This year, according to actuarial calculations, the state was supposed to contribute $3.1 billion to the pension system. Of that amount, $1.8 billion was to pay for the unfunded actuarial accrued liability, while only $1.2 billion was for current costs. Under Christie's first budget, the state put in nothing.
The official estimate of the state's public employee pension fund shortfall is $45.8 billion as of June 30, 2009, or more than $5,200 for every man, woman, and child. Per capita, New Jersey's unfunded pension liabilities are the highest in the nation.
Many experts believe that even $46 billion is a gross underestimate of the state's true shortfall. According to a study from the Mercatus Center at George Mason University, New Jersey's pensions would have an unfunded liability of $174 billion using the accounting methods required for private-sector pensions.
A recent study by the Pew Center rated the Garden State's public pensions among the eight most poorly managed in the country.
Exactly how long New Jersey's pension funds will remain solvent depends on any number of unknowable variables, including when government employees retire, the rate of investment returns, what changes are made to benefits, and how much the state pays into the system.
One national pension expert, Joshua D. Rauh, an economist at Northwestern University's Kellogg School of Management, estimates that assuming an 8 percent return on investments, New Jersey's public employee pension funds will run dry in 2019. Rauh's calculations assume the state will contribute enough each year to cover the costs of new benefits, which means if the state does not do that, the pension funds could go broke even sooner.
