|September 10, 2008
2009 Pension Cost Budget Shock
The New Jersey Division of Pensions, based upon the actuarial analysis and approval by the various Boards of Trustees, has posted on their web site the pension billing for 2009 (http://www.state.nj.us/treasury/pensions/2009-employer-billing.htm). Payment will be due April 1, 2009.
The Police and Fire Retirement System (PFRS) which, based upon the phased in legislation, went to 100% by municipalities in 2008 and will see a total increase of $56,734,552 for property tax payers. The total 2009 contribution required from Local Governments is $696,476,702 compared to the 2008 levy of $639,742,150. This represents an 8.87% increase which will be subject to the Property Tax Levy Cap and the Expenditure Cap. The legislation which exempted pension increases from Cap Levy was only during the phase in period. Because in 2008 the PFRS went to 100% the increase for 2009 must be absorbed as part of the levy increase.
The Public Employees Retirement System (PERS) will go to 100% funding for Local Governments in 2009. The State was to be at 100% funding in 2008 as they were ahead of municipalities. The change from 80% to 100% funding will result in an overall increase of $146,510,667 across all Local Governments. This represents an increase of 35.25%. This year, however, this increase will be an exception to the expenditure cap and an add-on for the levy cap.
We recognize the shock this type of increase will cause to your budget and the Property Tax Levy. We will work with you to help find offsetting revenues and new sources of funding. In the meantime have your Finance Officer obtain information from the Division of Pensions website so you can begin to prepare for the pension shock which will confront your budget making process during 2009.
Very truly yours,
William G. Dressel, Jr.