TRENTON, N.J. — The state treasurer said Thursday that Gov. Chris Christie's proposal to use New Jersey Lottery ticket proceeds to bolster the government worker pension fund could be finalized by the June 30 end of the fiscal year.
Christie floated the somewhat opaque proposal to transfer assets from the lottery to the pension fund in his February budget address. His administration hasn't released any additional details since, including what would happen to the programs currently funded by the lottery.
"When can we expect a detailed proposal on this lottery concept? Sen. Paul Sarlo (D-Bergen), chairman of the Senate Budget Committee, asked the treasurer as a budget hearing Thursday. "Don't tell us June 30. We're all intrigued by it. Why wait?"
Treasurer Ford Scudder assured Sarlo more information would be made available in the near future.
Roughly, Christie wants to pledge the lottery as an asset to the pension fund, dramatically reducing its unfunded liabilities, which currently sit at about $49 billion for the state, or $66 billion if local government debts are included as well.
Christie has said the shift would immediately reduce the unfunded liabilities by $13 billion. The treasurer's office has issued a request for proposals for a valuation of the lottery system, which generates about $1 billion a year.
New Jersey accrued these high unfunded liabilities over years of contributing less than recommended by actuaries into the pension fund, in which some 800,000 current and retired state and local government employees are enrolled.
Christie has been increasing payments into the system by one-tenths of what's recommended by actuaries each year, but it's not yet enough to turn the tide.
Without the rush of cash, the system won't become even 80 percent funded for another three decades, Scudder said, adding that the lottery proposal could improve that timeline by as much as 10 or 20 years.
"That provides a lot of additional security to the pension system," he said.
This will not require a change in the state Constitution, which requires that lottery proceeds be spent on state institutions and state aid for education, Scudder said.
The state pays a number of costs on behalf of local school districts that can be categorized as aid, including the employer share of the Teachers' Pension and Annuity Fund.
As it stands, the $965 million the lottery is expected to receive from ticket sales helps fund higher education programs, psychiatric hospitals, centers for people with developmental disabilities and homes for disabled soldiers.
Christie's proposal has triggered concerns about what will happen to these programs if the lottery money is rerouted to the pension fund.
Scudder said Thursday that once the lottery reduces the unfunded liabilities of the pension fund, the state won't have to kick in as much money each year. The money freed up in the general fund should be able to help cover those programs.
The instability of the public pension fund remains one of New Jersey's weak spots, with Wall Street rating agencies downgrading its credit rating 11 times under Christie. The most recent rating change by Moody's Investors Service cited the state's "rapid pension liability growth, exacerbated by underfunding to maintain budget balance."
Moody's said it would take much more than the governor's one-tenths plan to improve the state's outlook.