Back in 2011, Governor Chris Christie of New Jersey renegotiated union contracts with state workers stating a need to lower labor costs but also acknowledging that the state has underfunded the pension system for years. In short, he pushed for a law (the full 120+ page pdf) that among other things would actually fund the pension system over the next 37 years while otherwise clawing back some retirement and worker benefits in the present.
Fast forward to 2015, when revenue projections still have not fully met Governor Christie's projections from 2011. His administration has not funded the pension system as the law requires and has not made major moves to show good faith. Labor, which did what it was required to do when it immediately took raised retirement ages and higher contributions to pension and health care costs, has had to go to the courts to attempt to make the Christie administration do what it is required to do under the law.
To sum it up: the government chronically underfunded the contractually agreed upon pension for decades. Governor Christie pushed employees to take a haircut just to get the state to pay what it was supposed to pay. Post-haircut the governor has followed in his predecessors irresponsible underfunding footsteps. Labor's only recourse has been the courts.
It's time for this limited recourse to change.
Going to the courts to enforce a contract should be a last-ditch measure. What unions need to do is build enforcement mechanisms into the contract.
Many businesses write bonuses or penalties into their contracts with other businesses. A common practice when paying for goods are terms where the business pays a little less if it pays for goods or services within a week, pays full price if paying within a month, or pays a little more if it exceeds a month. This contract structure encourages businesses to pay their bills in a timely fashion.
Another contract structure has nonperformance penalties. When the recent Comcast/Time Warner Cable deal fell through recently, some news outlets expressed surprise that there wasn't a standard 2-5% penalty in the buyout contract in case the buyer decided to not buy.
A regular contract consumers sign, with credit card companies and cell phone companies, states that contract disputes should go through arbitration before or instead of the court system (the fact that these companies are the primary funders of arbiters is a different can of worms and somebody else's post).
Many business contracts have built-in enforcement mechanisms. Labor contracts have penalties for individual workers in case they fail to perform well, but seem to lack accountability if the employer fails to make good in fuzzy areas like pensions unless labor takes the company to court, a very expensive and time-consuming process. This is why so many pensions have been underfunded or looted.
It's time to change that. It might cost a few cents an hour in negotiations, but solid sticks for corporate malfeasance--for example, a retroactive pay raise nd bonus to all employees whose pensions are underfunded, scaled to the degree of underfunding--could end the underfunding of pensions.
SEIU, AFL-CIO, UAW, I have one thing to tell you: it's time to stop being doormats in negotiations.
And Governor Christie? I won't say that the state pension being underfunded for so long is your fault. However, how you deal with it now, that's all on you. You have tried modern neoconservative tax ideology to cut taxes to improve tax collection and it has failed to produce the tax receipts you insisted would quickly blossom. It is time to try something else, something proven to improve tax receipts, and that's a modest tax increase.
Sure, you'll lose the 2016 Republican Presidential primary, but you'll get to serve as Governor of New Jersey for at least another term--barring more scandals like Bridgegate, of course.