Christie sets out teachers' pension reform

TRENTON, N.J. (Reuters) - New Jersey Governor Chris Christie said he had struck a deal with the state's teachers on a road map for pension reform while warning of a dire future if other unions do not make similar commitments to cut the cost of workers' retirement benefits.

But while Christie highlighted the deal during his fiscal 2016 budget address, the teachers' union said the governor was overstating how far the discussion had gone.

The governor's office later acknowledged that more work remained to be done on pension reform.

The agreement between Christie, a Republican weighing a 2016 bid for the White House, and the New Jersey Education Association came despite a long-bitter relationship and continuing uncertainty over many details.

"If we do not reform, next year we would be asked to spend nearly $8 billion on pension and health benefits," said Christie in his annual budget address on Tuesday afternoon in the state capital. "Health costs alone consume nearly 10 percent of the budget."

Rating agency Moody's has estimated that the U.S. public pension gap has tripled to at least $2 trillion in less than a decade - hurt by the 2008-9 crisis.

The teachers' union said it was "deeply disappointed that Gov. Christie overstated the nature of the understanding we reached with the (pension) commission," NJEA President Wendell Steinhauer said in a statement.

"We have not agreed to any changes to pensions or health benefits. We have only agreed to continue looking at all solutions that may provide our members with more stable pensions and affordable, high-quality health benefits," he added.

Christie and the teachers' union have had an acrimonious relationship since he was elected in 2009, repeatedly clashing over his efforts to curtail benefits and overhaul tenure rules.

The deal provided a glimmer of good news for Christie's 2016 ambitions, which has suffered from a defection of donors to rivals like Jeb Bush and other setbacks.

Under proposals by a commission of pensions experts, the union's existing pension plan would be frozen and replaced by a new one. Christie said he hoped other unions would follow suit.

A memo posted to the pension commission's web site laid out the "roadmap" of changes to the system, with a cover letter signed by union executives and commission members.

The teachers’ pension fund has a market value of $27 billion and is 57 percent funded, according to a 2014 report by the commission of pension experts. It has a projected depletion date, when it is projected to be unable to cover payments, of 2027.

The $33.8 billion budget presentation came a day after a state judge ruled that Christie's plan to cut $1.6 billion of contributions to the state retirement system violated the state constitution. The cuts were one of the lynchpins in his effort to close a $2.7 billion budget gap projected through fiscal 2015.

Christie's budget forecast contributing $1.3 billion to pensions in fiscal 2016, below the around $3 billion that a previous pension reform would have called for in the fiscal year.

(Reporting by Luciana Lopez; Writing by Megan Davies; Editing by Dan Grebler, Christian Plumb and Jeremy Laurence)