The opinion of the court was delivered by

REISNER, P.J.A.D.

In these appeals, which we have consolidated for purposes of this opinion, several groups of public-employee plaintiffs challenge the constitutionality of N.J.S.A. 43:3B-2 (Chapter 78), a 2011 statute that suspended the payment of cost of living increases (COLAs) to current and future retirees receiving pensions from each of the State's public pension funds. See L. 2011, c. 78, § 25. The trial court dismissed the complaints on summary judgment. For the reasons that follow, we affirm the grant of summary judgment in DeLucia v. State of New Jersey, A-0632-12. We reverse the grant of summary judgment in Berg and New Jersey Education Association v. Christie (Berg), A-5973-11 and A-6002-11, and we remand Berg to the trial court for further proceedings required to address plaintiffs' Contract Clause claims under the New Jersey Constitution.

I

The State pension systems have been addressed at length in a number of recent opinions. See, e.g., Teamsters Local 97 v. State, 434 N.J.Super. 393, 407-25, 84 A.3d 989 (App.Div.2014); N.J. Educ. Ass'n v. State, 412 N.J.Super. 192, 214-15, 989 A.2d 282 (App.Div.), certif. denied, 202 N.J. 347, 997 A.2d 232 (2010). Nonetheless, for the sake of clarity, we find it necessary to review the history in detail, since "[t]he legal issues must be viewed realistically against the story of these pension plans." Spina v. Consol. Police & Firemen's Pension Fund Comm'n, 41 N.J. 391, 393, 197 A.2d 169 (1964). Likewise, because this litigation has been conducted in several different courts, we discuss its procedural history in greater detail than we otherwise might.

THE PENSION SYSTEMS

Resolution of this appeal requires a review of the statutory framework and history surrounding the: 1) State-administered retirement systems; 2) Pension Adjustment Act, N.J.S.A. 43:3B-1 to-10; and 3) non-forfeitable rights statute, N.J.S.A. 43:3C-9.5. We will discuss that framework here.

A. The State-Administered Retirement Systems

Plaintiffs in Berg are a group of twenty-six retired attorneys who are currently receiving pension benefits through the Public Employees' Retirement System (PERS), N.J.S.A. 43:15A-1 to-141. PERS was established in 1954, L. 1954, c. 84, and is the largest of the State-administered retirement systems. N.J.S.A. 52:18A-108(c). The intervenors in Berg are retired and active vested members in the three largest state-administered defined benefit retirement systems: 1) PERS; 2) the Police and Firemen's Retirement System (PFRS), established in 1944, L. 1944, c. 253, under N.J.S.A. 43:16A-1 to -16.2; and 3) the Teachers' Pension and Annuity Fund (TPAF), reorganized in 1955, under N.J.S.A. 18A:66-1 to-93. The DeLucia plaintiffs are retired members of PFRS.

PERS, PFRS, and TPAF are governed by separate boards of trustees. N.J.S.A. 43:15A-17 (PERS); N.J.S.A. 43:16A-13 (PFRS); and N.J.S.A. 18A:66-56 (TPAF). The day-to-day administration of the retirement systems is conducted by the Department of the Treasury, Division of Pensions and Benefits. N.J.S.A. 52:18A-95 to-100 (Division of Pensions); N.J.S.A. 43:15A-18 (PERS); N.J.S.A. 43:16A-13 (PFRS); N.J.S.A. 18A:66-57 (TPAF). Employees are vested in these systems after having obtained ten years of service credit. N.J.S.A. 43:15A-38 (PERS); N.J.S.A. 43:16A-11.2 (PFRS); N.J.S.A. 18A:66-36 (TPAF).

The State-administered retirement systems are funded by: 1) contributions from employees' wages; 2) contributions from the State, as the employer; and 3) the return earned on invested assets. N.J.S.A. 43:15A-24 (PERS); N.J.S.A. 43:16A-15 (PFRS); N.J.S.A. 18A:66-18 (TPAF). See also N.J. Educ. Ass'n, supra, 412 N.J.Super. at 214-15, 989 A.2d 282 (describing TPAF statutory funding and contribution scheme). Employees' contributions to the systems are set by statute as a percentage of salary. N.J.S.A. 43:15A-25 (PERS); N.J.S.A. 43:16A-15 (PFRS); N.J.S.A. 18A:66-29 (TPAF).

The State's contributions are computed by actuaries, who act as technical advisors to the board of trustees, based on an annual valuation of the assets and the fund liabilities. N.J.S.A. 43:15A-24 (PERS); N.J.S.A. 43:16A-16 (PFRS); N.J.S.A. 18A:66-16 (TPAF). See Passaic v. Consol. Police Pension Fund Comm'n, 18 N.J. 137, 140-41, 113 A.2d 22 (1955) (explaining in simple terms the theory of pension funding and the actuary's role). As the Division of Pensions explained in its Employers' Pension and Benefits Administration Manual (EPBAM), in the State pension systems the employer is essentially "responsible for filling the gap between the funds needed to meet the retirement system obligations and those available from employee contributions and investment earnings on system assets." Employers' Pension and Benefits Administration Manual (EPBAM), http://www.nj.gov/treasury/pensions/epbam/pensions/funding1.htm (last visited June 12, 2014).2

The State is statutorily required to contribute, to each system or fund, both a "normal contribution," which includes basic retirement allowances and COLAs as determined by the board of trustees in consultation with the system's or fund's actuary, and an accrued liability contribution. N.J.S.A. 43:3C-9.5(c)(1). "The amount of the State's annually required contributions shall be included in all annual appropriations acts as a dedicated line item," N.J.S.A. 43:3C-9.5(c)(1), and the Legislature "shall make an appropriation sufficient to provide for the obligations of the State." N.J.S.A. 43:15A-37 (PERS); N.J.S.A. 18A:66-33 (TPAF). Commencing July 1, 2011, the State's contribution

The money in the pension funds is held in trust for the exclusive use of the members or their beneficiaries. N.J.S.A. 43:3C-9.1.

B. The Pension Adjustment Act

In 1958, at approximately the same time that PERS, PFRS, and TPAF were established, the Pension Adjustment Act, N.J.S.A. 43:3B-1 to-10, was adopted. L. 1958, c. 143. The Act provided for limited modest increases, based on a fixed adjustment, to the first $480 of the retirement allowances of state employees (including members of PERS, PFRS, and TPAF), who had retired before 1952, that is, prior to the advent of Social Security coverage for public employees. L. 1958, c. 143. The State, as employer, bore the cost of the adjustments (except TPAF), which were, as initially enacted, to be made on a "pay-as-you-go" basis and were subject to appropriation by the Legislature. L. 1958, c. 143. The Sponsor's Statement to the bill explained:

In 1961, the Act was amended to increase the retirement allowance by applying an increased percentage adjustment to the first $600 in benefits, and by adding employees who had retired in 1952, 1953 and 1954. L. 1961, c. 144. The Sponsor's Statement explained:

In 1964, the statute was amended to apply the percentage adjustment to the first $900 in retirement allowance. L. 1964, c. 198, § 1. Then Governor Hughes confirmed that the "program extends only to those who retired prior to 1955 and prior to the advent of Social Security coverage." Governor's Statement upon Signing Assembly Bill No. 610, L. 1964, c. 198 (Oct. 13, 1964).

The first major revision to the Act was made in 1969, when the Act was amended to: 1) grant adjustments or COLAs to all eligible retirants of state-administered pension systems, not just those who retired before 1955; and 2) provide adjustments based on an amount equal to one-half of the percentage of the change in the Consumer Price Index (CPI), not a fixed formula. L. 1969, c. 169, § 1. See Brown v. Twp. of Old Bridge, 319 N.J.Super. 476, 511, 725 A.2d 1154 (App.Div.) (increases in annual COLAs are calculated by reference to CPI to protect retirees from increased inflation), certif. denied, 162 N.J. 131, 741 A.2d 99 (1999). The Sponsor's Statement explained:

From 1982 to 1991, the State retirement systems grew dramatically, and the growth in assets and the return on retirement investments far outpaced the growth in benefit payments from the retirement systems. Sponsor's Statement to Senate Bill No. 540, at 28 (March 12, 1992), (L. 1992, c. 41). During that period pension adjustments were enhanced, and the Act was amended to: 1) expand COLAs to include survivors, L. 1971, c. 139; 2) reduce the lag time for updating the CPI adjustment, L. 1975, c. 375; 3) increase the percentage of adjustment from 50% to 60% of the CPI, L. 1977, c. 306; and 4) provide for payment for the entire month in which the retirant dies, L. 1993, c. 335.

From 1987 to 1990, the Act was amended, with regard to funding, to: 1) provide that COLAs were to be prefunded by employers, rather than on a pay-as-you-go basis; and 2) that COLA payments shall be paid by the retirement system and funded as employer obligations by the same method provided by law for funding of employer obligations for the basic retirement benefits. N.J.S.A. 43:3B-4a (TPAF); N.J.S.A. 43:3B-4.2 (PFRS); N.J.S.A. 43:3B-4.3 (PERS).3 As the Division of Pensions stated in the EPBAM: "An employer's contribution to one of the State's defined benefit plans covers not only the cost of basic pension allowances, but also future cost-of-living adjustments (COLA)." EPBAM, http://www.nj.gov/treasury/pensions/epbam/pensions/funding1.htm (last visited June 12, 2014). The Sponsor's Statement to the PERS bill, L. 1990, c. 6, explained:

The Senate Revenue, Finance and Appropriations Committee's Statement set forth that the bill provided for the "recognition of ... (COLA) payments as a liability of the PERS system." Committee's Statement to Senate Bill No. 665, at 1 (Feb. 5, 1990). See also Governor's Statement upon Signing Senate Bill No. 2602, L. 1989, c. 204 (Dec. 19, 1989) (prefunding mechanism will result in substantial savings to urban municipalities).

C. The Genesis of the Current Pension Dispute

Beginning in the mid-1990's, a series of Executive and Legislative policy decisions — which the State later characterized as short-sighted — resulted in underfunding of the pension systems. As described in then Governor Corzine's February 24, 2008, Budget Summary presented to the Legislature:

D. The Nonforfeitable Right Statute

In 1997, the Legislature introduced a bill, signed into law on June 5, 1997, conforming the administration of certain State-administered retirement systems, including PERS, PFRS, and TPAF, to federal Internal Revenue Code requirements; however, the bill also established "certain non-forfeitable" pension rights. L. 1997, c. 113, § 2.4 Significant to this appeal, the law provided that vested members "shall have a non-forfeitable right to receive benefits as provided under the laws governing the retirement system or fund upon the attainment of five years of service credit in the retirement system or fund...." N.J.S.A. 43:3C-9.5(b). "[A] `non-forfeitable right to receive benefits' means that the benefits program, for any employee for whom the right has attached, cannot be reduced. The provisions of this section shall not apply to post-retirement medical benefits which are provided pursuant to law." N.J.S.A. 43:3C-9.5(a). Nonetheless, N.J.S.A. 43:3C-9.5(e) provided:

The Senate Budget and Appropriations Committee's Statement to L. 1997, c. 113 explained:

With regard to the fiscal impact of L. 1997, c. 113, the Senate Budget and Appropriations Committee set forth that:

In 2010, the Legislature introduced Senate Bill Nos. 2, 3, and 4, which were passed and signed into law on March 22, 2010. The "bills implemented some of the recommendations of the Joint Legislative Committee on Public Employee Benefits Reform, Final Report (Dec. 1, 2006) (Final Report)...." See Paterson Police PBA Local 1 v. City of Paterson, 433 N.J.Super. 416, 419-21, 80 A.3d 1152 (App.Div.2013) (describing history of bills and provisions of Final Report). The Final Report was created to identify "proposals that will terminate abuses of the pension systems and control the cost of providing public employee retirement, health care and other benefits." Final Report, supra, at 1. The Committee found that as of 2006, New Jersey's retirement systems had an $18 billion unfunded liability. Ibid. The main contributors to that liability were: 1) "State and local government employer pension `holidays' totaling $8 billion over seven years; [2)] [N]egative investment returns resulting in a $20 billion loss; [3)] Costly pension benefit enhancements and early retirement incentive programs; and [4)] Continuous increases in enrollment." Ibid.

Relevant to this appeal, Senate No. 2, enacted at L. 2010, c. 1, § 29, and codified as amended at N.J.S.A. 43:3C-9.5(b), removed public employees who had become vested members of the State-administered retirement systems on or after May 21, 2010 (the bill's effective date), from the "non-forfeitable right" provision.

Under this provision new members of the State-administered retirement systems do not have a non-forfeitable right to receive retirement benefits upon the attainment of five years of service credit. N.J.S.A. 43:3C-9.5(b).

The Sponsor's Statement to L. 2010, c. 1, explained that:

Significantly, Recommendation 7 of the Joint Committee's Final Report, upon which the Legislature relied, provided:

In its Final Report the Committee concluded that:

In 2011, however, the Legislature made significant changes to public employee pension and health care benefits, including the suspension of automatic COLAs for current and future retirees. L. 2011, c. 78, § 25 (codified as amended at N.J.S.A. 43:3B-2(a)). The statute provides that commencing on June 28, 2011,

Under Chapter 78, the newly-created pension committees, which are comprised of both labor and state appointees, have the discretionary authority to reactivate COLAs when the individual pension funds attain the "targeted funded ratio," that is, seventy-five percent funding in "State fiscal year 2012, and increased in each fiscal year thereafter by equal increments for seven years, until the ratio reaches 80 percent at which it shall remain for all subsequent fiscal years." N.J.S.A. 43:3C-16; see N.J.S.A. 43:15A-17 (PERS pension committee); N.J.S.A. 43:16A-13 (PFRS pension committee); N.J.S.A. 18A:66-56 (TPAF pension committee). The Sponsor's Statement explained:

The Division of Pensions and Benefits estimated that the

In a press release accompanying the bill, the Governor stated that "pension funds are considered to be adequately funded if their AVA funded ratio is at or above 80% (the federal standard for `at-risk' funds). At the end of fiscal 2010, the State's plans' combined AVA funded level was just 56 percent." Governor's Statement upon Signing Senate Bill No. 2937, L. 2011, c. 78 (June 28, 2011).

As part of the political compromise that produced its passage, Chapter 78 also amended the non-forfeitable right statute to provide that members of the State-administered pension systems have a contractual right to the annual required contribution made by the employer or any other public entity. L. 2011, c. 78, § 26, codified at N.J.S.A. 43:3C-9.5(c)(2). The statute was also amended to provide that any rights reserved to the State under N.J.S.A. 43:3C-9.5(e) to modify or amend the retirement systems "shall not diminish the contractual rights of employees established by subsections a, b, and c of this section." Ibid. (emphasis added).

N.J.S.A. 43:3C-9.5 (emphasis added), currently provides:

In their complaint, the Berg intervenors asserted that from 2006 to 2011 the unfunded liability of the retirement systems increased as follows: PERS increased from $2.6 billion to an estimated $15.6 billion; TPAF increased from $5.8 billion to $31.2 billion; and PFRS increased from $3.5 billion to $11 billion. During that same period the funding ratios decreased. The State does not contest those allegations, which are consistent with the actuarial reports in the record. Intervenors allege that the increase in unfunded liabilities and the decrease in funded ratios of the TPAF, PERS and PFRS are attributable in significant part to the reduced contributions from the State and local employers.

In the 2014 budget, the Legislature appropriated a $1.676 billion payment for the pension systems, consistent with the funding formula set forth in the 2010 pension amendments. N.J.S.A. 43:3C-14, L. 2010, c. 1, § 38. However, by Executive Order 156 (May 20, 2014), the Governor reduced the State's pension contribution by ordering the State Treasurer to freeze expenditures.5 The Executive order was issued in response to what the Governor characterized as an $875 million shortfall in expected State tax revenues and a total revenue gap of approximately $1.3 billion.

PROCEDURAL HISTORY

On July 26, 2011, plaintiffs, Richard W. Berg and twenty-five other retired government attorneys (plaintiffs), filed a notice of claim in accordance with the statutory notice requirement of the Contractual Liability Act (CLA), N.J.S.A. 59:13-5, asserting that they had contractual, statutory, and constitutional rights to COLAs.

On December 2, 2011, plaintiffs filed a complaint, Berg v. Christie, MER-L-2996-11, against the Governor, the Secretary of State, the Director of the Division of Pensions (Director), the Board of Trustees of PERS, the State Treasurer, and the State (collectively defendants), challenging the constitutionality and enforceability of the suspension of their COLAs under Chapter 78. Plaintiffs alleged the suspension constituted a breach of express and implied contract (counts one and two), violated the Contract and Due Process Clauses of the Federal and State Constitutions (counts three, four, and six), and violated their state civil rights (count five). They sought a judgment declaring Chapter 78 unconstitutional, a permanent injunction, monetary damages, and attorneys' fees and costs.

On February 2, 2012, defendants filed a Rule 4:6-2(e) motion to dismiss for failure to state a claim upon which relief can be granted. Plaintiffs filed a cross-motion for summary judgment. Plaintiffs and defendants filed joint stipulations, including a stipulation that reports cited by defendants in their brief were admitted into evidence with the consent of the parties. As a result, the motion to dismiss was converted into a summary judgment motion. R. 4:6-2.

On April 16, 2012, intervenors, a group of state and local active and retired employees and the labor organizations that represented them, filed a motion on short notice to intervene, on the COLA issue only.6 By order issued on May 2, 2012, the trial court granted the motion for intervention pursuant to Rule 4:33-2. On May 8, 2012, intervenors filed a complaint in intervention, asserting claims of violation of the Contract Clause (count one), violation of Due Process (count two), and equitable estoppel.

On May 25, 2012, a Law Division judge conducted oral argument on the motions, and issued a brief oral decision granting defendants' motion for summary judgment. The judge found that the suspension of COLAs under Chapter 78 was constitutional because, under the Debt Limitation and Appropriations Clauses, the Legislature retained continuing authority to amend the pension systems. The judge did not decide plaintiffs' Contract Clause, and other claims.7 On June 20, 2012, the judge issued an amended order dismissing plaintiffs' complaints.8

II

On an appeal from a summary judgment order, our review is de novo, and we owe no deference to the trial court's legal interpretations. See Perez v. Professionally Green, LLC, 215 N.J. 388, 398-99, 73 A.3d 452 (2013). We agree with the Berg plaintiffs9 that the trial court erred in premising its decision on the Debt Limitation and Appropriations Clauses of the New Jersey Constitution. The Appropriations Clause, N.J. Const, art. VIII, § 2, ¶ 2, requires "that the State's finances be conducted on the basis of a single fiscal year covered by a single balanced budget." N.J. Educ. Ass'n, supra, 412 N.J.Super. at 216, 989 A.2d 282. The clause generally bars the courts from ordering the Legislature to appropriate funds. City of Camden v. Byrne, 82 N.J. 133, 149, 411 A.2d 462 (1980). The Debt Limitation Clause, N.J. Const, art. VIII, § 2, ¶ 3, prohibits "`one Legislature from incurring debts which subsequent Legislatures would be obliged to pay, without prior approval by public referendum.'" City of Camden, supra, 82 N.J. at 152, 411 A.2d 462 (citation omitted).

There is no dispute that, at the current time, there are sufficient funds in the pension systems to pay COLAs to current retirees. Moreover, pensions are neither funded by appropriations on a pay-as-you-go basis, in the way that COLAs used to be, nor is their payment contingent on the making of a current appropriation. Compare N.J.S.A. 43:3B-4.1 with N.J.S.A. 43:3B-4a. During the years that the State skipped making its pension contributions, the pension systems continued paying CLAs to retirees. In fact, in 2010, the State assured this court that the pension systems were capable of paying out benefits for the next thirty years, despite the State's failure to make its contributions to the funds. N.J. Educ. Ass'n, supra, 412 N.J.Super. at 215 n. 14, 989 A.2d 282. Hence, COLAs can be paid currently without the need for any legislative appropriation. Consequently, neither the Appropriations Clause nor the Debt Limitations Clause is currently implicated here, where the issue is payment to retirees from the pension funds rather than payment by the Legislature into the funds. See City of Camden, supra, 82 N.J. at 148-53, 411 A.2d 462; N.J. Educ. Ass'n, supra, 412 N.J.Super. at 215, 989 A.2d 282 (noting the "clear distinction between the right to receive pension benefits and the funding method adopted by the Legislature to assure that monies are available for the payment of such benefits").

It may be argued that if the pension funds are not restored to fiscal health, at some point the money will run out and an appropriation will be needed to restore the funds' solvency. A lawsuit aimed at requiring such an appropriation would implicate both the Appropriations Clause and the Debt Limitation Clause. See N.J. Educ. Ass'n, supra, 412 N.J.Super, at 216, 989 A.2d 282. However, we conclude that in this lawsuit, such a potential eventuality does not trigger either clause. See Passaic, supra, 18 N.J. at 147, 113 A.2d 22 (finding no violation of the Debt Limitation Clause in the creation of a pension fund to which State law provides the State "shall" contribute); Enourato v. N.J. Bldg. Auth., 90 N.J. 396, 402-03, 410, 448 A.2d 449 (1982) (holding that contracts subject to legislative appropriation do not violate the Debt Limitation Clause, but recognizing that the State's failure to honor its financial commitments may affect its bond rating).

Nor can we agree with the trial court's conclusion that N.J.S.A. 43:3C-9.5(e) defeats plaintiffs' contract claim. Subsection (e) reserves to the Legislature the "right to alter, modify or amend" the retirement systems, "[e]xcept as expressly provided herein...." Ibid. (emphasis added). Reading section 9.5 as a whole, the emphasized phrase clearly refers to the rights created in sections 9.5(a) and (b), which are exceptions to the reserved right to alter, modify or amend the retirement systems. Thus, section 9.5 gives retired or vested members a non-forfeitable right to their pension benefits as described in subsections (a) and (b), while subsection (e) allows the State to modify the pension systems as to employees or retirees to whom subsection (b) does not apply.

We have considered the additional contentions raised by the Berg plaintiffs, and we conclude that, to a large extent, they are recycling arguments that were litigated and decided adversely to the intervenor-plaintiffs in the prior state and federal lawsuits noted in section I of this opinion. Those arguments were properly addressed and rejected by Judge Mary Jacobson, New Jersey Education Association v. State, No. L-0771-12 (Law Div. June 13, 2013), and Judge Anne Thompson, New Jersey Education Association v. State, Civ. No. 11-5024 (D.N.J. March 5, 2012). With respect to the State's Eleventh Amendment immunity, we add that the State may not "be forced to entertain in its own courts suits from which it was immune in federal court...." Howlett v. Rose, 496 U.S. 356, 365, 110 S.Ct. 2430, 2437, 110 L.Ed.2d 332, 346 (1990); see also Alden v. Maine, 527 U.S. 706, 748, 119 S.Ct. 2240, 2263, 144 L.Ed.2d 636, 673-74 (1999). Because the State has sovereign immunity with respect to plaintiffs' federal causes of action, plaintiffs' federal Contract Clause claims were properly dismissed.10" See Allen v. Fauver, 167 N.J. 69, 75, 768 A.2d 1055 (2001). With the exception of their State Contract Clause claims (discussed in section III, infra), the Berg plaintiffs' arguments are without sufficient merit to warrant further discussion in a written opinion. R. 2:11-3(e)(1)(E).

Turning to the DeLucia case, plaintiffs are former law enforcement officers who were wounded in the line of duty and retired on disability pensions paid by the Police and Firemen's Retirement System (PFRS).11 In an effort to differentiate themselves from the Berg plaintiffs, they filed a separate lawsuit, raising claims based on the Victims' Rights Amendment, N.J. Const, art. I, ¶ 22; the Crime Victim's Bill of Rights, N.J.S.A. 52:4B-34 to-38; and the tax-exemption and non-assignability provision of the PFRS statute, N.J.S.A. 43:16A-17. In an oral opinion issued on August 24, 2012, the trial court dismissed their complaint.

While we are not unsympathetic to the DeLucia plaintiffs and the sacrifices they made during their law enforcement careers, the statutory and constitutional provisions they cite are irrelevant to the issue of their entitlement to a pension or a COLA. Without relying on N.J.S.A. 43:39.5, these plaintiffs also argue more generally that a COLA represents deferred compensation which the State cannot deny them. These and related arguments were properly rejected by the trial court. Plaintiffs' appellate arguments do not merit further discussion here. R. 2:11-3(e)(1)(E).12

Hence, we turn to the contract issue.

III

A. The Existence of a Contractual Right

Plaintiffs claim that the following language gives vested or retired employees a contractual right to receive not only basic pension benefits but COLAs:

We begin with some basic principles of statutory interpretation. In construing any legislation, we attempt to determine and effectuate the intent of the Legislature. Allen v. V & A Bros., Inc., 208 N.J. 114, 127, 26 A.3d 430 (2011). We first consider the statute's plain language, but "[w]hen `the Legislature's intent cannot be derived from the words that it has chosen[,]' a court may use extrinsic tools such as legislative history, legal commentary, sponsors' statements, or a Governor's press release." Nini v. Mercer Cnty. Cmty. Coll., 202 N.J. 98, 108, 995 A.2d 1094 (2010) (citations omitted). Indeed, "[s]tatutes cannot be read in a vacuum void of relevant historical and policy considerations and related legislation." Borough of Matawan v. Monmouth Cnty. Bd. of Taxation, 51 N.J. 291, 299, 240 A.2d 8 (1968).

Because pension legislation is remedial in nature, it should generally be liberally construed in favor of the employee. Klumb v. Bd. of Educ. of the Manalapan-Englishtown Reg'l High Sch. Dist., 199 N.J. 14, 34, 970 A.2d 354 (2009). However, in this case, the principle is in tension with the general rule that statutes are not to be construed as creating contracts.

Because the primary role of the Legislature is to enact statutes, not to create contracts, our courts are generally reluctant to imply a contract created by legislation. N.J. Educ. Ass'n, supra, 412 N.J.Super. at 206, 989 A.2d 282. That reluctance extends to the State's pension funds. The concept was explored at length in Spina, supra, 41 N.J. at 403-04, 197 A.2d 169, which involved a pension crisis arising from a combination of overly generous benefits and inadequate funding. In upholding the Legislature's power to increase the retirement age and years-of-service requirement, the Court declined to characterize the pension right as contractual.13

The Court further observed that the contract approach to pension benefits was likely to hamper the Legislature's ability to deal with funding crises affecting the pension fund:

Mindful of our required hesitancy to infer legislative contracts, and the practical difficulties the Court described in Spina, we nonetheless find that the non-forfeitable rights statute enacted in 1997 created a contractual right. Based on our review of the legislative history of the Act, we conclude that the creation of a contractual right to pension benefits stemmed from concerns raised by public employee unions after the State, through 1994 legislation, re-valued pension fund assets, L. 1994, c. 62, and later skipped making contributions to the pension funds.

During a May 20, 1996 legislative hearing on the State's public pension systems, then-State Treasurer Bryan Clymer insisted that the pension systems were fiscally sound, despite concerns expressed by public employee unions. Public Hearing Before Senate State Management, Investment and Financial Institutions Committee (May 20, 1996) (Pension Hearing). He stated:

In response, a union representative challenged Clymer to support S-1132, a recently-introduced bill that would guarantee public employees a contractual right to their pension benefits:

The hearing was chaired by Senator Peter Inverso,14 the principal sponsor of S-1119, which was eventually adopted as the 1997 non-forfeiture legislation. Senator Inverso introduced S-1119 on May 9, 1996, two weeks before the hearing. Unlike S-1132, the bill the unions supported, S-1119 originally did not contain a contractual rights provision.

The original sponsor's statement, as well as the language of the original bill, made clear that its purpose was "to conform the administration of the [pension systems] to federal Internal Revenue Code requirements in order to maintain the qualified status of these retirement systems and pension funds." Sponsor's Statement to Senate Bill No. 1119, at 4 (May 9, 1996). The bill stemmed from an investigation by the Internal Revenue Service based on allegations that the State had illegally diverted pension funds to other uses. The lawsuit had been settled on March 21, 1996, with the State agreeing to restore the funds to the pension system.

During the May 20, 1996 hearing, a union representative explained the employees' concern that, as a result of skipping pension payments, the State would eventually find itself facing a need to make a much larger contribution in the future, would balk at such a large expenditure, and would instead try to cut benefits. He urged, "it is critical that this Legislature guarantee the benefits that employees have earned" and argued that the Legislature should accomplish that goal by providing a contractual right to the benefits. Pension Hearing at 68-69.

Senator Inverso indicated that he was prepared to negotiate with the "administration" (presumably, the Executive Branch) on that point. Pension Hearing at 70.

On April 17, 1997, Senate Bill No. 1119, was amended by the Senate Budget and Appropriations Committee to add the non-forfeiture provision.15 The Committee Statement to the bill reiterated its purpose to ensure that the pension systems conformed to Internal Revenue Code requirements. However, the Statement also recited that, with the exception of medical benefits, the bill amendments

Nothing in the Statement suggested that COLAs, as opposed to medical benefits, were to be excluded from the non-forfeitable rights provision. The Statement also noted that the bill required the State "to make annual normal contributions and annual unfunded accrued liability contributions to each retirement system or fund except under two circumstances set forth in the bill." Ibid.

In a recent case, the State conceded that retirees have a contractual right to the basic pension benefit they began receiving upon retirement. N.J. Educ. Ass'n, supra, 412 N.J.Super, at 215, 989 A.2d 282. N.J. Educ. Ass'n involved a challenge by members of the Teachers' Pension and Annuity Fund to the State's method of funding the pension system. We affirmed the dismissal of the lawsuit, "finding that TPAF members, although entitled by law to the receipt of vested benefits upon retirement, possess no constitutionally-protected contract right to the particular level, manner or method of State funding provided in the statute." Id. at 196, 989 A.2d 282. Although the contractual right to vested benefits on retirement was not directly at issue in N.J. Educ. Ass'n, we recognized the "non-forfeitable rights" language of N.J.S.A. 43:3C-9.5:

We also acknowledged the State's concession that section 9.5 created contract rights:

We noted that "[a]s to this non-forfeitable right" both parties agreed that TPAF would "continue to have enough assets [to pay pension benefits] for at least the next thirty years...." Id. at 215 n. 14, 989 A.2d 282. Hence, there had been "no impairment — much less a substantial one — of plaintiffs' non-forfeitable right to receive accrued pension benefits." Ibid. We concluded, however, that one Legislature could not bind a future Legislature to make an appropriation for the pension fund, without running afoul of the Appropriations Clause. Id. at 216, 989 A.2d 282.

In N.J. Educ. Ass'n, the State's position on the contract question was consistent with opinions previously issued by the Office of the Attorney General and the Office of Legislative Services. As previously discussed, both opinions advised that N.J.S.A. 43:3C-9.5 created a contractual right to pension benefits, and hence the State could not diminish vested pension benefits unless it could satisfy the constitutional standards under which the State may impair the obligation of a contract.

Based on the foregoing, we begin from the premise that the "non-forfeitable rights" clause created a contractual right to receive, upon retirement, pension benefits at the rates in effect at the time the employee attained five years of service or at the time the non-forfeitable rights statute was passed, whichever was later. The issue in this case is whether, in enacting the non-forfeitable rights clause, the Legislature intended that cost of living increases be included in that contractual right.

The State argues that because COLAs are controlled by the Pension Adjustment Act, while each individual pension system or retirement plan is governed by its own separate legislation, the term "benefits" in the non-forfeitable rights clause should be interpreted as applying only to the benefits provided by each separate pension/retirement system and not to COLAs.

The history of the pension statutes, including amendments to the Pension Adjustment Act, convinces us that COLAs are such an integral part of the pension system that the Legislature must have intended that they be included as part of the non-forfeitable right, N.J.S.A. 43:3C-9.5, guaranteed in 1997. As previously discussed, while COLAs were originally funded by annual appropriations, and could be denied if the Legislature failed to make an appropriation, N.J.S.A. 43:3B-5, that system was abandoned decades ago.

Instead, through amendments adopted in the late 1980's and early 1990's, COLAs are funded in the same way that the regular pension benefits are funded, and CLAs are payable from each of the applicable pension funds. See N.J.S.A. 43:16A-15.6 (L. 1989, c. 204, § 7); N.J.S.A. 43:16A-15.7 (L. 1991, c. 511, § 3); N.J.S.A. 43:15A-24.1 (L. 1990, c. 6, § 2). As plaintiff Ouslander points out, the Committee's Statement to Senate Bill No. 665, which was eventually codified at N.J.S.A. 43:15A-24.1, explains that the bill "provides that the COLA payment would be recognized as a liability of the system in the same manner as other retirement benefits are now liabilities." Committee's Statement to Senate Bill No. 665, at 1 (Feb. 5, 1990). Hence, we reject the State's argument that the reference, in section 9.5(b), to a retiree's non-forfeitable entitlement "to receive benefits as provided under the laws governing the retirement system or fund" refers only to benefits under the basic pension funds and not to COLAs.16 We conclude that the laws governing COLAs are part of the laws governing the retirement systems or funds.

The State also contends that when the non-forfeitable rights statute, N.J.S.A. 43:3C-9.5, was enacted, the Pension Adjustment Act, N.J.S.A. 43:3B-2, explicitly provided that COLAs could be decreased, revoked, or repealed "as otherwise provided in this act." Consequently, the State argues, the Legislature would not logically have intended to include COLAs in the non-forfeitable rights provision because, as defined in section 2 of the Pension Adjustment Act, COLAs were always subject to change by amendment to the Adjustment Act, and the Legislature should not be deemed to have repealed section 2 by implication. The State thus argues that the non-forfeitable rights in N.J.S.A. 43:3C-9.5 cannot be read to impliedly repeal N.J.S.A. 43:3B-2, and the State remained free to change future COLA rates by amending the Pension Adjustment Act.

We conclude this argument is based on a misreading of subsection 3B-2, which reads in pertinent part:

We read the highlighted language, on which the State relies, as language of limitation. Specifically, the language limits changes in previously-granted COLAs to those specific situations allowed by the Pension Adjustment Act. For example, N.J.S.A. 43:3B-3 sets forth the formula for calculating COLAs each year. Other provisions address the voluntary waiver of a right to increased retirement allowances, N.J.S.A. 43:3B-6, the cessation of payments if monies are not appropriated, N.J.S.A. 43:3B-5,17 and the termination of COLA benefits if the Legislature provides for a "blanket increase in original retirement allowances." N.J.S.A. 43:3B-8. In context, we read section 2 as limiting the extent to which a COLA that was already awarded could be reduced, increased or revoked. Nothing in its language suggests that the Legislature could not, in separate legislation, contractually guarantee the right to receive a COLA. Hence, N.J.S.A. 43:3B-2 and N.J.S.A. 43:3C-9.5 are compatible and, contrary to the State's argument, the latter does not implicitly "repeal" the former.

During the 1996 Pension Hearing, the participants discussed the basic pension benefits and COLAs as part of the same system. See, e.g., Pension Hearing at 55. Clearly the Legislature was well aware that COLAs were part of the various pension benefit plans. In fact, in discussing the various actuarial assumptions, Robert Baus, the State's actuarial consultant, observed that the inclusion of COLAs as a pre-funded part of the pension system, instead of as a separate pay-as-you-go item, was a critical issue: "The methodology is not driving the funding of this system. What is driving the funding of this system is the phasing in of the COLA. That is where the sensitivity of the cost is going to come in." Pension Hearing at 2, 77.

Moreover, in section 9.5(a), the Legislature specifically excepted health benefits from the non-forfeitable right it created. Given the historical context in which the section was enacted, we conclude that if the Legislature also intended to except COLAs, it would have specifically so stated. In construing a statutory provision that contains a specific exception, "`doubts should be resolved in favor of the general provision rather than the exceptions.'" Prado v. State, 186 N.J. 413, 426-27, 895 A.2d 1154 (2006) (citation omitted).

The approach taken in the non-forfeitable rights statute enacted in 1997, was also consistent with ERISA, which has been construed as including COLAs, but not health benefits, as part of the accrued benefit to which an employee is entitled on retirement and which cannot, absent very limited circumstances, be decreased after the employee retires. See 29 U.S.C.A. § 1054(g)(1); Williams v. Rohm & Haas Pension Plan, 497 F.3d 710, 713 (7th Cir.2007), cert, denied, 552 U.S. 1276, 128 S.Ct. 1657, 170 L.Ed.2d 386 (2008).18 "`In contrast [to health benefits] the COLA [is] inseparably tied to the monthly retirement benefit as a means for maintaining the real value of that benefit. It [cannot], therefore, be said to be ancillary to the benefit....'" Williams, supra, 497 F.3d at 713 (citation omitted, second and third alterations in original).

For all of these reasons, we conclude that the non-forfeitable right provision, which creates a contractual right to receive pension benefits, applies to COLAs. In the next section, we address the constitutional implications of that conclusion.19

B. The State and Federal Contract Clauses

As we recently recognized, while the State and Federal Constitutions protect legislative impairment of the obligations of contracts, that protection is not absolute:

See also Farmers Mut. Fire Ins. Co. v. N.J. Prop. Liab. Ins. Guar. Ass'n, 215 N.J. 522, 546, 74 A.3d 860 (2013).

As we also stated in Teamsters Local 97, supra, 434 N.J.Super. at 402-03, 84 A.3d 989

However, consistent with constitutional principles and common sense, we cannot blindly defer to the State's own evaluation of a law's reasonableness and necessity, lest political expediency replace objective fiscal evaluation:

Further, in enacting a law that impairs contractual rights, "a State is not free to impose a drastic impairment when an evident and more moderate course would serve its purposes equally well." Id. at 31, 97 S.Ct. at 1522, 52 L.Ed.2d at 115.

As noted earlier, in evaluating a Contract Clause claim, a court must consider whether the challenged legislation "(1) `substantially impair[s] a contractual relationship,' (2) `lack[s] a significant and legitimate public purpose,' and (3) is `based upon unreasonable conditions and ... unrelated to appropriate governmental objectives.'" Farmers Mut. Fire Ins., supra, 215 N.J. at 546, 74 A.3d 860 (citations omitted).

In this case, the State argues that the pension system was, and still is, in financial difficulty that must be addressed lest the system eventually collapse. Our Supreme Court has acknowledged "the serious fiscal issues that confront the State and that led to the passage of Chapter 78." DePascale v. State, 211 N.J. 40, 63, 47 A.3d 690 (2012). Moreover, the fiscal health of the pension system is of importance to both current and future retirees. Although, even without a current legislative appropriation, there is now money in the pension funds from which to pay COLAs, unless there is a long-term financial solution, the money in the pension funds may eventually run out.

In another context, the Court has interpreted Spina as endorsing the State's authority to modify pension benefits when needed to ensure the integrity of the pension fund. In disagreeing with a County's interpretation of a statute mandating uniform benefits for all employees, the Court stated:

It may be argued that the Chapter 78 legislation was part of a reasonable, tripartite approach to the pension-funding problem, which required some contribution from all the stakeholders — additional pension contributions from current employees, the resumption of normal pension contributions by the State with additional contributions to pay down the shortfall, and the temporary cessation of COLAs for retirees. See L. 2010, c. 1 § 38; L. 2011, c. 78, §§ 8, 10, 15, 25. It may further be argued that in temporarily suspending COLAs, the Legislature chose a "moderate course" rather than the more drastic step of reducing the basic pension benefit for retirees. See U.S. Trust Co., supra, 431 U.S. at 31, 97 S.Ct. at 1522, 52 L.Ed.2d at 115.

On the other hand, plaintiffs contend that the State was partially responsible for the pension shortfall by skipping its pension contributions in prior years, and it should not be permitted to thus precipitate a pension crisis and then solve it at the expense of retirees. Plaintiffs also argue that the State has taken contradictory positions about the health of the pension systems, assuring this court in N.J. Educ. Ass'n that the systems were sound enough to meet their obligations for the next thirty years despite the State's failure to make its contributions, and now telling us that "the pension system is teetering on the brink of collapse." See testimony of Senator Sweeney (a sponsor of Senate Bill No. 2937) before the Senate Budget and Appropriations Committee on June 16, 2011.

In a recent submission, plaintiffs further point out that the State is proposing to renege on its promised contributions, through an Executive Order suspending a portion of the State's planned pension payments for this fiscal year and the next. See Executive Order 156 (May 20, 2014). Of course, in response, the State would no doubt contend that there were other reasons for the pension shortfall, including drastic investment losses caused by the financial "meltdown" in the stock market, and that it intends to make as large a contribution as it can in the current and coming fiscal years, consistent with avoiding another general budget crisis.

As noted below, on this record, we cannot determine which side has the better arguments.20 Further, even if we were to currently view the suspension of COLAs as a moderate and reasonable step, that view might change in the future, depending on how long the suspension lasts, how quickly the cost of living increases, and whether, and to what extent, the State meets its own obligations under the tripartite approach it created.

While we note these issues, we agree with intervenor-plaintiffs and defendants, who both argue that, if we find section 9.5 created contractual rights, we cannot fairly decide the constitutional impairment-of-contract claim on this record. Because the trial court did not address the contract clause issue at all, and because a contract-impairment claim presents "a mixed question of fact and law," N.J. Educ. Ass'n, supra, 412 N.J.Super, at 206 n. 10, 989 A.2d 282, a remand is required to allow all sides to create a complete evidentiary record. Hence, we remand this case to the trial court for further proceedings consistent with this opinion. If there are additional arguments the parties wish to raise on remand concerning the impairment-of-contracts issue, they may do so.

In remanding, we end with these observations. It is not the courts' role to run the pension systems. Our responsibility is to interpret and apply the Constitution in light of the evidence, and we will do so. But to a very great extent, the strength of the pension systems rests on policy choices made by the other two branches of government, and on their political will to preserve the systems and satisfy prior commitments made to public employees and retirees. See Spina, supra, 41 N.J. at 404-05, 197 A.2d 169.

Affirmed in DeLucia (A-0632-12). Reversed and remanded in Berg (A-5973-11, 6002-11).