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"People wanted to fund tax breaks by taking money out of the pension and giving wealthy people money back," said Alan Kaufman, legislative and political coordinator for the Communication Workers of America, which represents 50,000 public employees statewide. "To turn around and try to pit public workers against the taxpayers is really unconscionable. The problem is not our pensions, the problem is the tax policy."

After enjoying a $1.2 billion pension surplus as stocks boomed at the start of this decade, New Jersey has owed the system for three years running. The actuarial report estimates what the state should invest to cover pensions for retired workers and active employees who will retire in the future.

The state has been paying only portions of what it owes over the past several years, and it will continue that practice this year. The state expects to pay $337 million for all pension funds in its 2005-2006 budget, including $285 million to PERS.