Gov. Chris Christie’s plan to convert the New Jersey lottery into an asset of the cash-strapped pension system is a fiscal gamble that “could make things worse,” according to a bond market analyst.

Municipal Market Analytics released a report on Monday that was critical of Christie’s proposal to make the lottery an asset of the $71 billion pension system for 30 years, calling it an “accounting scheme.”

“While MMA agrees that dedicating the revenues of the lottery to pay a portion of the actuarial contribution is positive for pension funding, the details of the transaction suggest the greater benefit is more of an accounting scheme (and gamble) for optics and budgetary relief,” wrote Lisa Washburn, managing director at Municipal Market Analytics.

That dose of skepticism comes just as the state Senate Budget and Appropriations Committee is scheduled to discuss Christie’s proposed legislation at its Thursday meeting, although a vote is not planned.

A spokesman for the state Treasury Department, Willem Rijksen, said MMA had published its comment on the lottery proposal “without first understanding the transaction.”

“The contribution provides the strongest commitment the state can make to funding its pensions, short of a constitutional amendment. It provides the pension funds with a high-quality, revenue-producing asset,” he wrote in an emailed response. “The benefits of the lottery contribution are not based on accounting and optics, but establishing and funding a tangible commitment to meeting the state’s pension obligations.”

Advocates of the plan say it would provide a stable stream of revenue — around $1 billion a year — for the troubled pension system, immediately increasing its funded ratio from 45 percent to 59 percent.

The state would value the lottery at more than $13.5 billion, according to a Senate bill introduced this week, and state Treasurer Ford Scudder last month estimated it would generate $37 billion for the pension system over the 30-year period.

The state’s pension payment in the coming fiscal year is scheduled to be a record $2.5 billion. But Scudder testified before the Senate budget committee on May 16that if the lottery transaction goes through before June 30, that payment could be reduced to $1.5 billion, since the immediate improvement in the pension system’s funded ratio would, by extension, reduce the actuarially determined contribution required of the state by about $1 billion.

The freed-up $1 billion would be spent on the same services for education, veterans and senior and disabled residents currently supported by the lottery, he said.

Some critics say there’s no real guarantee that the $1 billion currently spent on needy groups would be made up under Christie’s plan. “Advocates to dedicate Lottery profits to pensions ignore entirely how to make up the $1B for education and vet homes,” Gordon MacInnes, the president of the liberal think tank New Jersey Policy Perspective and a former state legislator, tweeted Wednesday.

Washburn wrote that if the value of the lottery is less than the $13.5 billion estimate, the state’s required pension contribution in fiscal 2018 would likely be too low at $1.5 billion. State officials initially said the lottery would increase the funded ratio for the pension system from 45 percent to 65 percent, but Scudder then told the budget committee the increase would be to 59 percent on May 16.

If the $13.5 billion estimate turns out to be low, “additional payments will need to be made to compensate for that in the future,” Washburn wrote. Since pension funds are invested, she added, “the pension will also have lost out on the earnings capacity of those funds. This could make things worse.”

Rijksen wrote that “the lottery’s valuation was performed by an independent, qualified third party using conservative underlying assumptions.”

“If the lottery performance falls short of expectations, it will be revalued, and the state’s contribution requirements will be increased accordingly,” he said.

Wall Street credit-rating agencies have dropped New Jersey’s bond rating 11 straight times under Christie in large part because of the drastically underfunded pension system. After years of neglect from previous governors and lawmakers, Christie tried to save the pensions from collapse with broad reforms in 2011, only to yank billions of dollars in contributions he had pledged three years later, in 2014, amid a budget crunch. He notes every year that most of the state’s revenue growth goes straight into ballooning pension and health benefit costs.

Under the bill introduced in the Senate, the Teachers’ Pension and Annuity Fund would receive nearly 78 percent of lottery contributions. The Public Employees’ Retirement System would get a 21 percent piece, with just more than 1 percent going toward the Police and Fireman’s Retirement System.

Ahead of the Senate budget committee hearing, Christie’s office released statements from supporters of the lottery plan. The Senate bill, sponsored by Senate budget committee Chairman Paul Sarlo (D-Bergen) and ranking member Anthony Bucco (R-Morris), is up for discussion only on Thursday.

“The lottery enterprise contribution addresses a key fiscal concern for the state by providing a significant asset, reducing the retirement system’s unfunded liability, and elevating its funded ratio — all while maintaining funding for programs currently receiving lottery net proceeds,” Michele Siekerka, president and chief executive of the New Jersey Business and Industry Association, said in a statement. “Shoring up the unfunded liability of the pension fund is critically important for the state’s long-term economic growth.”

Commerce and Industry Association of New Jersey President Anthony Russo said the plan “should be celebrated from Wall Street to Main Street.”

But Washburn said Wall Street won’t likely be cheering.

“We believe the transaction is unlikely to generate the positive response the state is anticipating from the market participants, including rating agencies,” she wrote.

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