(Reuters) — New Jersey's retirement system for public employees is in worse shape than previously reported, thanks to recent accounting changes that are starting to be rolled out across the country.

In a document released Tuesday after a bond sale, the state revealed that one of its five main pension funds will have insufficient assets to cover projected benefit payments within 10 years.

Under new pension accounting standards issued by the Government Accounting Standards Board, the New Jersey system's overall funded level stands at 44% for fiscal 2014, compared with the 63% previously determined by standard actuarial methods. Eighty percent or more is generally considered healthy.

In the face of a budget crisis in May, New Jersey Gov. Chris Christie, a potential 2016 Republican presidential candidate, slashed two years of state pension contributions by about $2.5 billion altogether, prompting lawsuits by organized labor.

Under Gov. Christie's watch, the state has been downgraded eight times by Wall Street credit rating agencies. New Jersey is now the second-lowest rated state behind Illinois, which also has huge pension liabilities.

"Regardless of how the liability is measured, the state's record of underfunding its annual contributions to the pension system is at the root of its deterioration," Standard & Poor's Corp. said in statement.

New Jersey Treasury Department spokesman Christopher Santarelli said in a statement that the retirement system had current assets of about $40 billion.

But he added that the new pension reporting system, based on actual contributions, "underscores the urgent need for additional, aggressive reform of a pension and health benefits system that, if fully funded, would eat up 20% of New Jersey's budget."

Gov. Christie has called for more pension changes since February without detailing a specific proposal. He appointed a study commission in August, which is expected to present proposals soon.

Only a few pension systems across the country have begun to issue financial reports adhering to the new rules from the GASB, which measure a retirement system's net position as a percentage of total pension liability.

The net position uses market asset values instead of actuarial ones. In the case of more poorly funded systems such as New Jersey's, it also uses lower discount rates that make the liabilities appear much higher.