By Hilary Russ

(Reuters) - The New Jersey Supreme Court on Monday agreed to hear the state's appeal of a lawsuit over pension contributions, a case with billions of dollars of public funding at stake and the end of a budget year looming.

Governor Chris Christie's administration last week asked the state's highest court to take up the appeal directly after losing a key decision in a lower court.

The high court set oral arguments for May 6, which could allow the court to rule before fiscal 2015 ends on June 30.

The administration is defending Christie's decision to strip $1.6 billion from the state's 2015 contribution into its public employee retirement system.

Labor unions sued over the reduction, which Christie said he was forced to make because of a severe drop in the state's revenues.