If the matter was rejected by NJ’s Supreme Court, it’s highly unlikely that The Federal Supreme Court would go the other way. The SCOTUS tends to lean slightly more to the right than their NJ colleagues. There’s also massive nationwide ramifications for the SCOTUS to consider here, as this same issue applies throughout the country. Many States and local Governments are operating at near bankruptcy. The fat lady is doing voice scales in her dressing room.
Yep, we need some real longer-term, structural change in NJ govt spending. A few ideas being thrown around include open bidding NJ state road & infrastructure projects to private sector firms to cut out union & Mafioso graft, increased pension contributions and health insurance premiums paid by state & municipal employees and retirees for health. Asking state & municipal workers to roll back many of the pension enhancements they’ve been given since the 1990s under Florio and Whitman, i.e. maximum pensionable income should be capped like California at $110K, with pensions at 50% of that, ie $55K, in-line with current PFRS avg $57K. New employees should be moved to 401(k) style defined contribution plans, not defined benefit anymore so that politicians can no longer interfere in pension funding issues and raid the funds for Union pet projects like Xanadu, and bye-bye to accumulated leave payouts upon retirement at up to six months of avg final comp rate – “use it or lose it”. Taxes are probably going up too if all of these concessions are made, the sooner the better.
Probably worth looking at, here’s the road map to putting state finances on a more sustainable path now that Christie can get on with it https://www.state.nj.us/treasury/pdf/FinalFebruaryCommissionReport.pdf
Read the NJ Supreme Court’s full pen/ben decision here
In a long-awaited decision today that comes as a boon to Gov. Chris Christie and a blow public sector unions, the state’s Supreme Court ruled that the Republican’s administration does not have to make a slated contribution to a beleaguered pension and benefit system, striking down an earlier lower court decision that ruled the opposite.
In the 115 page document, Justice Jaynee LaVecchia wrote on behalf of the majority that the court cannot be a mediator of fiscal troubles “in place of the political branches.” (Brush/PolitickerNJ)
New Jersey’s Top Court Rules Christie Can Skip Pension Payments
New Jersey’s highest court ruled on Tuesday that Gov. Chris Christie could skip the pension payments he promised to make in the signature law of his tenure, averting a huge fiscal crisis just weeks before the state closes its books for the year. (Zernike/The New York Times)
” Asking state & municipal workers to roll back many of the pension enhancements they’ve been given since the 1990s” Im good with that and while your at it roll back my property taxes, heathy cost, mortgage interests, insurance to 1990s.
He called on public worker unions to return to “the table” and work together with his administration for a new round of pension reforms. His pension reform bill is only have illegal. His half. Yes go ahead and sit down with him.
Don’t sit down and incur the wrath of a popularly elected Governor whose Presidential hopes have been dashed… He’s going to put all of his anger in to implementing the above Roadmap for Reform recommended by his Pension Study Commission
Someone mentioned in another post how Christie got no Union votes. Well good, he hasn’t been bought like Sweeney, Sarlo, Whitman, McCheesey and the NJEA payroll assembly woman in Maplewood. It means he doesn’t owe the unions anything and can push for real concessions, and real roll backs of all of the tax payer giveaways and freebies (so called “pension enhancements”) since the days of Florio and Whitman. Time to sit down and make concessions.
What are those “pension enhancements” can you post them ?
Interesting that the NJ State Supreme Court decided they didn’t want to be an activist court, interfering between the Legislature and Executive. When it comes to COAH they are extremely activist, acting in place of the Legislature and Executive.
Now he is in Iowa and is going to talk like a union busting conservative.
Even while they were neglecting pension contributions, New Jersey politicians were sweetening the pot. In 2001 benefits for the state’s two largest groups of workers, government employees and teachers, were increased by 9%, creating an additional $4.2 billion in liabilities. In 1999 the state approved a “20 and out” measure that allowed firefighters and local police to collect pensions equal to 50% of their pay after 20 years of service – a perk previously available only to the state police. Benefits added since 1999 have increased liabilities by more than $6.8 billion, according to official estimates as of 2009. If New Jersey reaches the point where one or more of the funds in its system runs out of money, the state will have to pay retirees out of annual revenue, adding another burden to the budget. That’s how the state covers retiree health-care costs which already cost billions each year. (An attempt to pre-fund those expenses began in the 1980s but was sacrificed to budget pressures in 1994.)
It would then have to slash services or boost taxes to balance the budget, a pair of ugly options. The Tax Foundation says New Jersey already charges the highest state and local taxes in the country, the highest residential and commercial property taxes, and some of the highest sin taxes in the nation on cigarettes and alcohol.
New Jersey is confronting escalating bills from the $2.8 billion of pension bonds issued by Gov. Whitman, adding to pressure on Governor Chris Christie as the state struggles to finance its underfunded retirement system. The payments on the debt, which was sold in 1997 to fund the public-employee pension plans, are set to grow to almost $500 million in 2020 from $342 million this year, according to a Feb. 13 report released by the state treasurer. The annual cost will remain close to that level until the debt is paid off at the end of 2029. The pension bonds carry yields as high as 7.65% on debt maturing in 2026. Most can’t be repurchased from investors (many of them NJ public unions) before they mature, which prevents the state from refinancing to take advantage of lower interest rates today when AAA rated municipal yields are only 3% on similar 30 year bonds. It makes our debt repayments and state budget inflexible as total interest and principal payments on NJ state debt will rise 15% next year to $3.99 billion.
Here’s what the union thugs don’t tell you when they scream“the State should just pay what it owes”: Given a $3.6 billion annual gap in pension funding at the State level along with even higher increases in health benefits costs, to “pay what we owe” would require the NJ state sales tax to rise to 10% or increase state income taxes by 29%. Aside from their crushing impact on taxpayers, such measures would face significant obstacles from State constitutional mandates on the use of specific revenue sources for particular purposes, such as the dedication of all income taxes to property tax relief. In addition, the State must obey federal mandates, honor bonded obligations and meet other funding demands. As a result, roughly 87% of State revenues are effectively committed to specific purposes before the budgeting process begins. The remaining fund – $4.3 billion in the current budget – are counted on for vital functions such as law enforcement, public safety, the judiciary, and executive department offices. A “millionaires’ tax” imposing an average $50,000 additional annual tax on each millionaire, for example, would make only a small dent in the funding shortfall. It would still require the State to impose a 23% increase in state income taxes. Cutting employees’ health benefits to the equivalent of Bronze-level coverage under the Affordable Care Act (“ACA”) and eliminating retirement benefits for employees hired after 2010 would also be needed to allow current retirees to continue to enjoy their Platinum-plus health benefits, and new employees would be deprived of all retirement benefits to permit employees with more tenure to continue to accrue benefits at unsustainable levels. And, even with these concessions, NJ state taxpayers would still face the need to provide $3 billion in additional annual revenue, the equivalent of a 24% state income tax increase.
Here’s what the guy postimg at 8:32 AM doesn’t want you to know. When the pension funds were funded over 100% the Governed and legislature took money out of the pension funds to give to Abbott schools throughout the state. Add to that our poster at 8:32 AM never mentions that the pension managers hired by Christie just so happened to be one of Christies largest campaign doners. And lets not forget the Atlantic City “invesrment” Christie made with pension money so he could reep even bigger doner dollars. But guess what, that investment went bankrupt taking Billions of pension dollars down the toilet with it.
But christie got his donations and didn’t risk or lose a dollar doing so. Yes our Christie lapdog at 8:32 AM doesn’t want you to know that, as he lines his pockets with tsxpayer dollars from Christie.
Here is what the poster at 8:32 who hates government workers and unions will NOT tell you and he doesn’t want you to know.
The state of New Jersey first began using public money to finance government employee
pensions nearly a century ago, when the legislature established the Teachers’ Pension and Annuity
Fund and noted in the legislation creating the fund that its management would be governed on a sound,
“scientific (actuarial) basis.” Over the next seven decades the state added a host of other retirement
programs, including funds for police and fire personnel, prison officers, judges, and general state
workers. The state continued contributing to these programs on a regular basis, so that the state’s
pension system reflected, by 1995, a high level of funding with only modest unfunded liabilities of
$2.9 billion.
However, as fiscal pressures began to weigh on the state budget in the economic downturn of
the early 1990s, Trenton initiated a series of maneuvers to diminish the impact of financing pensions
on the state budget. Thus began a nearly two decades long period in which state politicians used
questionable accounting and actuarial practices to minimize the debts of the pension system, ignored
their obligation to fully contribute proper amounts to state worker pensions, and increased benefits to
workers even as the system’s debts were piling up. The result was a pension system that even today,
according to a June 27, 2013 study by the ratings agency Moody’s, remains one of the five worst funded
state pension systems in the country despite reforms the state put in place in 2011.
Accounting and funding traditional defined benefit pensions is a complex process that can be
difficult for the average citizen to understand, so it has not always been readily apparent to taxpayers
or government employees how actions in Trenton put the system at risk. In 1992, for instance, as the
state faced budget pressures from a continuing economic downturn, the legislature passed the
innocuous sounding Pension Reevaluation Act, signed into law by Gov. Florio, increased the projected
rate of return that it would achieve on its assets from 7 percent annually to 8.75 percent, making the
system’s future seem far rosier. Using this new formulation, the state estimated far higher future assets
in the pension fund and began cutting contributions in the present, in anticipation of those future
dollars. New Jersey thus decreased by a net $1.5 billion in budget years 1992 and 1993.
Two years later the state added new twists to its pension financing to further diminish state
contributions. Legislators passed a bill signed into law by Gov. Whitman which allowed the state’s
pension funds to switch to a method of allocating retirement costs for workers as they neared
retirement age, commonly described as ‘backloading,’ as compared to the system that the state
previously used, which allocated those costs evenly throughout a worker’s career. Although the state’s
new method, known as the projected unit credit (PUC), was legally acceptable, few other pension plans
used it because it defers costs and increased risks of underfunding.
The impact of the 1994 pension financing changes on the state’s budget and annual funding of
the pension system were substantial. This action reduced the state’s contributions into the pension
system by a combined $1.4 billion in fiscal 1994 and 1995.
Thanks to heady stock market gains in the mid-1990s, assets in the state’s pension funds
continued to increase despite these declines in government contributions. In 1997, seeking to further
lower the state’s costs, the legislature passed the misleadingly titled Pension Security Plan, signed into
law by Gov. Whitman, which allowed the state to issue $2.75 billion in pension obligation bonds under
the theory that the pension system could earn more by investing that money than it would have to pay
in interest costs on the borrowing. To further minimize the cost to the budget the state borrowed the
money by issuing deferred interest bonds which required no interest payments for 10 years but which,
as a result, made the borrowing more expensive in total to pay back. Over the life of the bonds, the
state will pay back more than $10 billion in interest and principal on the original $2.7 billion
borrowing.
The legislation allowed the state to take a ‘holiday’ from any contributions when the pension
fund had more than 100 percent of the assets needed to pay its accrued liabilities. Thanks in part to the
money from the pension borrowing, which made the pension system seem well-funded, the state
reduced or completely eliminated its own contributions to from fiscal 1997 through fiscal 2003. The
state, for instance, contributed no money at all to the Public Employees Retirement System and the
State Police Retirement System in these years. Meanwhile, it contributed just twice, in 1997 and 1999,
to the Teachers’ Pension and Annuity Fund.
Yep, just as I suspected, the state increased benefits to workers even as the system’s debts were piling up. Add in the fact that the benefits themselves are too generous and unsustainable to begin with – something the unions always forget to tell you – and it’ll be fair to expect some serious concessions before any tax hikes like the outrageous 24% increase in state income taxes and state sales tax of 10% and 25c/gallon gas tax hike that the Dems like Sweeney are pushing… The days of pigging out at taxpayer expense are finally over
To the cut & paste poster at 11:45, have you ever missed any of your pension checks? Ever had a healthcare bill go unpaid? You should be praising NJ taxpayers who already pay the highest state + local taxes in the nation to fund your unsustainable benefits. Guys coming up today won’t get any pensions just so you can keep your platinum-level health coverage and +$100k a year pension and yet you’re still whining and complaining while the rest of us bend over backwards getting taxed to death so you can continue to live off taxpayers
There no money, where’s it gonna come from. It’s been sunk in the swamps next to Rutherford
What’s wrong 1:43 pm, don’t like to hear the truth. Yes I copied and pasted FACTS from the NJ pension report. Sorry the FACTS annoy you. How about this fact, you are grossly overpaid for what little you do. Why do you feel it’s ok to rip off your clients. Funny your so concerned about the guys today while you screw your clients out of money from their retirement accounts. Hypocrite.
What our “I hate government workers” friend fails to point out in his rant about the state increasing benefits to workers even as the system’s debts were piling up Is the only union that got those increased benefits was the teachers union. Funny how he only tells part of the story so the people reading his comment mistakenly think ALL unions received increased benefits.
No one in private sector gets pensions anymore and many pay their own health insurance or most of it.
Christie should pay what he promised.l But in future major changes are in order.
Now sit down with that Big Burger and Fries and Beer in front of the couch potato boob tube. Drive up health care costs, with you high LDL etc , because you don’t have to pay out of pocket and complain when you don’t get everything for low cost.
‘,
4:07pm, what have you got against teachers? Yes, teachers and govt employees did get a 9% increase in benefits in 2001, but in 1999 the state approved a “20 and out” measure that allowed firefighters and local police to collect pensions equal to 50% of their pay after 20 years of service – a perk previously available only to the state police. Benefits added since 1999 have increased liabilities by more than $6.8 billion, according to official estimates as of 2009 which means they’re much higher today under new, tougher accounting standards. You seem to also forget that teachers on average retire at age 62 with a $47K a year pension, where as cops & fire (I can only assume you’re a cop given your complaints about the teachers’ union) on average retire at age 52 on a $57K pension. If you live to 82, that means an average cop gets 30 years at $57K or $1.7mn, whereas an average teacher gets 20 years at $47K or $940K.
Junior should ask the actuary at his union about page eight of this study: https://www.state.nj.us/treasury/pdf/FinalFebruaryCommissionReport.pdf. It says junior will get reduced benefits AND pay higher state & local taxes just so Dad can keep his same level of current benefits. In 20 years when the money runs out to pay junior’s benefits, the dad won’t care anyway. So why does the dad say it’s all a lie, hmmmm? No self-interest or conflict there, hmmmm?
Well, if our reps in Washington would stop standing idly by while NJ gets shafted (we get less than 65 cents back for every buck we send to DC) and increased our share of the pie (to say 75 cents on the buck), the budget and pension shortfalls would disappear… we are the biggest “donor” state in the nation…
11:53 pm I have NOTHING against teachers. What do you have against Public Safety employees,. Can you explain why you didn’t you even mention teachers and the teachers union until I called you out on the fact that teachers, both retired and active, got a 9% increase in benefits in 2001. Your rant has been just against Public Safety employees. I bet you have a family member who is a teacher.
Here is a another question for you Mr. I hate Public Safety employees, why have you chosen to ignore the Billions, yes Billions of dollars stolen from the various pensions. The fact is had those Billions NOT been stolen from the various pensions by the Governors and Legislatures we wouldn’t have a pension problem.
Hey 2:11 am, Interesting fictional story, and that’s exactly what it is, a story. The same story has been told about Social Security. If you think that’s gonna happen to Social Security or the NJ Pension system you are crazy. You sat by and let your elected officials throw money away for decades on social programs and special interests instead of holding them to spending the taxpayer dollars on what they were intended for, and now you are concerned? Welcome to the party.
Your past lack of concern is about to cost you, consider it a stupid tax, because you were stupid enough to trust the Democrats and Republicans to spend your money wisely and you didn’t care.
7:24am, in addition to enhancements for teachers and goverement workers, the post clearly states that in 1999 the state approved a “20 and out” pension enhancement measure that allowed firefighters and local police to collect pensions equal to 50% of their pay after 20 years of service – a perk previously available only to the state police. These benefits added since 1999 have increased liabilities by more than $6.8 billion, according to official estimates as of 2009. What’s crazy about that is that, even with the “20 and out” enhancement in 1999, the average PFRS pension as of 2013 was $57,000 per retiree who retired at an average age of 52. That’s $10,000 per year more than the average retired teacher who gets $47,000 a year after retiring at an average age of 62. So 10 years more in retirement if you live to the same age, i.e. police & fire get average $1.7mn in retirement checks versus only $940,000 for teachers and even less for PERS retirees. Nice pension enhancement for police & fire in 1999 that you conveniently ignored.
7:24am, if the pensions were 401(k)-style defined contribution plans then no politician would be able to interfere with them. Can you please post facts about “Billions of dollars stolen from the various pensions”? If you have evidence of theft you should report it. Billions is definitely possible from retirees falsely claiming early retirementt and disability payments, that’s what happened in NY with the LIRR. Can you give evidence of billions stolen, my friends in the Federal Prosecutor’s office would love to talk with you?
11:18am, you’re saying page eight of this report is a fictional story ? https://www.state.nj.us/treasury/pdf/FinalFebruaryCommissionReport.pdf Is that what you tell the young guys coming up? This page should be posted in teacher’s offices, municipal offices, fire houses and precinct offices across the state so the current workforce can see what their retired former colleagues aren’t telling them.
1:51 AM said,
if the pensions were 401(k)-style defined contribution plans then no politician would be able to interfere with them. Can you please post facts about “Billions of dollars stolen from the various pensions”?
What makes you believe that switching to a 401k defined contribution plan would be safe from politicians? 401ks are stolen from often, don’t https://www.cbsnews.com/news/401k-theft-7-signs-your-employer-is-stealing-your-savings/
1:51 AM said,
.
if the pensions were 401(k)-style defined contribution plans then no politician would be able to interfere with them. Can you please post facts about “Billions of dollars stolen from the various pensions”?
.
What makes you believe 1:51 AM that switching to a 401k defined contribution plan would make the money safe from politicians? Private 401ks are stolen from often by employers, don’t believe me check out this link.
.
https://www.cbsnews.com/news/401k-theft-7-signs-your-employer-is-stealing-your-savings/
.
As you requested here is just one example of Billions stolen from the pension system. The following is a quote directly from the January 2014 New Jersey Pension Study on page #5 from the second paragraph.
.
https://watchdog-newjersey.wpengine.netdna-cdn.com/files/2014/01/CSI-NJ-Pension-Study-2014.pdf
.
In 1992, for instance, as the state faced budget pressures from a continuing economic downturn, the legislature passed the innocuous sounding Pension Reevaluation Act, signed into law by Gov. Florio, increased the projected rate of return that it would achieve on its assets from 7 percent annually to 8.75 percent, making the system’s future seem far rosier. Using this new formulation, the state estimated far higher future assets in the pension fund and began cutting contributions in the present, in anticipation of those future dollars. New Jersey thus decreased by a net $1.5 billion in budget years 1992 and 1993.
.
Just this one action by Governor Florio cost the pension system over 6 Billion in todays dollars. How? I am glad you asked. Had that 1.5 Billion been invested in the market earning an average return of 7% using the rule of 72 the value of that money would be over 6 Billion dollars today. That is a fact.
( if you are unfamiliar with the term rule of 72 please refer to this web site.)
.
https://www.investopedia.com/ask/answers/04/040104.asp
This should be included in financial reports to residents from the towns and counties, posted in libraries, train and bus stations and voting booths across the state so the residents can see how the Governors screwed the government workers.
Interesting, same amount then as the “20 and out” pension enhancement measure approved by the state in 2009 that allowed firefighters and local police to collect pensions equal to 50% of their pay after 20 years of service – a perk previously available only to the state police. These benefits added since 1999 have increased liabilities by more than $6.8 billion, according to official estimates as of 2009
frankly, the fact we assume an annual 7.95% annual rate of return on NJ Pension plan assets is troubling, it should be closer to 5%…. which will increase the unfunded liability further. Also, if we were being honest and used the latest mortality figures for NJ, our unfunded liabilities would increase dramatically as well because retirees are living at least 5-6 years longer on average than we currently assume… little pension gimmicks that add up to a lot but don’t get mentioned so as not to scare potential private sector employers from relocating their employees to NJ
Uh, changing the assumed rate of return is not technically stealing… perhaps it reduced the amount required for state contributions to the fund, but forgive me for stating the obvious: public sector unions asked for enhanced benefits under Florio and Whitman, which they received….
Sorry 9:47 AM but your wrong, there were NO pension enhancements when Governor Florio changed the assumed rate of return so he could lower tbe the amount he was supposed to contribute in 1993 & 1993 by 1.5 Billion dollars so he could spend it on other things. That’s theft in my book. And as I stated that 1.5 Billion dollars invested in 1993 & 1993 with a return of just 7% would be worth over 6 Billion dollars today. If you dont agree with my calculations then Tell me where I am wrong!
Yes I agree 9:39 AM assuming an annual 7.9% rate of return on NJ Pension plan assets is troubling, it should be closer to 6.2%…. which is below the average rate of return of the S&P 500. From 1928 through 2014, the S&P 500’s compound rate of return was 9.8%, enough to transform a $100 investment at the start of 1928 into $346,261 over 87 years. See Market Watch Link below as my reference.
.
https://www.marketwatch.com/story/understanding-performance-the-sp-500-in-2015-02-18
Apparently you aren’t aware 9:35 that anyone that retired under the “20 and out” pension plan for firefighters and police wirth 50% of their pay after 20 years of service is NOT entitled to any medical benefits when they retire. I would expect you to be praising that retirement plan not complaining about it!
9:47 am said….Uh, changing the assumed rate of return is not technically stealing…
So 9:47 AM when the Bank you have your Certificate of deposit in says you will get a 3% return on your investment but they only àctually give you a 2% return what would you call that?
9:35 said ……Interesting, same amount then as the “20 and out” pension enhancement measure approved by the state in 2009 that allowed firefighters and local police to collect pensions equal to 50% of their pay after 20 years of service – a perk previously available only to the state police. These benefits added since 1999 have increased liabilities by more than $6.8 billion, according to official estimates as of 2009.
Care to provide some proof to support your lie above….opps my bad I ment statement.
11:43, how many of those “20 and out” retirees since 1999 got medical benefits as part of a disability settlement? As for your previous comment about S&P returns, are you suggesting that NJ Pension plans should have all $80bn of their assets invested only in the S&P 500? No foreign stocks, no US treasuries, municipal or corp bonds,no real estate, no foreign bonds, no infrastructure, just straight US stocks? And as for no pension enhancements exactly when Florio’s administration changed their assumed rate of return, who said anything about those enhancements coming exactly in 1993?
June 14, 2015 at 12:08 pm
Once again i will break down your comments to answer your questions
.
1) how many of those “20 and out” retirees since 1999 got medical benefits as part of a disability settlement?
.
Your question makes no sense. A disability retirement as a result of an on the job injury and the retirement of an individual at 20 years have nothing to do with each other.
.
1) As for your previous comment about S&P returns, are you suggesting that NJ Pension plans should have all $80bn of their assets invested only in the S&P 500? No foreign stocks, no US treasuries, municipal or corp bonds,no real estate, no foreign bonds, no infrastructure, just straight US stocks?
.
I used the S & P 500 as an example of market returns. When did I ever suggest that all of the pension funds should be only invested in the S & P 500? The pension funds should be spread over the 7 classes of investments and allocated among the various investments within those classes.
.
3) And as for no pension enhancements exactly when Florio’s administration changed their assumed rate of return, who said anything about those enhancements coming exactly in 1993?
.
So you admit that when Governor Florio changed the assumed rate of return in 1993 there were no pension enhancements associated with that change. Which means the governor used his power to improperly take money away from the pension system by not making the proper contributions to the pensions. Had the 1.5 Billion dollars that was supposed to be put into the pension system by Governor Florio be made it would be worth over 6 Billion dollars today, so now tell me where I am wrong!
and yet here we are… no money, high taxes and broken solutions like more taxes. It’s all the Governors’ fault.
Welll 11:31 AM I see that you still can’t bring yourself to admit that the problem is NOT the government employees fault but what was done by the Governors of the State huh.
.
And you still can’t admit that the math that says 1.5 Billion dollars that should have been invested into the pension systems in 1992 and 1993 would be worth over 6 Billion dollars today. That’s simple math, why can’t you comprehend that?
.
If it’s not the Governors fault then who’s fault is it? And please back your statement up with facts and provides a link the documentation of those facts. I will be eagerly awaiting your reply.