By Post Editorial Board
June 14, 2015 | 5:55pm
Breaking a widely touted promise to public workers isn’t illegal, New Jersey’s Supreme Court ruled last week. That’s good news for Gov. Chris Christie — and may be even better news for overburdened Garden State taxpayers.
Because it may prove a much-needed slap in the face that forces government-worker unions — who expected the court to back them — to return to the negotiating table.
The justices ruled Christie can’t be forced (absent voter action) to make his promised $2.5 billion payment this year to the badly under-funded (by $37 billion) pension system. That budget-buster would’ve forced massive layoffs and service cuts.
This was one of those promises that must be broken. Because pols can’t pat themselves on the back for making commitments that they have no idea how to pay for.
Which was pretty much the case with Christie’s 2011 bipartisan pension reform: It made real changes, but far short of the system-saving “model for America” he called it. The “fix” was just the first 100 yards of a marathon.
https://nypost.com/2015/06/14/new-jersey-unions-need-to-face-failed-pension-facts/
in the end the state house will pay. but it,s real funny that they ok’ed two bill on the mall in the swamp. the dream , who,s dream was that. what a scam, and thats tax money on that.
Both sides are liars.
Not sure why state & local taxpayers are on the hook for any of this when 6 out of every 7 workers in NJ gets no public pension and no subsidized healthcare until Medicare/Medicaid at 65. A lot of the money that was not paid in to the public worker pension funds went to fund pet projects of unions like Xanadu/American Dream, so the pension underfunding issue should just be an internal issue between the unions and their Dem lackeys in Trenton…. Oh wait, now I get it! The reason the union toadies like Sweeney and Sarlo want to raise state taxes, sales and gasoline taxes is to pay for all of the unsustainable benefits promised to public sector workers even though we already can’t even afford them as it is with the highest state + local taxes in the land already! They want to keep feeding the giant black hole of corruption, graft and union vote buying without any questions asked. So why throw more good taxpayer money at the bad vampire squid public sector unions who are already bankrupting the state? They need to make real and meaningful concessions before an extra dime of tax revenues is raised.
Christie is on to something here, failed pension math. Our public pension plans assume 8% annual returns- unadjusted for inflation – when the current 30 year US treasury rate is 3.06% and a 30Y AAA muni yields 3.41%; the pension plans assume people will die 5 years earlier than they actually do because they use incorrect mortality data, and the pensions paid are based off of inflated salaries and total comp for final pension calculation. NJ will be shifting to the CA model of capping pensionable income at $110,000 and then limiting maximum pensions to 50% of that. They will also be moving new employees to defined contribution type pension plans, and raising the contribution amounts from employees towards their own pensions and health care benefits. Roadmap for change is here https://www.state.nj.us/treasury/pdf/FinalFebruaryCommissionReport.pdf
“making commitments that they have no idea how to pay for”…. who would do such a thing? Not politicians looking for union votes of course? Not union negotiators and their full-time labor lawyers looking to squeeze as much blood from taxpayers in CBA contract negotiations vs. part-time Council members in Villages like Ridgewood who used to be part of the union? Not possible, right? Thankfully Christie didn’t get any union votes, so he doesn’t owe them anything.
Sorry 8:54 AM but there is no failed math here. It’s a pure case of theft of funds by the current and past Governors by NOT making the required pension contributions. Here are the facts from the NJ Pension Study dated January 2014! – see link below.
https://watchdog-newjersey.wpengine.netdna-cdn.com/files/2014/01/CSI-NJ-Pension-Study-2014.pdf
1) 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.
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HAD THAT 1.5 BILLION BEEN INVESTED IN THE PENSION SYSTEM IT WOULD BE WORTH OVER 6 BILLION DOLLARS TODAY!
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2) 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.
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HAD THAT 1.4 BILLION BEEN INVESTED IN THE PENSION SYSTEM IT WOULD BE WORTH 6 BILLION DOLLARS TODAY! WE ARE UP TO 12 BILLION IN LOST DOLLARS JUST BY THESE TWO ACTIONS.
3) 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, 5 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.
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SO FOR 7 YEARS THE STATE MADE NO CONTRIBUTIONS TO THE PUBLIC EMPLOYEES AND STATE POLICE PENSION SYSTEMS AND MADE ONLY 2 OUT OF 7 REQUIRED PAYMENTS TO THE TEACHERS PENSION SYSTEM. HOW MANY BILLIONS OF DOLLARS WERE LOST BECAUSE OF THIS 15 BILLION – 20 BILLION?
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4) From fiscal 2006 to fiscal 2011, the state contributed just $2.339 billion to its pension funds
though its actuaries calculated that the state should have put $13.1 billion into the system to adequately
fund it during that period.
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ANOTHER 10 BILLION PAYMENT NOT MADE OVER AN 11 YEAR PERIOD. WE ARE UP TO 32 BILLION DOLLARS THAT SHOULD CURRENTLY BE IN THE COLLECTIVE STATE PENSION SYSTEMS THAT IS NOT THERE BECAUSE IT WAS NEVER INVESTED LIKE IT WAS SUPPOSE TO BE.
8:59 AM clearly you have no idea what your talking about.
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The various village unions rarely involved full-time labor lawyers in CBA contract negotiations. Those negotiations were done by employees who were in a specific union.
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The fact is that the town always used full time labor lawyers from Grotta, Glassman and Hoffman labor attorneys, specifically Joan Foster, Beth Hinsdale and Kenneth Rosenberg and the Village Manager for every negotiation with union employee negotiators, not Council members.
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Stop spreading lies about the village negotiations with the unions.
he will be told in the end that he must pay or a cop will give him a beating with his or hers night stick.
Yep and that cop will go straight to federal court for denying the citizen his or her constitutional rights… federal courts aren’t NJ or Bergen County kangaroo courts. BTW, name the cops that would violate their oaths to serve and beat a citizen for expressing their free speech rights ? That cop should be fired now.
9:45, the post clear states the facts on the failed math: Our public pension plans assume 8% annual returns- unadjusted for inflation – when the current 30 year US treasury rate is 3.06% and a 30Y AAA muni yields 3.41%; the pension plans assume people will die 5 years earlier than they actually do because they use incorrect mortality data, and the pensions paid are based off of inflated salaries and total comp for final pension calculation.
yeahhhhhhhhhhhhhhhh, right.
There you go again 4:38 PM making false statements. Lets break your comment down again…..
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1) Our public pension plans assume 8% annual returns- unadjusted for inflation – when the current 30 year US treasury rate is 3.06% and a 30Y AAA muni yields 3.41%;
Answer: Are you 4:38 PM suggesting that all of the money in the New Jersey Pension system should be invested in only 30 year US treasury notes at 3.06% and 30Y AAA municipal notes at 3.41% and none of the money should be invested in domestic or foreign stocks, corporate bonds, real estate, foreign bonds or infrastructure?
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2) the pension plans assume people will die 5 years earlier than they actually do because they use incorrect mortality data.
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Answer: Ok Mr. smart guy, where is your reference, back up your statement with proof, or are we just suppose to take your word that the people running the pensions are stupid and they are using incorrect mortality data and only you are smart enough to know better……
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3) Once again Mr. smart guy, do you have any proof to back up your statement ” the pensions paid are based off of inflated salaries and total comp for final pension calculation.” Lets see you back up your rhetoric with some documentation or proof of some kind. Or are we again just suppose to take your word for it. Sorry that doesn’t cut it . Bring on the proof or shut the hell up!
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Here you go https://www.soa.org/news-and-publications/newsroom/press-releases/society-of-actuaries-releases-new-mortality/ The updated reports (which NJ will adopt from June 30, 2015) show that among males age 65, overall longevity rose 2.0 years from age 84.6 in 2000 (what NJ currently uses) to age 86.6 in 2014 (will be applied as of June 30, 2015). For women age 65, overall longevity rose 2.4 years from age 86.4 in 2000 to age 88.8 in 2014. Based on the data, the SOA estimates there could be a 4% ~ 8% increase in private pension plan liabilities, proving once again that you are wrong. Here’s a recent TIME magazine explanation if that is more your speed… https://time.com/money/3913718/living-long-ruin-retirement/