A warning for NJ? In Greece, they are now rationing pensions.
Greek Pension Rationing Begins; Poll Shows Tsipras Backedby Eleni ChrepaElliott GotkinePaul Tugwell
July 1, 2015 — 3:13 AM EDTUpdated on July 1, 2015 — 4:44 AM EDTIt’s a day of fresh indignities for the people of Greece.
About a third of the nation’s depleted banks cracked open their doors after being closed for three days. But all they did was ration pension payments, hours after the country became the first advanced economy to miss a payment to the International Monetary Fund and its bailout program expired.
While Greek retirees receive a fraction of what they’re due, European officials resume efforts to prevent the economy from cratering after more than five years of crisis-fighting. Finance ministers weigh a new aid bid from Prime Minister Alexis Tsipras and European Central Bank policy makers discuss whether to maintain their emergency lifeline.
“People are just completely fed up,” said Andrea Montanino, a former IMF executive board member who now heads the global economics program at the Atlantic Council in Washington.
The first poll before a snap referendum Sunday indicated most people back Tsipras. The survey, in Efimerida ton Syntakton newspaper, showed 54 percent would vote “no” — rejecting austerity in exchange for aid — and 33 percent would vote “yes” — accepting austerity as the price of staying in the euro. The poll was conducted by ProRata, which surveyed 1,200 people June 28-29 with a margin of error of 2.8 percent.
Turned Away
On the third day of capital controls, a few dozen pensioners lined up by 7 a.m. at a central Athens branch of the National Bank of Greece, an hour before opening time. They were to receive a maximum of 120 euros ($133), compared with the average monthly payment of about 600 euros. Many left with nothing after the manager said only those with last names starting with the letters A through K would get paid.
“Not only will I have to queue for hours at the bank in the hope of getting 120 euros, but I’ll have a two-hour round trip,” said Dimitris Danaos, 77, a retired local government worker who was making the bus journey from his home outside the Greek capital to the suburb of Glyfada. “And I fear that this situation won’t be over anytime soon.
Taxing the 1% won’t cover the under-funding gap, you’d either have to raise state income taxes by 29% overall or raise the NJ sales tax to 10% just to maintain existing benefits…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 funds—$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% income tax increase on every other taxpayer. As a matter of political reality, potential tax increases of this magnitude would first be preceded by substantial benefit reductions. If existing pension and retiree health benefits are considered beyond reach, the remaining options would involve actions such as reducing active employees’ health benefits to the equivalent of Bronze-level coverage under the Patient Protection and Affordable Care Act (“ACA”) and eliminating retirement benefits for employees hired after 2010.
Very few private sector jobs offer pensions anymore, and subsidized health care coverage until age 65 is only for public sector workers. So why are my taxes going to subsidize these things for public workers, some of whom make more than the median household income in Ridgewood? The original contract to provide a pension and healthcare coverage for those in public service was based off of trade-off: lower wages in return for retirement security. That trade-off no longer holds true, and because retirees are living longer in to their mid-80s on average, the pension and healthcare bills are piling up… and yet these guys in Trenton just want to keep on raising my taxes?
JUNE 21, 2015, 10:43 PM LAST UPDATED: SUNDAY, JUNE 21, 2015, 10:48 PM
BY SALVADOR RIZZO
STATE HOUSE BUREAU |
THE RECORD
Hundreds of thousands of public workers began paying more for their health care benefits after Governor Christie overhauled the system in 2011 — a massive shift that would save New Jersey taxpayers $3 billion over 10 years, administration officials said at the time.
But just four years in, instead of the expected savings, state and local taxpayers are staring at the prospect of footing more of the bill for those medical coverage plans.
The reason: Tucked inside the sprawling 2011 reform law is a sunset provision that says the higher payments required of public workers will expire in four years. After that, the provision says, all health care costs must again be negotiated at the bargaining table as union contracts come up for renewal.
For much of the workforce, that change kicks in at the end of this month.
So New Jersey’s powerful labor unions are gearing up for contract negotiations at all levels of government — from the state to counties, municipalities and school boards — with one unifying goal: to reduce health insurance costs as much as possible for their members.
The New Jersey legislature, looking to solve a budget crisis back in 1992, passed a bill that changed some of the accounting principles of the state’s government employee pension system. The technical changes, little understood at the time, made the system seem in better financial shape than it actually was, allowing the legislature to reduce contributions for pensions by $1.5 billion over the next two years. Legislators seized those extra dollars and redirected them into other spending.
Jersey officials could manipulate their pension system because local governments have latitude in how they run their own retirement plans. So what they did was not unique. Around the country, state and local officials have increasingly discovered over the years that they can exploit the complex and sometimes ill-defined accounting of government pension systems, as well as loopholes in their own laws governing those pensions.
Over time, elected officials came to promise workers politically popular new benefits without setting aside the money to pay for them, declared “holidays” from contributions into pension systems and changed their own accounting systems midstream to make the systems seem better funded — all just ways of passing obligations on to future taxpayers. In the process, government pension systems became one of the chief vehicles that state and local politicians used to massage their budgets.
Now we face the consequences. Our elected representatives played a deceptive game of chicken with pension funds. And now the chickens have come home to roost.
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.
AMES, Iowa — After winning a major ruling at the state Supreme Court allowing him to cut payments New Jersey’s pension system, Governor Christie had defiant words for labor leaders and Democratic leaders in the state Legislature on Thursday.
Christie, a Republican, called on public workers to accept reductions in their health benefits if they want to secure more funding for the troubled pension system. It is the only way forward, Christie said, because he will not raise taxes to fund the retirement system. (Rizzo/The Record)
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.
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 ruledon 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)
Posted by Matt Rooney On June 09, 2015 0 Comment
By Matt Rooney | The Save Jersey Blog
Did you hear that noise, Save Jerseyans?
It’s thousands of public sector union heads exploding in unison.
The New Jersey Supreme Court issued an 5-2 opinion in the pension payment case (Christopher Burgos v. State of New Jersey) on Tuesday morning, reversing a lower court’s directive to the Christie Administration to make a billion dollar pension payment. Click here to read it. For a little background on the Christie/pension payment controversy, click here.
The majority opinion (which did not include Chief Justice Rabner) relied on the text of the Debt Limitation Clause:
“No matter how worthy the cause to be advanced by Chapter 78, the Debt Limitation Clause speaks directly to this situation and, in pertinent part, commands:
“‘The Legislature shall not, in any manner, create in any fiscal year a debt or debts, liability or liabilities of the State, which together with any previous debts or liabilities shall exceed at any time one per centum of the total amount appropriated by the general appropriation law for that fiscal year, unless the same shall be authorized by a law for some single object or work distinctly specified therein. . . . [N]o such law shall take effect until it shall have been submitted to the people at a general election and approved by a majority of the legally qualified voters of the State voting thereon.’”
“The purpose to be achieved by the Debt Limitation Clause dovetails with the Framers’ intent for a fiscally responsible annual budget process,” the majority continued. “Efforts to dedicate monies through legislative acts other than the annual appropriations act have no binding effect. They are read as impliedly suspended when contradicted by the budgetary judgment of the presently constituted Legislature acting in concert with the Governor in their constitutionally prescribed budget formation roles. Those debt limitation and appropriations-related constitutional clauses conflict with the contractual language of Chapter 78 and thwart plaintiffs’ impairment claims.”
JUNE 8, 2015, 10:06 AM LAST UPDATED: MONDAY, JUNE 8, 2015, 2:28 PM
BY SALVADOR RIZZO
STAFF WRITER |
THE RECORD
The state Supreme Court will hand down its ruling Tuesday in a major legal battle between Governor Christie and public-sector unions who say his move to cut $1.57 billion from pension funding violated workers’ rights.
The high court’s decision will be released at 10 a.m. Tuesday, according to a news release from state judiciary officials.
The ruling is expected to have a far-reaching impact on New Jersey’s state finances and workers’ rights. At stake is a pension-reform law Christie signed in his first term, which pledged large payments to the strapped pension system for seven years until the funds regained their health. Christie is asking the court to strike down his law during difficult economic times.
Christie’s pension reform was once his signature legislative achievement, a bipartisan agreement that raised worker costs but also pledged more tax dollars to rescue the pension system from collapse. The Republican governor said it was government at its best, protecting 770,000 pension beneficiaries. To this day, Christie boasts about his “pension reform” efforts on frequent trips out of state as he explores a presidential run.
Pension reform is like the weather: Everybody talks about it, but nobody does anything about it.
Despite years of dire warnings that pension shortfalls could become the monster that ate state budgets, little progress has been made to reduce the gap. Since changes must occur, it’s time to understand the causes of the crisis so past mistakes will not be repeated.
Pensions in Pennsylvania and New Jersey are staggeringly underfunded. This misery, though, has lots of company. Recently, the Dallas Morning News wrote an editorial about the looming crisis in Texas, which it called “an embarrassment.”
Not being alone is no excuse. Public-sector pensions are promissory notes between the public, through their elected representatives and government workers, for future payments. Unfortunately, politicians have been very willing to fail their fiduciary responsibilities.
Pension plans are underfunded because governing bodies have underfunded them. Contractually agreed-to plan payments have been diverted to other uses, and the trend continues. In New Jersey, a state court recently ruled the Christie administration violated a 2011 pension-reform law by not making this year’s required pension payment.
Let’s be clear: The failure to make necessary pension payments was not because of an inability to pay. The funds that should have gone to the pension plan went, instead, to fund other programs and to keep taxes from rising. The fiscal capacity to fund the pensions was there. The political will was not.
Who got the billions of dollars that didn’t go into the pension plans? The beneficiaries were individuals and businesses who paid lower taxes, and programs that received extra funding. In other words, everyone, which is why this is a politically feasible transfer of income.
‘Shocked’ by budget address, Sweeney and Senate Dems upbraid Christie’s pension plans
TRENTON — Senate Democrats, calling the Republican’s new proposal to overhaul the pension and benefit system a “some roadmap written on a cocktail napkin,” roundly condemned Gov. Chris Christie’s budget address today for failing to lay out a vision for the state’s economy and finances in 2016. (Brush/PolitickerNJ)
Assembly Dems question administration budget big on pension fixes but short on other issues
TRENTON — Assembly Democrats bashed Gov. Chris Christie’s budget address today for being heavy on talk about fixing a broken public pension and benefit system — but virtually nonexistent on anything else. (Brush/PolitickerNJ)
PBA head challenges Christie to ‘look beyond presidential ambitions’ on pension front
Following up on an earlier statement clarifying that his organization would “never support freezing pensions for our members who have continued paying their required pension contributions while government has skipped their legal responsibility to do so,” the president of a major public sector union in New Jersey further distanced himself from Gov. Chris Christie’s new proposal to overhaul the state’s pension and benefit system. (Brush/PolitickerNJ)
Firefighter Rep Donnelly goes after NJEA leadership after Christie budget speech
TRENTON – Gov. Chris Christie won the support of key Building Trades unions’ reps in his first term by seizing on fractures between those private sector unions and public sector labor.
This afternoon, his budget address sparked a fight among public sector reps, as New Jersey State Firefighters Mutual Benevolent Association (NJFMBA) President Eddie Donnelly trained his immediate sights on the New Jersey Education Association (NJEA). (Pizarro/PolitickerNJ)
“There is as much as a $4 trillion gap between what states have promised its public workers in retirement pensions and what has actually been set aside and invested in order to pay for them.
What would you do to solve the pension crisis?”
Most realize the problems, but they don’t want tax increases or spending cuts to fix them.
Scott Shackford | February 6, 2015
There is as much as a $4 trillion gap between what states have promised their public workers in retirement pensions and what they’ve actually set aside and invested in order to pay for them. There are enough reasons this has happened to count as a survey question on the most boring episode of Family Feud ever—states and cities didn’t set aside enough money, employees didn’t contribute enough, and guaranteed investment returns are overestimated, among many other problems.
But what does the average American think about the pension crisis and what would they do? A small number of communities like Phoenix, Arizona, and San Jose, California, have put pension reform in the voters’ hands, with mixed results. In our latest Reason-Rupe poll, we decided to focus almost entirely on the pension crisis, asking Americans how seriously they view the problem and what sort of trade-offs they would accept to fix it.
Yes, Americans Are Concerned About the Pension Crisis
Pension worriers will be pleased to hear that Americans are at least paying attention. A full 72 percent of those polled are either “very” or “somewhat” concerned about state and local governments’ ability to fund the pensions they’ve promised to public employees. A similar number (74 percent) are concerned that state or local governments will raise taxes in the future in order to meet these pension obligations. When asked to prioritize dealing with the pension crisis, 35 percent said pension reform should be a top priority, while 41 percent said pension reform should be an important but lower priority.
Actually tackling the pension crisis is a much more complicated affair. The poll asked participants to consider a host of different possibilities—raising taxes, reducing services, capping maximum pension payments, requiring workers to pay more, and transferring public employees to 401(k)-style defined contribution plans, rather than guaranteed pensions.
The most consistent response is probably also the most obvious: Americans want pension reform solutions that push public employees to play a greater role in their own retirements rather than relying on taxpayers to bail them out. Those surveyed were significantly opposed to raising taxes (74 percent) or cutting government services (77 percent) in order to fix funding problems with public employee pensions. Instead, when given a list of choices, participants strongly supported (82 percent) requiring public employees to contribute more to their own retirement funds. When asked to rank potential solutions, “Require current employees to contribute more toward their own pensions and benefits” blew every other option out of the water with 63 percent of the vote as the first choice. No other option even hit double digits.
But that list of solutions assumed states and cities would keep the existing pension systems and salvage them. The Reason-Rupe poll also asked whether participants would like to switch public employees from pension funds to 401(k)-style defined contribution retirement funds. The answer was yes. The poll asked participants whether they would favor such funds for current public employees and a separate question for just future hires. In both cases, the majority said yes, but support for shifting over future employees was notably higher (67 percent) than for current employees (59 percent).
But when comparing the two types of retirement systems in different ways, differences in responses were notable. The poll asked participants a question where the benefits of switching to a 401(k)-style plan were described (“401k style programs give employees the flexibility to take the plan with them from job to job and are less costly to the taxpayer”) as well as the concerns about switching to a such a plan (“benefits would not be guaranteed and would depend on how well the employees saved and how the market performed”). When those descriptions were used to ask whether they supported or opposed a shift to 401(k)-style programs, 66 percent still supported the shift. But when asked to consider a shift to 401(k)-style programs given only the concerns, support dropped to 50 percent. And when people polled are asked if they’d support shifting to 401(k)-style programs if it meant “breaking a contract made with public employees when they first accepted their jobs,” support plummets down to 38 percent. When asked to trade off a shift to 401(k)-style programs with either raising taxes or reducing services to pay for retirement, support for 401(k) programs climbed back up (66 percent and 59 percent). Those polled even opposed increasing taxes or reducing government services in order to pay the current pension benefits for already retired employees.
The lesson here: Americans don’t necessarily want to break an agreement with public employees or push them into retirement plans where the future benefits are not guaranteed, but they are willing to do so in order to avoid additional tax increases or reductions in government services.
“But what do the millennials think?” You may ask. Do they understand the crisis they’re getting themselves into as they take up a larger and larger chunk of the workforce? Yes and no. Those polled under the age of 30 do have concerns, but the numbers are more muted than for older generations. The number of millennials who say they’re concerned about pension funds drops down to 59 percent, and they’re less likely to see dealing with pension problems as a top priority (only 25 percent). Nevertheless, millennials also supported shifting public employees to 401(k) plans and requiring employees to contribute more into their retirement plans. Variations in responses by millennials may indicate more that they have less experience in these workplace issues or with dealing with taxation impacts rather than any sort of generational differences. For example, millennials were more likely to believe (34 percent) that public employee and private employees received fundamentally the same retirement benefits, something older workers know is untrue (public employees are widely understood to generally get better retirement benefits). They were also the only age group where a majority (59 percent) believed that pension calculations for retiring employees should be increased by using unused sick time, vacation pay, and specialty pay, a system that has led to the abuse known as “pension spiking,” with public employees getting six-figure annual pension guarantees. When we break down the millennial age demographic further, millennials’ attitudes start to shift toward the overall average the older they are, more closely aligning with the over-30 crowd.
Public Employees Are Not in Complete Denial
The poll asked respondents whether they worked in the public or private sector (or if they were retired from the public or private sector) so their responses could be compared. Public employees accounted for 17 percent of the working respondents and 36 percent of the retired respondents. Public employees are certainly paying attention to the impacts of bankruptcy in cities like Detroit and Stockton, California. Public employees are more concerned (80 percent) about the state of pensions than private employees (67 percent). It’s understandable they’re concerned, since they are the most directly affected should their cities or states fail to address underfunding.
DECEMBER 10, 2014, 9:14 AM LAST UPDATED: WEDNESDAY, DECEMBER 10, 2014, 4:36 PM
BY GEOFF MULVIHILL
ASSOCIATED PRESS
New Jersey’s three largest pension funds for public workers sued Gov. Chris Christie on Wednesday over his decision to cut contributions earlier this year.
The lawsuit was filed in state chancery court on behalf of the Public Employees Retirement System, Police and Fire Retirement System and the Teachers’ Pension and Annuity Fund. Unions representing public workers previously sued over the contributions cut after a surprise fiscal crunch this year.
“The unions were doing their thing on behalf of their membership,” said Tom Bruno, chairman of PERS. “Our thing is a little different. Ours is a matter of trusteeship.”
The funds also represent nonunion public workers. Bruno says the three members of the PERS board who represent Christie’s administration abstained from the vote on whether to sue and the state attorney general’s office recused itself from the issue.
One key accomplishment of Christie’s first term as governor was an agreement to catch up funding for pension funds. For decades, governors had skimped on or skipped pension payments. As part of the agreement, retired public employees saw their cost-of-living increases suspended and current employees had to increase their retirement contributions.
DECEMBER 7, 2014 LAST UPDATED: SUNDAY, DECEMBER 7, 2014, 12:10 AM
BY JOHN REITMEYER AND MELISSA HAYES
STATE HO– USE BUREAU |
THE RECORD
New calculations show that the pension fund covering retirement benefits for most of New Jersey’s public employees is projected to go broke in a decade, not the 30 years officials had estimated just months ago.
The fund that covers retirements for judges and court workers has less than 10 years.
And the largest of New Jersey’s pension funds, the one for teachers, will run out of money in 13 years.
The actual values of the pension funds have not changed, and the investments are still growing at rates much better than managers had predicted. What did change was the formula used to account for how much money will be needed to cover benefits for future retirees. When the impact of that change was made public in a Wall Street analysis last month, the differences were stark.
The new projections are not the most conservative, but experts say they are more realistic than those New Jersey had been making before it switched to the new accounting method. But they remain only estimates, and a number of factors could change the depletion dates, including how much money is deposited in the system in the future and whether investments can beat the anticipated |returns.
Oddly, both the Christie administration and the unions fighting in court to force the governor to restore billions in payments to those funds have embraced the new figures.
New Jersey union complaint on pension ‘ethics’ is full of holes
by Dan Primack
September 15, 2014, 2:30 PM EDT
Before the AFL-CIO files another ethics report to embarrass Chris Christie, it should double-check its dates. And the law.
The New Jersey State AFL-CIO last week filed an 11-page complaint with the State Ethics Commission, referring to what it called “a disturbing pattern of big contributions to Christie for Governor or Republican organizations by firms handpicked to manage hundreds of millions in state pension funds.” If the union’s goal was to generate headlines that would embarrass a political foe, then the AFL-CIO did its job. If it wanted to make credible allegations of wrongdoing, then it failed miserably.
At issue are New Jersey laws that prevent that state’s public pension system from investing in certain types of funds whose managers have contributed to in-state political candidates or parties during the 24 months prior to receiving the commitment. In other words, ‘pay-to-play’ restrictions designed to prevent pension officials (and their bosses) from giving new business to political patrons.
AFL-CIO believes it has found five examples of such behavior. The problem is that at least three of them involve investment decisions made before Christie entered office. Moreover, the political contributions came years after the pension’s investments were made, and were made by individuals who don’t actually fall under the rule’s purview.
For example, the complaint cites:
Gleacher and Company, which manages such monies even though William Sapoch, who is listed as an investment management professional with the firm, gave $3,800 in December 2012 to Christie for Governor.
According to state investment records, the only state pension monies managed by Gleacher & Co. relate to Gleacher Mezzanine Fund II, a private debt fund that was raised back in 2006. Hard to imagine how a political donation six years later would have impacted that decision (which was made during the Corzine administration). It also is worth noting that William Sapoch appears to have been a financial advisor with Gleacher who never worked on the mezzanine business — a business that actually spun out from Gleacher (and renamed itself Arrowhead Mezzanine) back in 2010.
Here’s another:
JP Morgan, a $3,800 contribution from Robert F. Cummings, listed as the vice chairman for Investment Banking, in January 2013 to Christie for Governor and a $15,000 to the State Republican Party by Greg Onken, who is listed as a managing director and financial advisor.
New Jersey has multiple investments in JP Morgan-related securities but most of it is in publicly-traded equities and bonds that do not fall under the New Jersey statute (because these are passive holdings that do not involve the bank “recommending investment management decisions”). The only exception is a venture capital fund investment called JP Morgan Venture Capital III, which was raised in 2006 and was not managed by either of the aforementioned JP Morgan professionals (Cummings didn’t even join JPMorgan until late 2010, while Onken is a private wealth manager).
The one AFL-CIO example that does hold water is a 2011 investment in a venture capital fund managed by General Catalyst Partners, which had a part-timer who had made a $10,000 contribution to the NJ Republican State Committee just months earlier. That deal has been under investigation since this past May, while Fortune reported earlier today that the New Jersey Division of Investments has sold its interest in the fund. AFL-CIO also mentions State Street, in which New Jersey appears to have briefly invested in via a money market fund. It is unclear when that investment began and ended.
But it gets worse. Here is what AFL-CIO wrote in its press release announcing the complaint:
Many of the state’s relationships with Wall Street firms coincide with generous political contributions, even though state ethics rules require a two-year lag before a donor can be a pension investor. For example, an employee of the Blackstone Group donated $10,000 to the NJ Republican State Committee in 2011, the same year new investment business was being proposed for the firm.
The Blackstone employee being referred to here in Anthony Grillo, who actually left the firm back in 2005 (according to both a press release and contemporaneous media coverage). This example was not included in the actual complaint, but remains in the press release posted on the union’s website.
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