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Reader says ,NJ Pension Liabilities paying for the past and ignoring investment in the future

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Paying for the past instead of investing for the future? Explains much of why NJ’s economy is in the toilet. Will.be an interesting test case on what to do as the state spirals down into oblivion. New legislation will be needed to resolve the liabilities, many of the needed federal & state laws haven’t been written yet, but states like NJ and Illinois will provide the necessary precedents. Current employees certainly won’t have it as good as current retirees, which is why some posters above are defending paying for the past and ignoring investment in the future. This is generational warfare, and the retiring baby boomers are winning, big time

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Ask Away: Why Are New Jersey Property Taxes So High?

ridgewood real-estate

3-30-17

By Michael Aron
Chief Political Correspondent

New Jersey is famous for saddling its homeowners with high tax bills. That prompted Paul Waters from Brigantine to ask, “Why are New Jersey property taxes some of the highest in the nation?”

There is not one answer.

Most obvious is that New Jersey has 565 municipalities, down from 567 — that’s 565 mayors, councils, town governments.

New Jersey also has more than 600 school districts, 586 of which are operational, each with its own superintendent and administrative structure.

Then there are the 21 county governments and their bureaucracies.

Public worker salaries and benefits are relatively high in New Jersey thanks to aggressive public sector unions.

Throw in the generally high cost of goods and services in the New York-Philadelphia region and you begin to see why our property taxes have been the highest in the nation for years.

https://www.njtvonline.org/news/video/ask-away-new-jersey-property-taxes-high/

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ACCUMULATED SICK-DAY PAYOUTS: ‘LOCAL’ PROBLEM HITS $2 BILLION AND COUNTING

Sick Dog

COLLEEN O’DEA | MARCH 30, 2017

Pay for unused absences was capped at $15,000 in 2010, but public employees hired before that at school districts, towns, and counties across the state can still rack up six-figure payouts

Public workers in a majority of New Jersey’s municipalities, school districts, and all but two of its counties are due almost $1.9 billion in pay for unused absences when they retire, with at least one employee slated to receive as much as $500,000.

To put things in perspective: If this obligation were spread throughout the state, every New Jerseyan would have to chip in $207 to cover the public-employee version of Wall Street’s golden parachute — according to an NJ Spotlight analysis of local budgets.

Or think of it this way: In this state with the highest property taxes in the nation, the $929 million owed to municipal workers alone, if it were paid out immediately by property-tax payers, would lead to an increase of 11 percent over last year’s total local levy.

Part of the problem can be traced to the way benefits are typically negotiated by local officials, be it with a union or with individuals. According to Jon Moran, senior legislative analyst with the New Jersey State League of Municipalities, it can be difficult for elected officials to take a hard line when facing the realities of what neighboring towns give and a town’s own precedent.

Follow this link for an interactive table of sick-day payout liabilities for New Jersey’s school districts, towns, and counties.

https://www.njspotlight.com/stories/17/03/30/accumulated-sick-day-payouts-a-local-problem-hits-2-billion-and-counting/

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HEADS THEY WIN, TAILS YOU LOSE

Village Council Meeting

ANDREW SIDAMON-ERISTOFF | MARCH 21, 2017

Police and fire unions’ power grab sticks New Jersey’s taxpayers with the pension bill

Andrew Sidamon-Eristoff

In 1866, Surrogate Gideon J. Tucker wrote that “[n]o man’s life, liberty or property are safe while the Legislature is in session.” Over a hundred years later, the New Jersey Legislature is doing its very best to keep Surrogate Tucker’s warning pertinent by once again advancing special-interest legislation that reaches for a new low in bad public policy and stunning indifference to taxpayers.

The issue at hand is the state Senate’s recent unanimous approval of S-3040, a bipartisan bill to transfer “management” of the $26 billion Police and Firemen’s Retirement System (PFRS) from the Department of the Treasury’s Division of Investment and the State Investment Council to a union-controlled board of trustees. The stated rationale includes giving PFRS’s beneficiaries more control over the investment of their retirement savings and insulating pension-asset investment decisions from nefarious political influence. That sounds benign, even reasonable. As the bill’s prime sponsor stated: “It’s a matter of enlightened self-interest for people who have skin in the game.”

“Self-interest”? Certainly. “Enlightened”? Not so much.

Here are only a few of the many reasons why this bill is a very, very bad idea:

Control without risk: sticking local taxpayers with the tab

Although it’s possible to make a straight-faced argument for giving PFRS and other pension-fund beneficiaries a greater role in making investment decisions, it makes absolutely no sense for government employers to turn over investment management while retaining all investment risk. And it’s demonstrably insane to give public employees unqualified power to set their own benefit levels and require that government employers (and taxpayers) pay the tab. Yet that’s exactly what this bill does.

https://www.njspotlight.com/stories/17/03/20/opinion-heads-they-win-tails-you-lose/

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Reader says , I’m sure the unions will do a great job managing their own pensions

Xanadu_main_theridgewoodblog

Good news. The faster the plans go insolvent the faster benefits can be diminished. Wonder if the unions will lower the assumed rate of return from 7.65% to actual 20 year returns of only 7.2%? Maybe they can bet all of the funds on red in Atlantic City? Or use updated actuarial data on lifespan which will add 2-3 years of pension liabilities per retiree? How will they resolve the issue of only 1.24 contributing workers for every retiree? Maybe they’ll reinstate COLAs to deplete the funds even faster. NJ state and local taxpayers should be happy this mess is no longer theirs. Thanks PFRS.

I’m sure the unions will do a great job managing their own pensions. Maybe they can invest more in American Dream Meadowlands or put it all on red in the casino at their own Revel hotel?

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N.J. Supreme Court enters fray over pay hikes for public workers

14405_trenton_new_jersey_s_state_house_capitol_in_trenton

By Samantha Marcus | NJ Advance Media for NJ.com
on March 14, 2017 at 7:45 AM, updated March 14, 2017 at 8:32 AM

TRENTON — Public employee unions and government officials clashed Monday in a case before the state Supreme Court that could determine whether workers across New Jersey will get pay raises.

The state’s highest court heard oral arguments over the whether “step” increases — raises in pay when workers reach annual milestones in years of service — should be granted after a contract has expired.

Atlantic County, Bridgewater Township and the Public Employment Relations Commission asked the court to reverse an appellate court ruling, which found PERC overstepped its authority when it upended a four-decades-old doctrine that says step increases outlive the term of a contract.

The Fraternal Order of Police Lodge 34 and Policemen’s Benevolent Association Local 77 charged Atlantic County with unfair labor practices, alleging the county violated that “dynamic status quo” doctrine during contract negotiations and arbitration.

Police officers who were not yet at the top of the pay scale were due 5 percent or 6 percent step increases.

https://www.nj.com/politics/index.ssf/2017/03/nj_supreme_court_enters_fray_over_pay_hikes_for_pu.html#incart_river_home

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Governor Christie Declares State Of Emergency Ahead Of Winter Storm Stella

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March 13,2017

the staff of the Ridgewood blog

Trenton, NJ – In preparation for Winter Storm Stella expected to arrive in New Jersey tonight, Governor Chris Christie declared a State of Emergency, authorizing the State Director of Emergency Management to activate and coordinate the preparation, response and recovery efforts for the storm with all county and municipal emergency operations and governmental agencies. Commuters are asked to use extreme caution while traveling across the state.

“This severe winter storm is expected to produce tonight through Tuesday afternoon significant snow accumulations, winds gusting up to 60 miles per hour, freezing temperatures, widespread coastal flooding and hazardous whiteout travel conditions,” Governor Christie said. “During these threatening conditions, I urge all New Jerseyans to remain off the roads so our first responders and public safety officers can safely and efficiently handle emergency situations.”

New Jersey roads are expected to be impassable due to significant amounts of heavy, blowing, and drifting snow, low visibility and whiteout conditions, with the highest impact expected from late Monday night through Tuesday afternoon. Forecasted snow accumulations from five to more than 20 inches are expected in some areas of the state.

Due to the severe winter storm, the State of New Jersey has authorized the closing of state offices on Tuesday, March 14 for all non-essential employees. Essential employees should report to work on their regular schedule.

Road conditions will be available at the New Jersey Department of Transportation website at https://www.511nj.org/.

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Reader says For New Jersey Pensions at the Current Cash Burn Rate, the Funds will be Insolvent in Less than a Decade

money-growing-on-tree-image-8

The math doesn’t work. The net asset value of the Pension Fund assets managed by the NJ State Investment Division was $72.9bn as of June 30, 2016. 41% of the 785,000 members in seven public pension systems are retired versus 51% of the members who are still working and contributing to the pension plans, while 8% are vested members no longer accruing benefits but not yet retired. That 41% of 785,000 = 321,850 retirees being supported by only 400,350 members still contributing to the plan, i.e. 1.24 workers per retiree. You need over 2 workers for every retiree to have a solvent plan, so already this is a mess with too few employees contributing to a system with too many retirees. Those 321,850 retirees draw annual pensions on average worth $31,070 but this number will explode as baby boomers retire through 2024. For example, note twelve of the fifteen +$100,000 a year public pension retirees in the Village of Ridgewood as of 2015 were police & fire, with only three from the BoE. But we just had seven more policemen retire in 2016. Once the baby boomers all retire, there are potentially less workers than retirees in NJ, which is the definition of a PONZI scheme with $10bn a year paid to plan beneficiaries vs. plan assets $72.9bn.

NJ pension funds cut checks to retirees worth over $10bn last year versus pension plan assets of $72bn. The problem is the benefits are too generous. At the current cash burn rate, the funds will be insolvent in less than a decade, with liabilities far in excess of plan assets. Think about that: we pay out over $10 billion per year in public pension benefits to retired public sector workers. So even with assets of over $70 billion, the system is fragile. Public pension plan and health care benefits need to be diminished before taxes can be raised further as we are already the highest taxed residents of any state in the nation. Start by lowering the assumed annual rate of return to 7%, use the updated actuarial mortality data to add 2-3 years of life expectancy to the liability. Then start moving all new hires to defined contribution pension plans like 401(k) plans to prevent politicians and unions from meddling with employee pension assets. If the pension assets are in the hands of the employees and not the state and municipalities, they will be protected. Then convert all current employees from Platinum to Bronze level health coverage, which is the equivalent of what is offered in the private sector. Only then can taxes be raised for funds specifically earmarked to close the pension liability gap.

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N.J. pension debt soared to $49B last year

Person dumping money into a toilet bowl

N.J. pension crisis explained with popsicle sticks

Samantha Marcus | NJ Advance Media for NJ.comBy Samantha Marcus | NJ Advance Media for NJ.com
on February 28, 2017 at 7:30 AM, updated February 28, 2017 at 8:37 AM

TRENTON — New Jersey’s government worker pension funds lost a lot of ground last year, as the state’s pension debt rose from $43.8 billion to 49.1 billion, newly released actuarial reports reviewed by NJ Advance Media show.

Even as Gov. Chris Christie made a record-high contribution to the pension system, the state’s unfunded liabilities climbed ever higher, making the outlook for the weakest public pension system in the country appear worse still.

The pension fund lost nearly 1 percent on its investments last year, and the state still contributed far less than what’s recommended. And notably, the state winds up owing more because the treasurer reduced the funds’ long-term assumed rate of return on its investments.

The state’s unfunded liability is a portion of the overall debt. The local side of the system is in much better shape but still $17.1 billion short of what it would cost to pay for future retirement benefits. The combined unfunded liability rose from $59 billion in the 2015 fiscal year to $66.2 billion in the fiscal year that ended in June.

https://www.nj.com/politics/index.ssf/2017/02/njs_pension_deficit_reached_491_last_year.html#incart_2box_nj-homepage-featured

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Pension fury: N.J. cops, firefighters just rose up against Christie

Senate President Sweeney_theridgewoodblog

By Claude Brodesser-Akner | NJ Advance Media for NJ.com

on February 28, 2017 at 9:45 AM, updated February 28, 2017 at 10:46 AM

TRENTON — Furious after watching pension investment fees triple over the last three years even as their funds lost value, police and firefighter union leaders are seeking to wrest control of their underfunded pensions from the state.

As Gov. Chris Christie is set to deliver his final budget address, state Senate President Sweeney (D-Gloucester) on Monday introduced a bill (S3040) that would transfer management of the Police and Firefighters Retirement System to a newly expanded board of trustees.

“They’ve been screwing up pensions for decades now,” Ed Donnelly, president of the New Jersey State Firefighters’ Mutual Benevolent Association told NJ Advance Media, referring to the $11 billion that the state has yet to pay into his retirement system.

https://www.nj.com/politics/index.ssf/2017/02/dems_float_big_change_to_nj_cops_firefighter_pensi.html#incart_2box_nj-homepage-featured

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Gubernatorial candidate Joseph R. Rullo offers Fixes to New Jersey’s Pension Crisis

Joseph R

STATE OF NJ EMPLOYEE PENSION & BENEFITS

February 25,2017

the staff of the Ridgewood blog

Ridgewood Nj, Jersey Born and Bred Gubernatorial candidate Joseph R. Rullo has put together a few ideas to solve the state’s massive pension crisis. Most of the ideas are relatively painless for employees and taxpayers and unlike other grand schemes easily doable .

Rullo starts with investing basics by looking to eliminate $700 million in pension fees to NYC politically connected brokerage houses and replace with licensed brokers in the state investors division to pay savings towards pension payment.  The pension fees went from 125M to 700M per year in the last 7 years.

https://www.shorenewsnetwork.com/2016/10/new-jersey-gubernatorial-candidate-remove-wall-street-from-new-jersey-pension-system/

https://www.youtube.com/watch?v=sJAwKQ8TLOM&feature=youtu.be&app=desktop

Let’s face it according to the all the town hall protesters New Jersey loves Obamacare so Rullo says :

*Open up state employee health insurance bids across America to create competition to lower premiums and get better coverage for employees.

Rullo get creative with the next one;

* Dedicate a portion of recreational marijuana revenues to pay towards pension payment.

Was first reported by The Star-Ledger’s Editorial Page Editor Tom Moran in a Sunday column arguing passionately for legalization. Joseph Rudy Rullo, a declared Republican candidate for New Jersey governor in 2017, also supports marijuana legalization.

https://www.njumr.org/…/praise-for-phil-murphy-marijuana-le…

And finally something that long over do in the state of New Jersey . We can start with the pensions and work our way through every state agency .

* Open up a formal investigation and audit the pension fund for the last several decades to hold politicians in both parties accountable for their actions.

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The New Jersey pension crisis | IN 60 SECONDS

Christine Todd Whitman

February 15,2017

the staff of the Ridgewood blog

Ridgewood NJ, the New Jersey pension crisis in 60 seconds . Reader says ,” the unions rule NJ and the politicians are at their beck and call. They’re bankrupting the state and municipalities, and taxpayers get screwed at every turn. Benefits should be diminished big time, but the unions get the vote out to keep the good times rolling. You keep voting in theives and you’re gonna get robbed. Any time the unions want something, assume it’s bad for state and local tax payers”

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Winners and losers in high-stakes N.J. pension ruling

diana-ross-supremes_theridgwoodnlog

By Samantha Marcus | NJ Advance Media for NJ.com
on June 10, 2016 at 7:35 AM, updated June 10, 2016 at 8:05 AM

TRENTON — The state Supreme Court on Thursday morning upheld a 2011 pension reform law that stripped public workers of their annual cost-of-living adjustments.

The ruling spared the state, its taxpayers and the public pension fund itself some financial pain, but it’s a big loss for public workers who have no guarantee when, or if, the COLAs will be restored.

Here are the winners and losers in that ruling:

https://www.nj.com/politics/index.ssf/2016/06/in_high-stakes_pension_ruling_who_wins_who_loses.html?ath=9c46bfc08d76232bb5a5e00eeaf0bfa2#cmpid=nsltr_strybutton

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NJ Supreme Court : No cost-of-living payments not required for Pensioners

diana-ross-supremes_theridgwoodnlog

June 9.2016
the staff of the Ridgewood blog

Ridgewood NJ , The New Jersey Supreme Court has delivered a victory to Gov. Chris Christie and has ruled the state does not owe public pensioners cost-of-living payments suspended under a 2011 law.

In a 6-1 ruling and a major legal victory for Gov. Chris Christie’s administration, which warned that restoring the annual increases would hurl a pension system already underfunded by $59 billion closer to insolvency.

The state Supreme Court upheld a landmark 2011 law freezing cost-of-living adjustments for retired government workers, a decision effecting pensions paid to 800,000 current and former public employees.