TRENTON — The state Supreme Court ruled on Tuesday that Gov. Chris Christie can slash billions of dollars in contributions from New Jersey’s troubled public employee pension system. The court’s ruling caps an intense fight for pension funding and deals a major blow to the state’s labor unions, who challenged Christie’s spending cuts. Christie had sought… Read the rest of this entry »
TRENTON — The New Jersey Senate today failed to override Gov. Chris Christie’s veto of a measure that would have made it harder for the state to cut pension payments at the last-minute to offset revenue shortfalls at the end of the fiscal year. The bill ( S2265) would have required the governor to make pension… Read the rest of this entry »
TRENTON — New Jersey has paid hundreds of thousands of dollars in fees to a Wall Street investment firm in the three years since Gov. Chris Christie said he was terminating all investments with the company, International Business Times reported today. That same firm, Angelo, Gordon & Co., hired Christie’s wife, Mary Pat Christie, as a… Read the rest of this entry »PBA #314 President Joe Tuohy has jumped into the fray over the PBA charges against Assemblyman Dave Rible over at Jim Hogan’s blog.
Tuohy disputes some of the figures Jim used in his post and says he supports the PBA action against Rible.
Police unions complaining like this is really unseemly. Even with the recent reforms, New Jersey police officers have an extremely enviable deal.
I admit…I’m envious! A high school buddy of mine retired from a NJ police force a little over a year ago. His take home pay from his pension is $20 per month less than he was taking home when he was going to work every day! I wish I had a deal like that at 52 years old. If my friend lives to be 82 he’ll collect over $2.5 million. That doesn’t count the cost of his health care.
Even with the recent reforms, I’m concerned about the economic sustainability of such a system.
Worse, we’re laying off police officers in high crime areas while we are paying able bodied men and women not to “protect and serve.” That is why, “people are going to die,” as Senate President Steve Sweeney said. They’re not going to die because of Governor Christie’s budget cuts.
Posted: July 15th, 2011 | Author: Art Gallagher | Filed under: PBA, Pensions | Tags: James Hogan, PBA, Pensions | 31 Comments »By Art Gallagher
The Bergenfield High School Class of ’76 had its 35th year reunion this past weekend. Thanks to facebook I’ve reconnected with many friends from my youth and attended my first reunion since graduation.
I suppose the good news is that I wasn’t the heaviest or the grayest member of my class in attendence. It was fun catching up with and remembering so many old friends. It felt odd pretending to remember others.
There were two people I got reacquainted with at the reunion that reminded me of how much the world has changed in 35 years.
I don’t remember who was designated “most likely to succeed” in my high school year book. The guy who succeeded is Glenn. He retired a year ago from the Bergenfield Police Department. His take home pay from his pension is $20 per month less than it was when he was working, so he says. He’s now a full time dad to his 10 year old son.
Bob probably should have been voted most likely to succeed back in 1976. I knew from facebook that Bob became a medical doctor, which impressed me. Seeing Bob on Saturday night for the first time in 35 years I congratulated him on his success. “You’re a doctor!” I said. “I have a family practice,” Bob said, without an ounce of pride or joy.
Family practitioners are small business owners. Bob and I had more in common than I realized. Life was sweet for us five years ago. Our educations and hard work were paying off and the future looked bright and comfortable. Now we are both facing a great deal of uncertainty and second guessing the choices we made decades ago. We’re getting squeezed by institutions we can’t afford to fight and by circumstances beyond our control.
The choices Glenn made look pretty good in hindsight.
Posted: April 13th, 2011 | Author: Art Gallagher | Filed under: Pensions | Tags: Pensions | 4 Comments »By Murray Sabrin
Editorial writers and good government types are foaming at the mouth because both Republicans and Democrats are collecting pensions while they are working in new government positions. Who would have guessed that members of the political elite would rip off (legally, of course) taxpayers?
Over the years, editorial writers have endorsed big government candidates from both major political parties because the political hustlers expressed “compassion” (financed with taxpayers’ money, of course) for the poor, elderly, et.al. In other words, they epitomize “phony” philanthropy. And how have the welfare statists repaid taxpayers? By engaging in a legal but cheesy practice—retiring from one government job and collecting a paycheck from another.
The solution is simple: end pensions and health benefits for all elected officials. This would end double dipping once-and-for all. During this transition, public officials would have to fund their own pensions and health care needs out of their own incomes. This “reform” would work as follows. Salaries of all state, county and local government official would be increased (or not) to account for all the benefits the state, county and local governments now pay.
In the future, if a person retires from say being a local police chief and then is elected county sheriff, there would be no double dipping because he would be using his savings from his first job plus the income from his new job to pay for living expenses. In short, no more double dipping for elected officials in New Jersey.
There is absolutely no reason retirement income and medical benefits should be tied to employment. Every adult should take responsibility for his or her life. That means planning for all stages of life including retirement. However, in our collectivist, welfare state culture, the most disingenuous words are: “I’m from the government and I am here to help you.” Or, “I work for the government and I really care about taxpayers.”
The reason state and local governments have a collective $3.5 trillion underfunded pension and health care liability is because politicians have not been funding the retirement plans and promised health care benefits of workers. In short, politicians from both political parties have been–to put it mildly–poor stewards of taxpayers’ money.
The evidence is overwhelming. Politicians cannot be trusted with the people’s money. We need to downsize, not reform, all levels of government. The welfare state, redistribution of income chickens are coming home to roost. The worst of the ongoing financial crisis is yet to come.
Murray Sabrin is professor of finance at Ramapo College and blogs at www.MurraySabrin.com
Posted: April 8th, 2011 | Author: Art Gallagher | Filed under: Pensions | Tags: Murray Sabrin, Pension Abuse, Pensions | 3 Comments »By Art Gallagher
The news out of Brookdale yesterday is encouraging, especially if it results in our elected officials looking for wasteful and abusive spending in other areas of government like the light that Governor Christie is shining on the Independent Authorities throughout the state. However there is one tidbit of information coming from the shake up in Lincroft that really sticks in my craw.
Dr. William Toms, the retired State Police Major who is taking over as Acting President of Brookdale on Monday, is collecting a state pension of $84, 293.40 per year. Toms is 47 years old, according to the Asbury Park Press.
47 years old and the tax payers of the State of New Jersey are paying him $84,293.40 per year for the rest of his life and he doesn’t have to show up for work.
Insanity.
I don’t mean to single out Toms. He’s just the current glaring example of an out of control pension and benefits we are paying our retirees. There are thousands of examples. Most of my readers can probably think of two or three people who either are or will benefit from this system right of the top of their heads.
Senators Jennifer Beck and Steve Oroho have proposed legislation that if enacted would stop retirees from collecting a pension and a government pay check. Even if their bill, S-2716 is enacted, which is highly doubtful given all the legislators and their friends and family who are in the system, the bill doesn’t go far enough. Not nearly far enough.
Pensions should not be like a lottery payoff. Pension should be deferred compensation for a job well done over a lifetime. They should sustain a retired employee and his/her spouse during their “golden years” when they are too old to work.
The average 47 year old is in his/her prime earning years. Such a person doesn’t need be sustained for another 10, 15, 20 or 30 years. This system is insane. It is unsustainable.
In the private sector, if an employee and their employer have saved and invested for their retirement years in a 401K type program and IRAs, the employee can’t make withdrawals from those retirement accounts before age 59 1/2 without paying tax penalties. There ought to be similar age restrictions for collecting on government pensions.
Collecting on government pensions ought to be age restricted. 59 1/2 is probably to young, but a political argument could be made for it given the federal restrictions on private retirement account withdrawals. And pension payments should be offset by any employment income, not just government employment income as the Beck/Oroho bill proposes.
Posted: March 4th, 2011 | Author: Art Gallagher | Filed under: Pensions | Tags: Pensions | 20 Comments »Analysis marks pension liabilities as root of state budget crisis
WASHINGTON, DC- The nation’s top state budget watchdog, State Budget Solutions, released a report on this week demonstrating the dramatic extent of unfunded liabilities facing the state government public employee pension funds- ranging from $1 trillion to $2.8 trillion dollars depending on the study used in the analysis. “This report shows that states have been fooling the public and the federal government for years,” said Bryan Leonard, author of the study. “The breadth and depth of the public pension crisis is finally coming to light and the numbers clearly speak for themselves.”
The analysis provides comprehensive data from three studies to demonstrate a consensus about the scale of the unfunded pension crisis spreading across the nation, just as public employees rally against proposed reforms in wages and benefits in states like Wisconsin and Ohio. “It’s clear that this study reveals that the increasing costs of supporting the unfunded liability that is needed to pay government employee pensions is the real driver of the budget crises in the states,” said Bob Williams, President of State Budget Solutions. “Our report demonstrates that legislators and governors need to come to grips with the pension funding crisis or it will put their states in fiscal peril for decades.”
According to the study, states with the largest pension liabilities are California, Illinois, New Jersey, and Ohio. State governments use a special accounting method, known as GASB, which differs from that of the private sector. “Under GASB, government pension funds have not accurately portrayed the real value the pension funds. If states were required to use private sector accounting rules, like those used in the Novy-Marx & Rauh studies, the liabilities are much more dramatic,” said Williams.
A full state-by-state analysis of the public employee pension unfunded liability can be found at statebudgetsolutions.org.
| State | PEW[1] | AEI[2] | Novy-Marx and Rauh[3] (2009) |
| AL | $9,228,918,000 | $43,544,880,000 | $40,400,000,000 |
| AK | $3,522,661,000 | $14,192,229,000 | $9,300,000,000 |
| AZ | $7,871,120,000 | $45,004,090,000 | $48,700,000,000 |
| AR | $2,752,546,000 | $20,026,314,000 | $15,800,000,000 |
| CA | $59,492,498,000 | $398,490,573,000 | $370,100,000,000 |
| CO | $16,813,048,000 | $71,387,842,000 | $57,400,000,000 |
| CT | $15,858,500,000 | $48,515,241,000 | $4,900,000,000 |
| DE | $129,359,000 | $5,688,663,000 | $5,100,000,000 |
| FL | ($1,798,789,000) | $98,505,110,000 | $8,980,000,000 |
| GA | $6,384,903,000 | $58,742,784,000 | $57,000,000,000 |
| HI | $5,168,108,000 | $18,533,398,000 | $16,100,000,000 |
| ID | $772,200,000 | $10,022,613,000 | $7,900,000,000 |
| IL | $54,383,939,000 | $192,458,660,000 | $167,300,000,000 |
| IN | $9,825,830,000 | $33,756,655,000 | $30,200,000,000 |
| IA | $2,694,794,000 | $21,266,226,000 | $17,000,000,000 |
| KS | $8,279,168,000 | $21,827,991,000 | $20,100,000,000 |
| KY | $12,328,429,000 | $47,016,382,000 | $42,300,000,000 |
| LA | $11,658,734,000 | $43,797,899,000 | $36,400,000,000 |
| ME | $2,782,173,000 | $13,227,289,000 | $11,800,000,000 |
| MD | $10,926,099,000 | $48,199,258,000 | $43,500,000,000 |
| MA | $21,759,452,000 | $60,476,274,000 | $54,200,000,000 |
| MI | $11,514,600,000 | $72,187,197,000 | $63,600,000,000 |
| MN | $10,771,507,000 | $59,354,330,000 | $55,100,000,000 |
| MS | $7,971,277,000 | $32,225,716,000 | $28,700,000,000 |
| MO | $9,025,293,000 | $56,760,147,000 | $42,100,000,000 |
| MT | $1,549,503,000 | $8,633,301,000 | $7,100,000,000 |
| NE | $754,748,000 | $7,438,589,000 | $6,100,000,000 |
| NV | $7,281,752,000 | $33,529,346,000 | $17,500,000,000 |
| NH | $2,522,175,000 | $10,233,796,000 | $8,200,000,000 |
| NJ | $34,434,055,000 | $144,869,687,000 | $124,000,000,000 |
| NM | $4,519,887,000 | $27,875,180,000 | $23,900,000,000 |
| NY | ($10,428,000,000) | $182,350,104,000 | $132,900,000,000 |
| NC | $504,760,000 | $48,898,412,000 | $37,800,000,000 |
| ND | $546,500,000 | $4,099,053,000 | $3,600,000,000 |
| OH | $19,502,065,000 | $187,793,480,000 | $166,700,000,000 |
| OK | $13,172,407,000 | $33,647,372,000 | $30,100,000,000 |
| OR | $10,739,000,000 | $42,203,565,000 | $37,800,000,000 |
| PA | $13,724,480,000 | $114,144,897,000 | $100,200,000,000 |
| RI | $4,353,892,000 | $15,005,840,000 | $13,900,000,000 |
| SC | $12,052,684,000 | $36,268,910,000 | $43,200,000,000 |
| SD | $182,870,000 | $5,982,103,000 | $4,700,000,000 |
| TN | $1,602,802,000 | $30,546,099,000 | $23,200,000,000 |
| TX | $13,781,228,000 | $180,720,642,000 | $142,300,000,000 |
| UT | $3,611,399,000 | $18,626,024,000 | $16,500,000,000 |
| VT | $461,551,000 | $3,602,752,000 | $3,300,000,000 |
| VA | $10,723,000,000 | $53,783,973,000 | $48,300,000,000 |
| WA | ($179,100,000) | $51,807,902,000 | $42,900,000,000 |
| WV | $4,968,709,000 | $14,378,914,000 | $11,100,000,000 |
| WI | $252,600,000 | $62,691,675,000 | $56,200,000,000 |
| WY | $1,444,353,000 | $6,628,204,000 | $5,400,000,000 |
| Total | $1,000,000,000,000 | $2,860,967,583,000 | $2,485,800,000,000 |
By Art Gallagher
Governor Chris Christie says that the rest of America is looking to New Jersey for the way forward in restoring fiscal sanity to state governments after decades of kicking the can down the road to the next generation. Christie rightly says the day of reckoning has arrived and that he is the man to lead New Jersey back to prosperity to provide the rest of the country an example of how to do it.
On the question of government employee pensions and health care benefits, the governor has proposed a series of reforms that will reduce New Jersey’s unfunded liabilities from a current estimate of $183 billion to $23 billion in 30 years. Christie’s reforms would require all government employees to contribute 8.5% of their salaries to their pensions, raise the retirement age from 62 to 65, roll back the 9% increase the Republican legislature gave away a decade ago, and reduce the anticipated return of the pension investments from 8.5% per year to 7.5%. Government employees would have to pay 30% of their health care premiums, with the government picking up the other 70%.
That sounds like a good plan on paper. It assumes the current and future administrations and legislatures will fund their portions of the pension and health care obligations, which given recent history is a risky assumption. The 7.5% projected return could easily turn out to be too optimistic. If the cost of heath care continues to escalate as it has over the last decade, deficits will continue to rise.
Still, Christie’s plan is a good answer to the question, “How do we save the pension and health care system from insolvency?”
As New Jersey, and many other states throughout the nation confront cumulative unfunded liabilities in the trillions of dollars, our leaders should confront a more fundamental question; “Why do we have defined pension benefits for government employees?”
Who besides government employees and union employees of once great corporations that have been bailed out by the federal government still get defined benefit pensions?
Are pensions necessary to attract qualified employees into government service?
Who is the pension system for? If it is for the citizenry, i.e. we the people get a better government, for us and by us, because we guarantee our employees lifetime benefits, then perhaps it is appropriate to tax money out of the private economy to provide those benefits.
But can anyone really make that argument? I would love to hear it.
Will government jobs really go unfilled if we don’t have a pension system? Will we get less qualified employees? Where will the more qualified employees go to work? Where will they find employment that guarantees a level of income for their retirement?
Nowhere, I think. If a reader can correct me on that, please do.
The pension problem should be addressed inside the context of this more fundamental question; Why do we have a defined benefit pension system? Should we have such a system?
If New Jersey’s, and many other states’, pension systems were private company pension systems the federal government would have shut them down years ago in favor of 401K type plans.
That is what state governments, lead by Chris Christie of New Jersey, should do now. Liquidate the system and shut it down. Those who are already retired and within a short time of retirement should get the pensions they were promised.
The $40+ billion in the pension plan should be equitably distributed to its owners, the employees, and invested in retirement accounts of their own choosing. With 800,000 people in the system, each future retiree would get a healthy initial investment into their plan. Those with a longer terms of service would get more, with those who have paid less into the system getting less.
Going forward, just like the private sector, employees and employers should participate in pay as you go retirement plans.
The private sector addressed this problem 30 years ago. It is not rocket science. There is a model for solving the problem. Christie and the other governors, should follow that model.
Posted: January 25th, 2011 | Author: Art Gallagher | Filed under: Chris Christie, Pensions | Tags: Pensions, Unfunded liabilities | 6 Comments »© Copyright 2024 | MoreMonmouthMusings | All Rights Reserved