Under Funded Pension VS. Over Funded Welfare

   

Recently, the National Association of State Retirement Administrators recognized New Jersey as having the most underfunded pension system of all 50 states.  They said that the NJ pension fund could be out of money by 2027 http://www.nj.com/politics/index.ssf/2015/03/nj_pension_system_most_underfunded_of_all_50_state.html#incart_river.

This isn't too much of a surprise, since New Jersey skipped pension payments completely from 2001 until 2004, and have generally put in less than the required payments since the mid 1990's. This resulted in billions less being put into the pension accounts, while at the same time, benefits increased.  Keep in mind that during this time, all of the union workers kept making payments without skipping a beat, and were forced to increase their pension payments to keep the pension funded.  In addition to an increase in payments, the retirement age was increased, and the cost of living adjustment was eliminated.  It hasn't worked out so well, and currently the state faces an $83 billion unfunded pension liability.  This is by no fault of the union workers, but the blame lies squarely in the laps of our current Governor and his predecessors.

     Governor Christie has touted the pension reform from day one, even after promising the unions not to touch their pensions.  It has been the mainstay of his soap box, and continues to this day.  It's a shame that the hard working union members, who have made pension payments from day one of their employment, have to be the scapegoats for the failures of the Governor.

     What I find upsetting, is how the Governor has been basically mum about reducing the benefits (handouts) that are given to a slew of residents, both legal and illegal, that have been on the receiving end of our tax dollars.  These are the same tax dollars that the Governor says is lacking to the point of an almost broke TTF (transportation trust fund).  Just as an example, according the a study by the Center of Immigration Studies, in 2009 (based on data collected in 2010), 57 percent of households headed by an immigrant (legal and illegal) with children (under 18) used at least one welfare program.  You saw that correctly.  Fifty-seven percent.  Over half are receiving welfare benefits.  Nationwide, Newark, NJ ranked No. 1 on a list ranking the cities across the country with the highest percentage of households on welfare.  That' right: NUMBER ONE in the country.   Where is the outrage and public condemnation?  (Insert sound of crickets here).  Welcome to the welfare state.

     While there have been some minimal reductions in welfare, the funding doesn't seem to be in the spotlight like it was years ago when "work-fare" instead of "welfare" was a hot topic.  Currently, the attention seems to be aimed directly at those that helped fund the welfare bottomless pits: the taxpayers.  Don't get me wrong; there are very legitimate uses for welfare.  It should be a temporary crutch to get a person or family back on their feet.  One of the problems is that many have come to rely on this crutch as an income with no end.  Fraud is rampant in welfare.  Additionally, what incentive does someone have to work when welfare pays more?

     The Governor is all about "reform", specifically PENSION REFORM.  It's about time that the Governor change directions and take a good hard look at WELFARE REFORM instead.  Welfare is supposed to be temporary, while a pension is for life.  One of the huge differences is the welfare recipients are receiving money put there by others, while the pensioner is receiving money put there by him/her, employer contributions, and the pension fund investments.  The number of people taking some type of welfare or handout from the state vastly outnumbers those receiving pensions.  This may be why the Governor doesn't want to piss of those voters...I mean constituents.

     While there are some attempts to reform welfare into a form of "work-fare", surprisingly enough, the ACLU is objecting to it for a variety of reasons, including calling it a form of discrimination by making someone work for their benefits.   How dare the government make someone work for their benefits! I don't recall the ACLU supporting me in my twenty-five years of working in order to get my benefits (which I paid dearly for).

     According to US Government Spending.com, in 2015 New Jersey will spend $9.7 billion in the pension systems (all of them), while at the same time, spent $9.1 billion in welfare.  Where will this money come from?  The pension money comes from the union members, employer contributions, and investments.  The welfare money comes from taxes.  Your taxes.  My taxes.  Reducing the rampant welfare fraud, and requiring welfare recipients to work for their handouts should be just the start.

     This is where the Governor should be focusing, not on the already beaten down union members who have worked their entire lives and put more money into the system than anyone else.  We've given enough.

     If history is any indication of how he will do as a Presidential candidate, he will embarrass New Jersey.

     Just my opinion.

Note: Ok, so the headline may be a bit deceiving.  Do I honestly think welfare is "over funded"?  No, not really, but I do want it reduced substantially through various means.  Welfare (workfare) has its place, but not to the extent it is being used now for "entitlements" or handouts.

Governor Christie's Pension Task force is a waste of time & resources. Here is why.

   

Governor Christie said "it's time to think out of the box" when he recently appointed nine people to serve on the bipartisan commission that will evaluate how New Jersey "can create an affordable and sustainable retirement and health benefits system" for taxpayers, current employees, and retirees.  He is sounding like an visionary; someone who is thinking of new and untested methods to conduct a "study" that has already taken place.  Let's be clear about one thing.  He is not thinking out of the box.  In fact, he is doing what many politicians have done in the past. Copy & paste.  He is NOT reinventing the wheel.  He is simply making it SEEM like he is.

     In 2005, Acting Governor Richard Codey created the "benefits review task force" that had ten members.  Actually, it was probably nine, like the current one, since the tenth member was a "Counselor to the Governor," who was there as an "Advisor to the Benefits Review Task Force".  So let's go with nine; the same as the current one.  These members weren't just anyone.  They were people who were professionals in a multitude of fields ranging from a retired Phillip D. Murphy, a Wall St. executive, David Alai, a Vice President Corporate Human Resources, Thomas A. Meyers, Senior Vice President & Chief Financial Officer from NJM Insurance Group, Richard D. Quinn Managing Director – Human Resources,
Public Service Enterprise Group, William M. Rodgers, III Professor and Chief Economist, John J. Heldrich Center for Workforce Development, Edward J. Bloustein School of Planning and Public Policy,
Rutgers University, and Paula B. Voos Professor of Labor Studies and Employment Relations, School of Management and Labor Relations, Rutgers University.  The task force also included Thomas D. Carver Commissioner, Department of Labor and Workforce Development, John E. McCormac State Treasurer, and A. J. Sabath Commissioner, Department of Labor and Workforce Development.  These were powerhouse people to have on this task force; People who were respected in their fields.

   The task force was charged with the following:

• Examining the current laws, regulations, procedures and agreements governing the provision of employee benefits to State and local government workers; 
• analyzing the current and future costs of the benefits; 
• comparing the level of benefits provided to government employees in this State to the benefits provided to other workers; 
• recommending changes to the laws, regulations, procedures,  and agreements designed to control the costs of such benefits to the State's taxpayers, while ensuring the State's public employees a fair and equitable benefit system.

This task force was Chaired by Phillip Murphy, and so the report was known by many as the Murphy Report.

     Without getting into all the boring details, they gave a final report.  Let's look at a few of their recommendations.  This is a quote from the report:

     "Government Must Meet Its Obligation
No More Pension Holidays — State and local government must meet their full obligation to make
annual payments to the pension plans.
No More Actuarial and Valuation Gimmicks — State government must use consistent and generally
accepted actuarial standards.
No more pension bonding.
The $12.1 billion unfunded deficiency must be immediately addressed." (remember, this was 2005)

     Sound familiar?  This was from 2005!  Nine years ago.  These recommendations were given to the State Government almost a decade ago, and we're still going round and round as if the Murphy Report never happened.  The report clearly states "Government must meets its obligation" (they didn't listen to this one), "no more pension holidays" (we know they didn't listen to this one either).

After making their recommendations, the Task Force went into a detailed review of the "history of pension and healthcare benefits". In this review, they talk about how "sound funding principles over the years allowed New Jersey’s plans to grow into one of the largest and well-funded pension plans in the country", and then goes on to say "this growth and stability has attracted administrations to use the Pension Fund Systems as a tool to balance the State budget. The funds were used to offset tax reductions and some were to maintain or expand current programs".  

     In 1999 and 2000, the pension funds rate of return was an +14%.  From 2001 through 2005 (the year of this study), it averaged negative 9.1%.  The report claimed that "the combination of enhancements, reduced contributions and lower rates of return have resulted in a $12.1 billion unfunded accrued liability that must be addressed."  It wasn't addressed.

     If anyone is interested in reading the complete Murphy Report, feel free to click here.  It's long and boring, but it contains some very current gripes, problems, complaints, issues, etc.  I can GUARANTEE you that the "Pension Task Force" will come up with the exact same problems, and the exact same recommendations.  This is nothing more than smoke and mirrors designed to make the general public think he is doing something about a problem that was already addressed by his predecessor.  Governor Christie, if you want your study, here it is.  Maybe you should read it.

My pension does not belong to politicians

   
 My pension should not be a political pawn.  Say it again:  My pension should not be a political pawn.  Okay, now that we've gotten that out of the way, lets get back to reality.  Right now, Governor Chris Christie is taking the national political stage, and he needs something meaty to bring to the table (insert food joke here). Unfortunately for countless government workers who are not making the big bucks unlike the political power-brokers, our pension is the meat; and the table is the national stage.  Governor Christie has been targeting the broken system (that he helped break) as the reason for all of the State's problems.  Fix the pension "problem", and all is well, right?  Uh, no.  Is the pension issue really a problem?  Maybe.  Maybe not.  As I've written previously, I don't see the pension as a crisis.  I see it as a scandal; a scandal that needs to be investigated by non-partisans as if this was a potential criminal act committed by our political leaders.

     When I started my public worker career years ago, my salary was relatively low compared with the private sector.  I accepted this in part due to the benefit package that came with the job.  One of the parts of the benefits package included a pension.  Not a free handout, but one that required me to pay a nominal part of my pay into the pension system that would afford me the "luxury" of a guaranteed income after I do my time. This is similar to Social Security, which by the way I never paid into and will never get.  For all you in the private sector, please read that last sentence.  I will never get a penny from Social Security because my employer did not take this from my check. Instead, they took a higher percentage of my salary (as compared to the 6.2% I would have paid as required according to Social Security Administration).  The last few years I paid 10% of my salary into my pension.  Before that I paid 8.5%.  Did you see that little two letter word two sentences back?  Who's pension did I say it was?  Mine.  I did not pay  into the Governments pension, I paid it into MY pension.  It was mine when I began my career, but lately it seems that Governor Christie wants the public to believe it's his to do with as he pleases.  Don't get me started (again) about how every governor since Christie Todd Whitman stole BILLIONS from MY pension, or how Governor Christie failed to make the required pension payments even though every foot soldier of a cop/firefighter/teacher made every payment without even a chance of skipping one.

   According to the Department of Treasure, the average firefighter & police pension benefit from this state is just under $58,000, while teachers get about $40,000.  Right now, there is no C.O.L.A. (cost of living increase), so the number you get is the number you get.  Forever.  Take into account that the average police officer dies within five years after retirement and reportedly has a life expectancy of twelve years less than that of civilians. (according to the national criminal justice reference service https://www.ncjrs.gov/pdffiles1/pr/109485.pdf)

     Why is New Jersey's pension issue such a hot topic?  Because politicians made it so.  Not only did they create the problem, but once they realized just how bad it got from their mismanagement, they shouted from the highest mountain telling everyone else how bad it was and now it needs to be fixed.  What makes New Jersey different than other states?  Why aren't other states' pensions in such disarray too?  Mainly because their Governors didn't raid it like their personal cookie jars like our Governors did for decades.

     The words of Mark Webber from NJSpotlight.com,  ring true here.  He stated "These states have proved that a sustainable pension system is not a fantasy; all it requires is honesty, discipline, and an ethical code that asserts that debts must be paid. If I run up my credit cards, I don’t get to walk away from my debts just because I don’t want to make sacrifices. States are no different: New Jersey can’t abandon its obligations just because tax hikes would get in the way of Chris Christie’s presidential ambitions".

     That is what this is all about.  The political ambitions of one Chris Christie.  The man who currently makes $175,000 a year (according to data universe), was also the U.S. Attorney for the district of New Jersey (can you say "federal pension"?).  This is also the same person who was elected as a Republican to the Board of Chosen Freeholders for Morris County in 1994 (can you say another pension?).  And lets not forget that in 1993, he was made a partner for the law firm of Dughi, Hewit & Palatucci of Cranford, NJ (can you say "cha-ching!!!").  So this is not a man that cares about the little guys.  He's a shark and we are bait fish.  He'll make sure we don't grow any bigger by eating us en mass.  He's doing this little by little every time he "reforms" the pension system.  But he's not reforming it, he's destroying it.

     If the government kept its nose out of my pension, maybe I'd support someone like Christie.  Remember the letter?  You know which one I'm talking about.  I wrote about it in my first blog post on this site.  Let me remind you about "the letter" in which he described the "sacred trust" and that he would never change our pension.  He did this for our votes, which he got, and almost immediately afterwards, reversed course telling the public that the pension needs to be fixed.

Click to Enlarge

     Governor Christie, do not politicize my pension.  It is the contractual compensation I have earned for work done.  I paid for it without skipping a beat, while you have paid when it was convenient for you.  It is not yours to play politics with.  It is mine to live my life with.

Pension Update from State PBA President Colligan

Just passing on info posted by Colligan....

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Pension Update from State President Colligan

I wanted share some good news about our pensions. The State Investment Council met this week and disclosed that our pension investments are earning double what managers expected. Four years ago the pension fund balance was $66 billion. In the last four years it has grown by $35 billion despite the State failing to pay its obligation. This increase took place while a record numbers of officers retired. Experts told the investment council that if the current rate of return on investments continued, we would have no pension debt at all.

While the Investment Council’s report is good news it just highlights our arguments about the current political debate about pensions. The Governor missed a golden opportunity to strengthen our pension even further by simply paying the State’s obligation. The pension problem exists because politicians have repeatedly failed to pay into the pensions. The Governor can spin all he wants but this report highlights his failures.

The report should reassure our members that our pensions are generating a good return. Our pensions are on solid ground. This report will not make the Governor restore COLA or stop his latest campaign against law enforcement officers. It will make people take note that employee contributions have kept the system afloat even when the State failed to meet its obligations. 

Pension payment cut approved by Judge, 2% cap law signed - but these aren't the real problems.

(Tony Kurdzuk/The Star-Ledger)

So it finally happened, and I'm not surprised. On Wednesday June 25th, Superior Court Judge Mary Jacobson said that Christie's action "was reasonable and necessary under the circumstances of this budget shortfall of over $1 billion...and gave painfully few options with the two months left in this fiscal year".  I saw this coming, and even called this in my previous blog.  Once again, Judge Mary Jacobson took the easy way out.  Now he can save his budget, after blaming others for his financial mismanagement. Now he can have his krispy kreame doughnut and eat it too.  

Christie also recently signed the 2% cap law, which really is the least of the states problems. I can go into detail about this one too, but think most of the readers here realize that very very few municipalities actually go to arbitration.  This law is more hype than anything else.  "Oh my gosh, lets stop expensive arbitration awards", when the truth is that they are few and far between, and usually due to years of zero percent raises.

The police and fire pensions are not the cause of the drain on the state finances.  We are not wasting tax dollars.

But wait...our tax dollars ARE being wasted.  By whom you ask?  You mean all that money isn't going to the police and fire unions?  But according to the Governor, the Police & Fire unions, as well as the teachers unions are the reason we are in this mess.  Did he lie?  How could he mislead us.

Lets take a look at just the tip of the iceberg when it comes to wasted tax dollars by Governor Christie:

$65 million dollars in "emergency" Hurricane Sandy funds were spent on tourism television ads. "Instead of rushing aid  to the people who need it most, state-level officials in New York and New Jersey spent the money on tourism-related TV advertisements," the report states.

Abbot districts.  One of the biggest wastes of your tax dollars.  There are thirty-one districts that fall under this program. If you don't know what they are, here is the Wikipedia definition.  I can't even begin to tell you how much money is poured into this failed program.  
http://en.wikipedia.org/wiki/Abbott_district

$1.5 million in "ambiguous and non-transparent dealings" from bridge tolls: 
http://blogs.wsj.com/metropolis/2012/03/29/report-finds-toll-money-wasted-at-Delaware-river-port-authority/

$23.8 million dollars - the total cost for the primary and special elextion to fill the seat of US Senator Frank Lautenberg in October 2013, rather than waiting one month until the general election.

$150 Million - The amount AshBritt secured in NO-BID CONTRACTS from 53 NJ municipalities after the Christie administration secured their contract.

$390,000+  The amount the Governor and Lt. Governor cost the taxpayers using NJSP helicopters.

$1.2 Million paid to "politically connected" lobbying law firm Patton Boggs for fighting demands from the federal government to return the $271,000,000 spent on "Access to the Region's core project"

$279 Million - Loss to NJ taxpayers as a result of Gov. Christie cancelling the ARC tunnel project.

In Christie's first three years in office, he doled out over $2 Billion in tax credits and subsidies to 171 various projects.

He gave out $2.3 Billion in tax breaks for corporations in just one budget alone. (Times of Trenton 3/4/2013)

$261 Million was given in State tax credits to the Revel casino, which we all know is now bankrupt. (Philadelphia Inquirer 2/21/13)

$200 Million - cost of tax breaks Christie promised to the foreign company that took over the development of the Meadowlands Xanadue project (NorthJersey.com 5/3/2011).

$800 Million+ Money paid skimmed from the state's Clean Energy Program, paid by NJ residents, to make up for lost revenue under Gov. Christie's administration (NJ spotlight 4/24/2013)

$400 Million - Education funding lost because Gov. Christie refused to compromise and work with teachers' union on application for funding (Star Ledger 10/10/2010).

$3 Billion - Federal grant lost when Christie killed the Access to the Region's Core Tunnel Project (APP 12/27/2010)

$145 Million - Amount owned to the federal gov't for Medicare mismanagement (Star Ledger 1/12/12)

$171 Million- Expected losses from 2012-2018 as a consequence of Christie pulling NJ out of the Regional Greenhouse Gas Initiative (Environment NJ 2/15/2012)
http://www.onenewjersey.org/christie-by-the-numbers/


Giving the Philadelphia 76ers a grant worth at least $82 Million dollars so they can have a practice facility in Camden NJ
http://blog.northjersey.com/meadowlandsmatters/8707/philadelphia-76ers-getting-closer-to-moving-practice-site-to-camden-via-82m-grant/


Like I said, this is just the tip of the iceberg.  This state is hemorrhaging money, but police, fire, and teachers unions have been doing more with less for years.  The smoke and mirrors tactics by Governor Christie have pulled the wool over the public's eyes for too long.  It's time everyone saw Governor Christie for what he really is, which is a lying, sneaky slime-ball who can't balance a checkbook.  He can't keep blaming the unions for his poor financial management and decisions.

Fix it or forget it - the NJ pension issues

I'm not a fan of the Trentonian newspaper.  I think its better served as a blotter at the bottom of my bird cage than anything else.  Except for an occasional page 6 girl, there's not much worth reading in what many have called the "Trashtonian".  There are two columnists that are regular's for the Trentonian, L.A. Parker and Jeff Edelstein.  I've read their columns in the past, and I'm not really fans of either one of them.

Sometimes they spice things up and make things interesting.  On June 11, 2014, they did just that, but in an unusual way.  They each published opposing thoughts on the New Jersey pension problems on the same page.  The headline read "Split Decision: Should New Jersey's pension program be blown up?" Parker was in favor of keeping it, blaming the problems on the government, while Edelstein didn't blame anyone but whined about why we should scrap it and start from scratch, calling it "unsustainable".

Parker and Edelstein traded spars, but in my opinion, the winner by a knockout was L.A. Parker.  Please don't take this as a show of support for him; I've read lots of garbage in his columns in the past.  Today he shined just a little.  Case in point: Parker points out that Edelstein is a staunch Christie supporter.  I agree. Read his columns and you will too.  Parker also adds the fact that the most recent problems are the result of the Governor "miscalculated or misrepresented" revenue projections.  I again agree.  Christie tried blaming Dr. Rosen, the Chief Budget Officer for the states office of legislative service for the miscalculation.  What many don't know is that this same Dr. Rosen warned Governor Christie about this impending crisis, but the Governor brushed him off.  Later, when Governor Christie was called out on this miscalculation, he said Dr. Rosen "just got it wrong".  Actually Governor, he was right, and you ignored him.  Had you listened to the man who had a reputation for being right, you may not be in this predicament right now.

Governor Christie blamed the pension problems on past Governors, ignoring the fact that he participated in the same activities as his predecessors.  He reached deep down into the pension cookie jar, removed several large handfuls, handed them out to his friends at the playground, and didn't put the cookies back as promised.  To help "fix" the problem he help create, Christie raised the retirement age to 65, burdened public workers with higher costs and payments, and eliminated the cost of living increases.  L.A. Parker points out that "our leaders need to put all potential problem solving issues on the table including hiring practices, payments made for years of unused vacation and sick time, and practices that allow a double-dipping of pensions."  Again, I agree.  Multiple fixes should be on the table for this one, not just one.

Edelstein, on the other hand, gave little in the way of facts. In fact, he even got some things wrong.  For example, he states "None of this getting the average of your three highest salaries for life.  What a crock!  Really.  Get a 401(k) like the rest of us."  Lets talk facts here.  Nobody in in the Police & Fire pension, or the teachers pensions gets the average of your three highest years averaged out for the rest of their lives.  The reality is that it is a percentage of that number based upon the number of years in the pension system.  Spend 25 years in the Police & Fire pension system and you are eligible for 65% of that, not 100% as he makes it seem.  Spend 20 years in Police & Fire, and you get 50%.  Edelstein also remarks about how unsustainable the pension is now based upon the average life expectancy compared to when it was first put into place in the 50's.  What he completely failed to mention is the reason it it is "unsustainable" is because of the BILLIONS of dollars removed by the Governors, as well as the BILLIONS in missed payments due to "payment holidays" the municipalities were given by the Governor.  Yes, the pension is funded at about 65% (or less), but fifteen years ago it was over 100% funded!  This decrease was not due to payments to retirees or from current workers not making their bi-weekly pension payments.  This decrease is because of both Republican and Democratic Governors grabbing money from the public pension trough, using it for their own pet projects, and never repaying it.   PERIOD!  Jeff, you missed this.

L.A.Parker - 1   Jeff Edelstein - 0

P.S.  I wrote this blog very slow, so just in case you are reading it Governor Christie, you'll be able to keep up.

Our pension is in the hands of Judge Mary Jacobson - Oh no!

Fourteen unions are suing Governor Christie over the pension scandal.  The unions think the laws support a successful lawsuit, and the billions that were slated to be diverted will be put back in its rightful place.  I really do wish this were the case. This case is being heard by Mercer County Superior Court Judge Mary Jacobson, so don't hold your breath.  I really hope I'm wrong, but lets be real. This is politics at its core.

This is the very same judge that supported Governor Christie as recently as April 9th, 2014 by ruling that Bridget Kelly, his former Deputy Chief of Staff, and Bill Stepien, his former campaign manager, didn't have to turn over documents that were subpoenaed by the New Jersey Legislature.  Why?  One reason is that she felt the committee itself had the authority to enforce its subpoenas.  In essence, she distanced herself from enforcing subpoenas that could potentially negatively affect the Governor.  She decided not to make a decision.  She clearly knows who butters her bread, and didn't want to bite the hand that feeds her.
http://www.judiciary.state.nj.us/gwblaneclosure/Stepien+Kelly%20Opinion.pdf.  

Judge Jacobson is listed in "RobeProbe", a website that rates judges based upon notable decisions, published opinions, knowledge of law, control, work ethic, and absence of racial bias.  While this blog you are reading now has nothing to do with that website (robeprobe.com), it is worth noting that her overall rating on that site is listed as "very bad".  http://www.robeprobe.com/find_judges_result2.php?judge_id=1091.

June 25th will be the true test of Judge Jacobson's opinion, knowledge of law, ethics, and bias.  Lets hope she doesn't play politics.