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.