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.

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.

Bridge-gate versus Pension-gate. Pension is a scandal, not a crisis.

Bridge-gate has taken on a life of its own.  The scandal surrounding the lane closures to the GW bridge has lead to firings, subpoenas, hearings, news headlines, drops in the Governor's popularity poll, and possibly (and hopefully) a severely diminished chance of the fat man becoming our next President.  And over what?  Lane closures and lies.  Mainly lies, since that is where the investigation seems to be surrounding.  Lies.  Did the Governor lie or not? 

I can answer that succulently.  Yes he did lie.  Did he lie about the bridge scandal?  That one I can't answer for sure, but I can answer for sure that he did lie about the New Jersey pension scandal.  Did I say scandal?  Odd, nobody else did.  It's called a "crisis" instead of a scandal.  But really it is a scandal.  If the Governor lying about his knowledge of the lane closures is considered a scandal, then the pension "crisis" is surely a scandal.  The Governor lied to the police and fire unions, putting words in writing, and then did the opposite.  Can you call this anything other than a lie?  Sure.  How about a "fabrication", or he was "just kidding" when he promised in writing not to change the pension of current or retired police and fire union members.

If there is so much fuss about the Governor possibly lying to the public about his part in the lane closures on the GW bridge, where we don't know for sure if he lied, then why is there no fuss about the fact that he clearly lied about the pension?  Why is there no Assembly committee hearings and subpoenas about this like there are for the lane closures?   

The bridge scandal, or "bridge-gate" as it is known as, began August 13, 2013 with an email exchange.  On September 9th, two of three access lanes are shut for a "traffic study" that never was.  We all know the story from there.  But do you know the story of the pension scandal?  You probably know some, since the Governor has been shoving it down the publics throats for years.  The only thing is, you are only hearing what he is saying, which may or may not be the truth.  Personally, I say it is not the truth. 

The lane closures took about four hours from beginning to end.  People were inconvenienced; some a little and some much more.  But it only lasted four hours.  The pension scandal, which I call "pension-gate", has been happening for decades, ever since Governor Whitman put her grubby little paws into the well funded police & fire pension fund, removed billions of dollars, and used this money for her own agenda.  The money was never put back, and each and every Governor since her has done the same.  Now the pension system is having major problems.

Pension-gate has affected thousands upon thousands, and cost people countless dollars.  It has forced current officers to pay more into their pension, eliminated the cost of living increases for retired officers, and forced current officers to also pay for a portion of their medical insurance, when for decades the good benefits were the trade off for lower pay.  I know some of you reading this might think "so what?  I pay for my medical insurance, why shouldn't they?"  Primarily because its a change of the rules mid-stream to fix a problem they didn't create.  I have no problem if someone takes a job knowing what the rules are; knowing they will be paying a portion of their medical insurance.  But changing the rules for current employees to fix a problem created by someone else is unjust.  The police and fire unions did not cause this problem, even if the media wants you to believe they did.  The union members are not "greedy and evil", but have paid their dues without so much as a hiccup.  The government has not.  Billions in missed pension payments were not the fault of the unions, but were the fault of the Governor.  Lets not forget the 2% cap the Governor put on pay increases, while at the same time he gave many of his staff raises of up to 23% (http://www.northjersey.com/news/christie-staffers-get-hefty-pay-increases-as-other-areas-face-cuts-1.1025934).

The NJEA is taking some action.  Take just a minute to read this link: http://www.njea.org/news/2014-05-22/take-action-to-protect-your-pension.  Click the appropriate box for the type of pension you are in and submit as required.  It only takes a minute.  I have nothing to do with this, but felt it was a step in the right direction. 

More action will be needed.  More attention needs to be put on the fact that this is a scandal, not a crisis. 

Thoughts?  Comments?