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 cuts head to court

On June 25th, oral arguments will be heard by Mercer County Superior Court Judge Mary Jacobson for a lawsuit brought by the NJSP union.  Judge Jacobson said she would decide whether Christie's plan violates the 2010 pension law that Governor Christie himself passed.  This will be a major challenge to Governor Christies plan to skip a huge pension payment for both this and next fiscal years.  Governor Christie said he needs to use the money to solve a budget crisis.

The Governor is planning on taking $900 million through an executive order he signed last month, and an additional $1.5 billion for the next financial year (which begins in 3 weeks).  Christie said the state constitution requires a balanced budget every year, and this money is needed to prevent huge cuts to hospitals or schools, or major tax hikes.  However, his failure to make the pension payments violates a law he created during his first term.  It also violates a section of the NJ state constitution that states, in part, "the Legislature shall not pass any bill...impairing the obligations of contracts".

The Governor has stated that failure to make these payments is fiscally irresponsible and taking the pension money was a "regrettable move", but the state can't afford to keep paying public workers the benefits they currently get. Lets not forget that this is the same Governor that just gave many of his own staff raises as high at 23%, while at the same time he requires others to stay under the 2% cap.  How can he call one thing fiscally irresponsible, but give huge raises at the same time? 

New Jerseys Moody's credit rating has been downgraded several times since Christie has been in office.  Fee's in New Jersey have skyrocketed.  The cost to register as a corporation fifteen years ago was $50 per year.  Today it is $500 per year; a 10-fold increase.  Motor vehicle fees have quadrupled in the past fifteen years.  These are not considered "taxes", so there is not much in the way of public outcry.  Is there really a difference between a state fee and a tax?  No.  When there is a shortage of money, you would think the Governor would created a solid tax base from businesses that are seeking to come to New Jersey, but he does the exact opposite.  Since 2010, the state has doled out over 2 billion dollars in incentives to corporations and developers.  Compare that number with the $1.5 billion given out in incentives during the prior 10 years. That money could have been used to our benefit, not to the benefit of corporations and developers.

Never in the history of our state has our leadership been so poor.  Lies, deceptions, double-speak, willfully not following the law, and so on and so on...

Judge Mary Jacobson, please make the right decision, and put our pension fund money where it was meant to be.







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