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.

Pension-Gate: The lies behind Governor Christie

The New Jersey Police & Fire pension problems are making the headlines again, this time with Governor Christie using the pension fund payment he promised to make being used instead to cover an $807 million state budget shortfall.  Of course this is nothing new to current and retired members in the Police & Fire pension system.  This is just one more time that the Governor has made these members seem like the reason the state is in such a financial mess.   Once again, Governor Christie has deflected blame from the real reason for the pension mess. 

For the non-government workers reading this, imaging if you would that you had a 401k program where you worked.  You made payments into this retirement fund, and your employer made matching payments.  This money is for your retirement, and you spent your career relying on it to support yourself and family once you retire.  Years go by, and your 401k plan is looking good; really good.  Now imagine if you would that your employer decided that they wanted to pay for a totally unrelated program or project, and decided, without telling you, that they used your 401k to pay for it.  When you do take note of the “withdrawal”, you are told “don’t worry, we will put it back”, but they never do.  In fact, not only to they not put it back, but they stop making the matching payments.  And to top it off, they blame YOU, and tell you that you need to put in more money.  Sounds idiotic, doesn’t it?  This is what your government has been doing for years. 

Remember the Enron scandal?  When discrepancies were first discovered, the CEO Jeffrey Skilling verbally attacked the Wall Street analyst who questioned “unusual accounting practices” in an attempt to distract from the fact that Skilling knew exactly what was going on.  Governor Christie, our CEO, is verbally attacking the Police & Fire pension union and members in an attempt to distract the public from the fact that he and his predecessors are to blame.  This should be called “Pension-gate” to go along with bridge-gate.

I was a police officer for 25 years, and always made my pension payments; first paying 8.5% of my yearly salary into the pension system, and then later, when the governor changed the amount, I paid 10% into the pension system.  All the while, the state and municipalities were supposed to be making the same payments.  We all know these matching payments were not paid as required by law.

To see where this pension fund disaster began, we need a short history lesson.  Governor Christie did not start this mess, but he continues to perpetuate the revolving door of politicians who systematiclally raid our pension fund to pay for other shortfalls.  I place the blame squarely on the shoulders of Governor Whitman for starting this fiasco.  When she was elected to lead our state, the pension fund was well funded with over 100 billion dollars.  Yes, billion; with a B.  This was our money, and not funds allocated for any other resource.  Governor Whitman began taking money from this pension fund without so much as asking.  She simply took it to pay for various items, including balancing the state budget.  The pension fund was so well funded that she permitted the state and municipalities to stop making their required matching pension payments, but she did not permit the members; the men and women it was meant to help, to stop making their payments.  Billions of dollars were not paid into the pension system by the governments, but like good little soldiers, we kept making our 8.5% payments without missing a beat.  The government payments which were “deferred” were supposed to be made up later.  Smart towns realized this and put money away in something like an escrow account, to be used to make the payments later.  Most towns did nothing except to use that money for other purposes, leaving themselves open for future problems when they had to repay the money.  Who do you think the government blamed when they were eventually told to make their payments?  They blamed the pension fund and the members of the unions of course.

Governor Whitman was not the only one to raid the pension fund.  Each and every Governor has followed suit, including Governor Christie.  The pension raids were done routinely, causing the fund to dwindle.  Governor Corzine was the one who told the towns it was time to put back the deferred payments.  The towns that did not prepare for this day were in for sticker shock.  They now had to make up the missed payments to the tune of billions of dollars collectively.  Towns couldn’t afford to make the payments if they failed to sock the money away, so the only way to raise the money was to raise taxes. Who did they blame for this?  They blamed the pension system; the evil and despicable police and fire union members who diligently made their payments while the municipalities were given a temporary reprieve.

Governor Christie, you are a bold faced liar.  When you first ran for office, you made a promise to the Police & Fire union IN WRITING because you wanted our vote. The unions backed you after you published this letter:

 click to enlarge

 

Let me quote Governor Christie.  “It is a sacred trust.  Nothing will change for the pension of current officers, future officers or retirees in a Christine Administration”.  Governor Christie put this in writing and published it for the world to see.  He did this to gain the support of a block of voters, and it worked.  We believed in him and supported him based upon a lie. He lied to us then and he is lying to you now.