Laws are not assurances in New Jersey

New Jersey in 2011 passed a law promising to make its legally required, actuarially-determined pension contributions* yet in a bond prospectus this month the state asserts:

“No assurances can be given as to the level of the State’s pension contributions in future fiscal years”

In one of the lamer political rationalizations for lying:

Christie spokesman Michael Drewniak provided The Star-Ledger with several examples where identical warnings were included in previous bond prospectuses dating back to at least 2009, calling it a standard disclosure.

“The language referred to is standard disclosure language that is identical to bond offerings disclosures going back to at least 2009 and the Corzine administration,” Drewniak said. “It is because we cannot tie the hands of, or commit future legislatures or governors’ actions that we are obligated to include such language.”

So no assurances could have been made in 2009 but, after the 2011 law passed, shouldn’t this language have changed?  How much of this prospectus is boilerplate?  Has anyone checked?  Is there still language in there from the Cahill administration about not needing an income tax?

What other tidbits are in the 16 pages of the prospectus devoted to Funding Pension Plans and what do they really mean?

An Assurance for New Jersey Public Workers on their Pensions

The Christie administration warned potential investors earlier this month that future pension payments — estimated to grow from $1.7 billion next year to about $5.5 billion by 2018 — will drain resources and “create a significant burden on all aspects of the State’s finances.”

“No assurances can be given as to the level of the State’s pension contributions in future fiscal years,” the prospectus reads.

Yet when pension ‘reform’ was passed in 2011 assurances were made and are still being made.

Pray for the PBGC

The Pension Benefit Guaranty Corporation (PBGC) is severely underfunded itself yet on Friday there was this press release:

Reversing a prior position, the Pension Benefit Guaranty Corporation announced today that it will pay pension benefits for more than 800 former employees of the Hospital Center at Orange, which provided primary and emergency care in Orange Township, N.J. before closing in 2004.

The Hospital’s pension plan was originally covered by ERISA and protected by PBGC. However, in 2003, after the hospital became affiliated with Cathedral Healthcare System Inc., the Internal Revenue Service determined that the hospital’s pension plan had become a church plan, which removed it from PBGC’s protection. Soon after that, the hospital began winding down its operations and laying off employees.

Over the past several years, at the request of the Pension Rights Center, PBGC worked with the hospital’s former staff and the IRS to revisit that designation. IRS recently set the designation aside and PBGC can now cover the pensions. The plan is within months of running out of money, so if PBGC had not stepped up benefit payments would have stopped.

“Why did PBGC push to take on this substantial financial responsibility?” said PBGC Director Josh Gotbaum. “The answer is simple. Our job is to provide a safety net for pensions. In this case, we realized we could restore the safety net — so we did.”

In a letter posted on May 10th, the Pension Rights Center praised PBGC for pushing to protect the hospital’s retirees. “The PBGC’s actions helped rectify an injustice that the law never intended, and illustrate your agency’s strong commitment to the protection of pension plans and participants.”

According to PBGC estimates, as of Jan. 1, 2009 (the plan termination date), the plan had $11 million in assets to pay $41 million in benefits. The agency expects to cover the entire $30 million shortfall and expects to pay the benefits owed under the plan.

Retirees will continue to get benefits without interruption, and future retirees can apply for benefits as soon as they are eligible.

What were they thinking?

Most Dangerous People to Effective Government

Give a political operative truth serum (in the guise of an emergency meeting that only ‘insiders’ were supposed to know about called to accept the resignation of his embattled benefactor) and you get their truth:

“I just want to say that it has always been my observation over the years that probably the most dangerous people to effective government are known as commentators. Commentators are those people that sit back and take pot shots and cherry pick and do things to make governmental officials look bad. I didn’t really realize that until I got into government because I in fact was in the private sector before that but Charlotte, on behalf of all government officials that are not just commentators but rather doers, I thank you for being the type of government official we would all like to be, strive to be, and in our wildest dreams will probably never accomplish.  Thank you again Charlotte……L-A C-O-R-T-E”

I’m not not making this up.  That’s what he really said.  See:

Crashing the Cocoon

It was supposed to be a ring-kissing ceremony as Union County political boss Charlotte DeFilippo was going to resign her public sinecure this afternoon at 3 pm in an ‘emergency meeting’ of the Union County Improvement Authority.  Though she had been recently called an overpaid political hack after her terms of employment became public knowledge, this gathering was going to be a celebration as the people she handpicked for either public office or public employment (resulting in million-dollar pensions and lifetime health benefits for some of them) would gather to pay fealty.

However, at 2:20 pm I was tipped off and  was able to crash the party with my camera.

Campaign Finance and Public Corruption: A Case Study

The Mercatus Center released a working paper questioning if campaign finance reforms reduce public corruption.

In my experience it does not and I just happen to have a perfect example which I will present one week from today to the New Jersey’s Local Finance Board in regard to an application before them:

Pushing Public Employees to Retire

School superintendents are by far the highest paid government employees in New Jersey, making even more than heads of some Utilities Authorities, though they do need to come to work occasionally.

Governor Christie makes $175,000 in salary so in 2010 he imposed that as a prospective cap on superintendent salaries.

In an article today, a purported blowback example is provided in the retirement of Judith Wilson who has 35 years of service with a salary of about $225,000 and is retiring on a pension of $144,000 at age 56 rather than swallow a pay cut.  What that writer is missing…..