Public pensions today all lie about the value of their liabilities (with the worst funded plans lying the most) primarily because of flaws in actuarial methodology that mask true underfunding. In the case of New Jersey the official liability value is $132 billion while the real liability number is about $250 billion.
As for the asset side the use of actuarial value instead of market as the official asset value is one lie but, in New Jersey anyway after examining in detail the value of Alternative Investments, it looks like they are also doing some more blatant lying that they get away with because they expect everybody to trust them and the professionals they buy. I don’t.
The story first appeared in the International Business Times (IBT) with lots of charts under the screaming headline:
Gov. Christie Shifted Pension Cash to Wall Street, Costing New Jersey Taxpayers $3.8 Billion
Today it was picked up by AOL, Esquire, and Daily Kos all using the angle that Christie wants to take money from retirees barely scrimping by so he can give it to his Wall Street friends who then donate to political campaigns of his choosing. But is that the real story?
The template is Detroit where pension funds that were officially 95% funded (using the flawed methodologies designed to understate contributions that every other public pension plan in the country uses) until the bankruptcy lawyers hired Milliman to provide a more convenient number for them. Unfortunately New Jersey can’t avail themselves of Milliman’s ‘Ministry of Truth division’ since they already use Milliman to provide other phony numbers for their Teachers’ Plan so a pension panel will have to do.
The Star-Ledger, a propaganda arm of whatever government entity supplies them with legal-ad revenues, did a fluff piece on the panel and its chairman today in which we learned:
Nothing much going on this time of year but did you know:
- How the New Jersey Pension Panel set up by Executive Order 161 is progressing;
- That a previous Executive Order (138) set up a Pension Fraud and Abuse Unit within the Department of the Treasury;
- How illegal immigrants get action; or
- That Todd Snider wrote a book?
Panels of experts or letter writers and anonymous commenters?
On August 7, 2014 Paul Mulshine of the Star Ledger wrote a confusing piece on the New Jersey pension mess that overstated the roles of the Government Accounting Standards Board (GASB) to which I commented and got a response.
David Jones is a retiree under the State Police Retirement System (SPRS) getting $90,650 annually. He is also running for Mercer County sheriff and Bil Schluter, who appears to be his campaign director, editorializes today that David Jones…
“has taken a stand of courage and self-sacrifice by opposing the double-dipping practice of collecting a state pension while also receiving a salary for service in another public office: He has said he will forego* his pension if elected sheriff.
Though Mr. Schulter later admits:
“Some might say that the pension savings of one sheriff and several undersheriffs are small when compared to all the pension extravagances taking place in New Jersey. But isn’t it because of the multiplicity of pension excesses that the unfunded liability of state pensions has grown to the point where sustainability of the system is in jeopardy?”
No! Not at all! It is a combination of a lack of independent oversight allowing everyone to supposedly get whatever they want and a general innumeracy (sometimes legitimate and sometimes feigned for convenience) among stakeholders that has doomed the New Jersey state pension system. Double-dipping is not the problem and in many cases is a cost container.
There have been more memorable rope line encounters with politicians but what happened at Governor Christie’s town hall meeting last Thursday in Ocean City should have at least gotten a higher footing in the media blabosphere above an insert on an NJTV story:
No word on whether this fellow was a disgusted Atlantic City employee or a public sector retiree or maybe even a good-government advocate but Chrisite admitted there were other incidents that day that didn’t even make NJTV:
Again, no explanation (or consideration) of why these people were disgusted. Just a dismissal of them as malcontents that the governor is stoically tolerating. I don’t know what the real concerns of these people are (and that’s not the story being told by those media folk) but the comments that Chrisite made at that Ocean City town hall meeting were disgusting and for these reasons: