Public pensions as constituted in most states are unsustainable for a variety of reasons previously laid out in this blog and a very few other places. The combination of generous benefits, willful underfunding, and the failure of the actuarial profession to tell the truth will bring bankruptcy to these plans (though they apparently will call it ‘restructuring’) and public pension participants may one day get a letter that begins:.
14 Apr
My Two Arguments Against the COLA Theft
On April 27th, a superior court judge in Mercer County, Douglas Hurd, is scheduled to hear arguments on New Jersey’s motion to dismiss a lawsuit brought by several retired prosecutors challenging the legality of the statute eliminating their COLAs. The arguments in the brief filed by the plaintiffs boil down to reciting favorable opinions of other lawyers (in the OLS and AG offices who would have been directly impacted by any COLA diminution). My two arguments against the COLA theft are a little more direct.
10 Apr
New Jersey Defines Corruption
According to a recent study New Jersey has the lowest risk of corruption of any state in the the union. That’s primarily because of our Open Public Records and Meetings laws which allow all access to view the corruption which has been legalized through the indifference of taxpayers and the complicity of compromised politicians. For example, this is what goes on in New Jersey and, as far as I can tell, is perfectly legal:
5 Apr
Time to Panic?
The Union County budget will not be released at tonight’s freeholder meeting. The agenda is not up yet but this undated notice, linked to on the front page of ucnj.org, states in part (and in red on their site):
Please note both the COLA Resolution and the FY2012 Budget Introduction & Approval Resolution, previously scheduled for the April 5, 2012 Special Meeting, have been rescheduled for a date to be determined. Additionally, the Public Hearing on the FY2012 Budget is now tentatively scheduled for May 31, 2012.
31 Mar
After the ARC
I attended the Enrolled Actuaries’ conference this week and never has the gulf between private and public plan actuaries been so wide.
In the private sector we have no discretion and only rules, sillier than ever*, to regurgitate onto valuation reports. For funding, we are told what method and mortality table to use and have a severely limited choice of interest rates.
Public plan actuaries, on the other hand, will soon have no funding rules other than the ones they come up with and the Society of Actuaries is asking for suggestions.
28 Mar
Josh Rauh Rantings
Much more to follow especially after this afternoon’s four-hour seminar on Public Pensions but, for now, here’s a tidbit from this morning’s workshop on Public Employee Retirement Systems.
24 Mar
Judging Your Worth
Top row, L to R: Justice Anne M. Patterson ($185,482); Justice Barry T. Albin ($185,482); Justice Helen E. Hoens ($185,482); Judge Dorothea O’C. Wefing ($175,534); Front row, L to R: Justice Virginia Long ($185,482); Chief Justice Stuart Rabner ($192,795); Justice Jaynee LaVecchia ($185,482).
Starting Monday these seven people will judge what their take-home salaries will be in a case brought by Superior Court Judge Paul DePascale ($165,000) of Hudson County who claims that judges’ salaries cannot be reduced. The state Supreme Court fast-tracked the case after lower courts ruled that the state cannot increase judges’ contributions while the case proceeds.
Judges have the best pension package and the lowest contribution rate (3% of pay) for those benefits. Last October Judge Linda Feinberg ($171,731) ruled that Superior Court judges and Supreme Court justices, protected by the state Constitution from salary reductions while in office, are exempt from Gov. Christie’s new pension and health benefits plan requiring them to contribute a larger share of their salary. In making her ruling, Feinberg said the salaries can’t be touched — even in difficult economic times — and noted the provision is in the Constitution to protect judges from potentially vindictive acts of the executive and legislative branches of government.
Think about that for a moment. Judges will rule on whether they get to take home about $25,000 more a year or not. They will argue that they need to take the extra money because if they don’t they would be subject to potentially vindictive acts of the executive and legislative branches of government. But if those judges rule not to accept the pay cut wouldn’t those same judges get Chrisite and the legislature mad at them and be subject to other potentially vindictive acts of the executive and legislative branches of government?
22 Mar
Taxes and Debt in New Jersey: Preview
On Monday, April 23 I will roll out a PowerPoint presentation on the real story behind a government’s budget and debt. If you think pension and OPEB reporting are farcical representations of reality wait until you see how regular debt is defined and created. Here is a preview at the New Jersey Taxpayer’s Association meeting last night:
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The principal speakers of the evening were Gina Genovese and Wendy McCahill of Courage to Connect NJ whose presentation should be up later today.
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This is the flyer for that event as of now, prior to the scare headline about the xx% tax increase when the 2012 budget is finally introduced.
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18 Mar
Who To Blame?
Last year Forbes magazine declared Stockton, California America’s most miserable city. Since then Stockton has defaulted on some bonds and last Friday the New York Times reported that they would be a test case for defaulting on public pensions. How did they get into this mess and who is most to blame? A look at their July 1, 2011 – June 30, 2012 budget (all 412 pages) answers that question for me.
