Millenial Moola thinks it’s teachers from the police but the reality is a lot more complicated – and it may even be the other way around.
On August 30, 2016 trustees of the New York State Teamsters Conference Pension and Retirement Fund out of Syracuse, NY became the ninth multiemployer (union) plan to file for benefit cuts under MPRA in an attempt to avoid insolvency and this one has a twist (all retirees @ 12/31/15).
From their latest 5500 form here is the plan’s relevant data:
Truth in Accounting released a report today on the Financial State of the States based on data provided by the states.
New Jersey came in last based on the numbers but we have two, if not entirely unique at least exaggerated, burdens to bear here that put us in a much worse fiscal position:
It turns out that Calpers, which managed the little pension plan, keeps two sets of books: the officially stated numbers, and another set that reflects the “market value” of the pensions that people have earned. The second number is not publicly disclosed. And it typically paints a much more troubling picture, according to people who follow the money.
The two competing ways of valuing a pension fund are often called the actuarial approach (which is geared toward helping employers plan stable annual budgets, as opposed to measuring assets and liabilities), and the market approach, which reflects more hard-nosed math.
For those involved with multemployer (union) plans this is nothing new since when a participating employer looks to leave a union plan they have to cope with another surprise – withdrawal liability – which is calculated using actuarial assumptions that inflate benefit values (rather than those used for funding which are designed to accommodate what is available to deposit) so as to squeeze as much money as possible from those leaving.
However it is the naming of these two methods that is confusing. Both are ‘actuarial’ as they involve interest rates and mortality tables and both involve ‘market’ principles as it suits their purposes.
So I propose more appropriate names for low-ball and high-ball estimates of pension liabilities…..
Our analysis seeks to maximize efficiency and preserve intergenerational equity.
That was the second paragraph and it made it difficult to read the rest.
New Jersey Policy Perspective (NJPP) released a report yesterday citing nine bad decisions made over the last quarter century by Republican governors and the courts that brought New Jersey to this bankrupt state which they teased with a youtube:
and this introduction:
Nine key decisions have driven this downward spiral. Both major political parties and all three government branches contributed to the failure. Behind each decision were two unstated assumptions: that policymakers can promise essential services without bothering to pay for them, and that future taxpayers should bear the burden for today’s spending even though they will not benefit from it. At the heart of this duplicity is the intentional, systematic and large-scale raid by governors and legislatures of both parties of the assets that had been set aside for the funding of pensions and retiree health benefits for hundreds of thousands of public employees. The New Jersey Supreme Court abetted this massive, fraudulent raid.
The NJPP report fingers some of the villains (if you do a search the word ‘Florio’ does not come up and ‘Corzine’ is only a footnote) who brought us from this: