Has NJ Solved their benefit problems? Unanswered questions

I attended most of the program today at Rutgers-Newark that was billed as answering questions as to whether “New Jersey has solved the Pension & Retirement Health Benefit Problem” and “What was actually accomplished & what is facing other governments”.

For me those questions were not answered which is odd because the answer to one of them would have been one simple two-letter word.  However, two questions did occur to me during the course of the program, one of which I actually voiced.

To show you I was really there:

The first question came to me when Susan Urahn, PhD, Managing Director of the Pew Center, mentioned that pension and health benefits were important in the public sector to attract, recruit, and retain a quality workforce.  I would have asked:

  1. The public sector has largely maintained their defined benefit plans with slight reductions in benefits for the newly hired.
  2. The private sector has cajoled, tricked, or forced their rank-and-file employees away from defined benefit plans and into plans like cash-balance with wear-away and 401(k)s without a match that essentially provide nothing
  3. This shift in the private sector began at least 20 years ago.
  4. Are you saying that the public sector now has a much higher quality workforce?

It’s a serious question to me but I didn’t anticipate it would have been taken seriously so I didn’t ask it.

The question I did ask was of Richard Raphael, Group Managing Director – US Public Finance, Fitch Ratings.  It was mentioned that New Jersey is one of the last states not to have adopted GAAP accounting on the local level.  I already knew that since Union County audits always include the line (page 9 of 186, second paragraph):

“the financial statements referred to above do not present fairly, in conformity with U.S. generally accepted accounting principles, the financial position of the various individual funds of the County of Union”

What I didn’t know was that most of the rest of the country did follow GAAP.  So my question of the Fitch guy was:

How could you have given Union County a rating of AAA on a recent bond issue when they are allowed to play games with non-budget revenue and the surplus, keep tens of thousands of dollars in a safe in the Finance Director’s office, build up massive debt, have among the highest property taxes in the nation, and to top it off don’t follow GAAP?

Hopefully the Hall Institute taped his response since, when I referred to my notes just now, all I found was the word ‘weasel.’

8 responses to this post.

  1. Posted by Javagold on September 30, 2011 at 7:20 pm

    of course NOT…….but when the ponzi collapses in 3 years, than i say problem solved !

    Reply

    • Posted by Anonymous on September 30, 2011 at 7:39 pm

      I hope they take out the trash in Aberdeen soon. You and your mindless jealousy are really starting to stink up this forum.

      Reply

  2. Posted by Larry Littlefield on September 30, 2011 at 7:23 pm

    “Are you saying that the public sector now has a much higher quality workforce?”

    No, because I believe public employees provide public services in proportion to their cash pay. The retirement benefits, in excess of what other people get, are thought to be in exchange for the support of incumbent politicians, and public employees aren’t grateful to those who pay for them.

    Perhaps there are retired public employees in Florida who might think “if I had known what a sweet deal I had, I would have done a better job.” But those on the job simply resent the fact that they feel underpaid in cash.

    Reply

  3. Posted by Anonymous on September 30, 2011 at 8:05 pm

    Java, nobody takes you seriously because you make utterly ridiculous comments. We all know what you wish for but its not what is going to happen. Oh everyone deserves to dream! By the way I have a friend in florida who works for the city and they can get up to 90 percent of their pay once they retire just by working 25 year plus. They dont get any health benefits though.

    Reply

    • Posted by Javagold on September 30, 2011 at 8:13 pm

      exactly why health benefits should be the first to go…..they are not protected…….

      dont take me seriously……..could care less……u r just another worthless public employee taker who can do nothing but call others names…….you will be hurt the most when the economic collapse comes

      Reply

      • Posted by Al Moncrief on October 1, 2011 at 12:52 pm

        Java, you mean you could NOT care less. If it’s possible for you to care less, then by all means care less and your stress level will drop.

        Reply

  4. How many years now has Suplee Clooney been performing audits for the County and its sub-agencies like the UCIA? Didn’t Matt Boxer issue a report, maybe last year, recommending government entities change their auditors every 10 years?

    Matt Boxer should run for governor.

    Reply

  5. Posted by Javagold on October 1, 2011 at 8:41 pm

    Co-author Roman Hardgrave and I have a new paper released at the Mercatus Center on the full cost of compensation for public sector workers in New Jersey. Our study dives into local accounting using two New Jersey municipalities: Englewood Cliffs and Garfield as a case study. We find that when fully accounting for pensions (minus accounting adjustments and flawed actuarial assumptions), health insurance, OPEB, and legally required benefits (Social Security, Medicare and Unemployment Insurance) the cost for public employees increases by between 45 and 50 percent over what is reported.

    Another way to put it: under current assumptions these two municipalities dedicate roughly between 56 percent to 58 percent of their budgets to public employee compensation, with the remainder dedicated to other spending. These proportions change dramatically when factoring in the full costs of benefits including unpaid liabilities, leaving these two municipalities with roughly 16 percent of their budgets to spend on other areas. In a state with high property taxes these growing costs will lead to increasingly difficult budget choices for many of New Jersey’s municipal governments.

    Reply

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