California v. NJ; Brown v. Christie

Seeing these two in any athletic contest would not be nearly as dispiriting as comparing their pension reforms:

Obviously Christie’s people will try to get the contests changed to sumo wrestling, doing cannonballs and maybe poker but, as with their pension reforms, there would be no real winner.

California’s reforms were similar to New Jersey’s reforms of last year in that the benefit reductions only impacted new-hires and the contribution increases only came from employees (other than NJ judges).  The only difference was that New Jersey took away cost-of-linving-adjustments on all benefits (until such time as it gets overturned in a court not influenced by the state).

Both pension schemes are still keeping up the race to see who drops dead first.  As with a Christie/Brown 3-mile footrace, my money’s still on New Jersey.

32 responses to this post.

  1. Posted by Anonymous on September 2, 2012 at 3:52 pm

    Christie and the Repubilcans did it again! They made private sector believe that everything is now under control! hahahahhahahahahhaha. At least with the Democrats you know you are in trouble and there i no doubt about it. Republicans keep telling that everything is now okay while you spiral further and further into debt and war! lmaooooooooo And who makes money from these wars and economic downfalls. Only the rich, the oil companies, the insurance companies, the rich! fools

    Reply

    • Posted by bpaterson on September 2, 2012 at 4:16 pm

      anon352, you left out one other group that will actually make the largest windfall: the government as they will use these issues to justify their existance and the confiscation of our money into thier own inefficient pockets of largesse. There is your enemy.

      Reply

    • Posted by Jeff on September 3, 2012 at 4:56 pm

      The rich are not the problem, the problem lies with those DEMS and Liberal Republicans who LIE to us.

      Reply

  2. Posted by Anonymous on September 2, 2012 at 9:46 pm

    TL is also the enemy of the private sector. She is a wolf in sheep’s clothing

    Reply

    • Posted by Tough Love on September 2, 2012 at 10:00 pm

      And what are you … a public sector worker (so petrified that his well “earned”) pension will go up in smoke that he/she post endless nonsense on this and other blogs.

      FYI, you SHOULD BE concerned about that pension because the Taxpayers (who have wised up to the financial rape from your ilk) are determined to not fund it.

      Reply

      • Posted by Anonymous on July 17, 2014 at 10:47 am

        Public workers and retirees are also taxpayers, the issue is creating a pension scheme that provides for retirees and provides relief to taxpayers. There are group hybrid models through insurers that can be tweaked to fit the needs of NJ public employees and retirees. With all the State supported higher education entities a commission could brainstorm this reform. There are other pressing issues jobs, urban gang violence, environmental protection etc. The State of NJ cannot manage its pension funds outsourcing is a clear option.

        Reply

  3. Govenor Jerry Brown is into physical fitness–he would wipe the floor with Christie in a race.

    Reply

  4. Posted by Al Moncrief on September 3, 2012 at 2:26 pm

    SEE THE GREENFIELD PAPER FOR A REFUTATION OF MONAHAN’S POSITION ON FURURE PENSION ACCRUALS.

    THE PUBLIC PENSION COLA COMMITMENT IS AN ESSENTIAL ELEMENT OF THE ECONOMIC ARRANGEMENT BETWEEN THE PARTIES. PUBLIC EMPLOYEES, AT A MINIMUM, HAVE “IMPLIED-IN-FACT” PENSION CONTRACTS. IF COURTS HAVE MISTAKEN LEGISLATIVE INTENT, LEGISLATURES WOULD HAVE CORRECTED THESE MISTAKES OVER THE LAST FIFTY YEARS.

    COURT: PUBLIC SECTOR WORKERS ARE NOT “SOPHISTICATED POLITICIANS” WHO EXPECT THEIR GOVERNMENT TO LIE TO THEM.

    On August 8, 2012 the National Conference of State Legislatures hosted a panel discussion relating to the contractual nature of public pension obligations. The panel included Professor Amy Monahan of the University of Minnesota School of Law . . . an advocate of allowing governmental entities to change the rate at which public employees accrue pension benefits. The panel discussion was titled: “How Much Can States Change Existing Retirement Policy?”

    The panel also included Douglas Greenfield, an attorney with a Washington D.C. law firm who refutes Monahan’s legal analysis. As part of his presentation, Douglas Greenfield presented a paper outlining his arguments and analysis . . . “In Defense of State Judicial Decisions Protecting Public Employees’Pensions.”

    A PDF of Douglas Greenfield’s paper is available here:

    http://www.ncsl.org/documents/fiscal/DGreenfield_Presentation.pdf

    A video of the NCSL panel discussion, “How Much Can States Change Existing Retirement Policy?” is available here:

    http://www.ncsl.org/issues-research/labor/how-much-can-states-change-existing-retirement.aspx

    In his paper, Douglas Greenfield makes a number of observations relating to contractual public pension obligations. A few interesting excerpts are provided below:

    Express legislative intent to create a contractual pension obligation is unnecessary:

    “There is no reason, and Professor Monahan offers none, why state courts may find state legislation has created enforceable contract rights only by identifying an express ‘legislative intent’ in the statutory language, particularly when these courts are considering the nature of their states’ employment contracts with public employees. As explained below, the state courts’ long-standing precedents protecting public employees’ pension contract rights against unilateral reductions are valid exercises of state judicial authority. Where recognized as contractual, public employees’ pension rights are protected generally under state constitutions (in a number of states) and under federal constitutional law, specifically the Contract Clause, against unilateral reduction or elimination by state government.”

    Even where a legislature has enacted an ambiguous statute, an implied-in-fact contract exists:

    “Even if a court were to re-examine the public pension programs within its jurisdiction and to conclude that the legislature that first created those laws did not ‘clearly and unmistakably’
    manifest its express intent to enter into a binding contract for itself and future legislatures – a result that even Professor Monahan would not favor on policy grounds – the court would nonetheless have more than adequate basis on which to decide that those pension laws created enforceable contract rights, based on surrounding circumstances as well as the court’s inherent power to find the existence of an ‘implied-in-fact’ contract.”

    Governments attempting to rid themselves of their own contractual pension obligations (e.g. Colorado PERA employers) will receive greater court scrutiny:

    “Under this test, once a contract is found is exist, the balancing factors are interrelated; the more substantial and severe the impairment, the greater the government’s burden to justify the impairment. Also, government actions taken to relieve the government of its own contractual obligations are viewed more stringently than governmental actions that affect only private contracts.”

    “Thus, the balancing test is applied with more bite when government seeks to alter a contract to which the government itself is a party, as courts reason that self-interest is more likely to be the motivation than public policy when the government is acting to eliminate or reduce its own financial obligations, rather than those of third parties.”

    A real or conveniently perceived “fiscal crisis” provides no justification for breach of pension contracts:

    “Courts applying this type of balancing analysis to amendments that alter public employees’ existing contractually protected pension benefits have almost unanimously treated these efforts as imposing ‘substantial” impairments’, and courts also have typically found governments’ justifications based on even real fiscal crises or emergencies insufficient. Most states therefore cannot readily reduce their existing pension obligations to their employees in an effort to solve a fiscal crisis, and until recently few even tried.”

    Governments have created long-standing expectations on the part of their public employees and retirees . . . these employees and retirees have acted based on those expectations in the employment exchange transaction:

    “In point of fact, the state courts typically have determined whether enforceable contract rights have been created with respect to state pension statutes or codes by evaluating the surrounding circumstances, including the express legislative language, the reasonable expectations of the parties, and the actions both have taken in performance of the contract, as well as the express
    statutory language.”

    In his paper, Douglas Greenfield cites the case Booth v. Sims, a case in which courts rejected legislative attempts to reduce state troopers’ pensions:

    “Unfortunately, the state troopers, secretaries, school service personnel, teachers, highway workers, maintenance employees, assistant prosecuting attorneys and other ordinary state and local workers are not sophisticated politicians who expect their government to lie to them. When, therefore, today’s legislature and today’s governor make those workers promises, those workers believe the promises and organize their lives in the expectation that their government and their employer will treat them honorably.”

    The commitment to use a COLA benefit as a means of paying a portion of the fixed (defined) pension debt is an essential element of the economic arrangement between the parties:

    “Commitments as to retirement age, accrual rates, cost of living adjustments, employee and employer contribution requirements, and vesting periods are all essential elements of the economic arrangement between the parties and also may be essential to the success of the pension program.”

    If courts have historically mistaken legislative intent, legislatures would have corrected these courts over the last fifty years:

    “If the courts had initially mistaken the legislative intent underlying these pension programs, and governments had not intended that they create binding contractual rights, governmental entities surely would instead have taken concrete steps, all these many decades, to correct the courts’ errors and to establish that they intended to have the freedom to revise such arrangements at will, as well as to ensure that newly hired employees understood the precariousness of the current pension arrangements.”

    “The wide-spread, long-standing acceptance by both legislative and executive branches of state government of their courts’ determinations regarding the contractual intent underlying the state pension programs provides equally strong support for the correctness of these state courts’
    recognition of the contractual nature of the pension programs.”

    ‘There is no sound public policy reason to conclude that these promises – based on the reasonable expectations of the contracting parties – should not be fully protected by the laws prohibiting or limiting the impairment of contracts.”

    Visit saveperacola.com, or Friend Save Pera Cola on Facebook.

    Reply

    • Posted by Jeff on September 3, 2012 at 5:03 pm

      When the funds go broke, there will be no more money, regardless of what any Court decides. Taxpayers will refuse to pay, and no sane politician will be willing to propose or pass a bill to raise taxes to do so. Contracts arrived at through fraud or deception are NOT valid. No one represented the taxpayer at these negotiations. Time to end the charade.

      Reply

      • Posted by Al Moncrief on September 4, 2012 at 3:26 pm

        As Jeff, as Greenfield points out in his NCSL commentary, the funds are not “going broke.” Most are currently funded at around 70 percent actuarial funded ratios and can pay benefits for decades. This is plenty of time for corrective, legal, prospective pension reform measures to be enacted.

        Reply

        • Posted by Jeff on September 4, 2012 at 3:33 pm

          More is going out than is being collected. In the private sector, that defines bankruptcy. I also think those figures are incorrect, as they assume a bogus ROI, have for years.

          Reply

          • Posted by dentss on September 5, 2012 at 12:03 pm

            read Bill Gross’ writing, explaining where 6.6% return for stocks in the long run has come from.
            “The commonsensical conclusion is clear: If financial assets no longer work for you at a rate far and above the rate of true wealth creation, then you must work longer for your money, suffer a haircut on your existing holdings and entitlements, or both.”
            http://www.pimco.com/EN/Insights/Pages/Cult-Figures.aspx#

          • Posted by Anonymous on September 5, 2012 at 7:56 pm

            Sorry, I do not know the point you are trying to make. Clearly, Bill Gross in wrong, and you are ignoring the issue.

    • Posted by Tough Love on September 3, 2012 at 11:01 pm

      Quoting Al …” IF COURTS HAVE MISTAKEN LEGISLATIVE INTENT, LEGISLATURES WOULD HAVE CORRECTED THESE MISTAKES OVER THE LAST FIFTY YEARS.”

      Not when those legislators have been paid off with Public Sector Union campaign contributions … as they HAVE been for decades.

      Reply

      • Posted by Al Moncrief on September 4, 2012 at 3:32 pm

        Hi TL, as you know, in Colorado the Republicans have ruled the roost for 50 years (almost without interruption.) Republicans enhanced pension benefits in 2001 to encourage expensive employees to leave. The Republicans were not paid off by unions, I don’t think they received any union contributions at all. I don’t know how many other states have this same history. Hey TL, Monahan spoke at the NCSL conference I linked (the advocate of trimming future rates of accrual.) Check her out at the link.

        Reply

    • Posted by muni-man on September 4, 2012 at 9:19 am

      There’s no mistaken legislative intent when NJ passed the UNCOLA: (1) 1947 NJ constitutional convention expressly refused to grant pensions any contractual status, (2) SPINA decision upheld the non-contractual nature of pensions in ’64, (3) recent NJ Appellate ruling upholding the UNCOLA, citing (1) and (2) and the fact that the legislature expressly reserved to itself the right to authorize appropriations and not be bound by past appropriations’ measures. Add to that the fact that NJ doesn’t recognize pensions as deferred compensation as many other states do, and the N.J. UNCOLA is here to stay.

      Reply

    • Posted by Willy05 on September 5, 2012 at 1:53 am

      I believe ultimately an appellate court will throw out the COLA freeze (UNCOLA) per the above. Given the actuarial failures, nothing prevents the legislatures from reducing or capping future benefit accruals or even sun setting future accruals a few years into the future. The defined benefit pension would then be replaced by a defined contribution pension from that point forward. Over time the pension liability shortfall would evaporate. Prior benefits accrued would be paid, especially up to a defined negotiated limit.

      Reply

      • Posted by muni-man on September 5, 2012 at 10:34 am

        The Appellate court has already upheld the UNCOLA, they can’t go to another appellate court. The NJSC affirmed as settled law the non-contractual nature of public pensions in March 2010 as laid out in the SPINA decision of 1964 which was based on the clear NJ legislative/constitutional history which doesn’t consider retirement benefits to be contractual rights. Likewise, NJ doesn’t recognize pensions as deferred compensation or buy into legal malarkey like ‘implied contracts’ as some other states do. In view of all that, the Feds won’t enter the fray. Strike three. I suppose the Dems could try to repeal the UNCOLA after CC leaves office if pressured enough by the unions but I think they know that just speeds up the plans’ demise. NJ has every right to prospectively and unilaterally change their benefit plans downward for new and active publics and that’s ultimately what they’ll be forced to do when they see they have no other choice.

        Reply

      • Posted by Tough Love on September 5, 2012 at 11:34 am

        All but your 1-st sentence is exactly what is necessary …. and routine in Private Sector Plans when the sponsor id in financial jeopardy.

        That’s the position NJ is in now, and in NJ’s case, it is primarily BECUASE of the unnecessary and excessive nature of Plan “promises” that we are in that financial jeopardy.

        It’s WAY past time to fix is …. for Current (not just New) workers.

        Reply

  5. Posted by Eric on September 3, 2012 at 7:48 pm

    There are no more courts of law. They are courts of politics. They are a sham. We are a banana republic.
    Eric

    Reply

  6. Posted by muni-man on September 4, 2012 at 1:01 pm

    $16T Fed. debt is about 12 hours away. When this bubble eventually pops it’s gonna be mighty U-G-L-Y!!
    http://www.usdebtclock.org/

    Reply

  7. Posted by eatingdogfood on September 4, 2012 at 3:25 pm

    You really didn’t think that Gov. Moonbeam and his Double Dealing
    Democratic Cohorts would Stab their Union Bosses in the Back, Did Ya ???
    Only one way out of this !!! Declare Martial Law and Nationalize the
    National Guard and Arrest All the Democrats and Union Bosses on RICO
    Conspiracy Charges !!!

    Reply

  8. Posted by Eric on September 4, 2012 at 3:43 pm

    muni-man:
    I like the last line of your debt clock showing the $120 Trillion of unfunded liabilities better than your $16 Trillion debt. The Fed will print most of this away along with our purchasing power. It is doing so now as I type this.
    Eric

    Reply

    • Posted by muni-man on September 4, 2012 at 4:03 pm

      They’ll keep a-printin’ and a-proppin’ up until that mystery event (which might be surprisingly small in scope overall but enough of a bogeyman to completely spook the markets) that sends the debt train off the tracks into the canyon for good.

      Reply

  9. Al, don’t know about CO–and would you please give it a rest–but in NJ there is no contractual law via the state constituion for pensions or benefits only promises and empty ones at that. Hope that the printing presses keep on a rolling and we will all be just fine. The NJ Uncola just keeps the sham going a bit longer. As the younger workers begin to figure out that their contributions are paying for the current retirees with no guarantee of anything left for them, the game will really get interesting. Only a matter of when and what it will look like. I predict the health benefits will go first in one way or another. Its already cut throat. Just wait……

    Reply

    • Posted by Tough Love on September 4, 2012 at 10:48 pm

      Quoting …” As the younger workers begin to figure out that their contributions are paying for the current retirees with no guarantee of anything left for them, the game will really get interesting.”

      Have been giving that some thought as well … but note, as they wise up, the “senior” union members nearing retirement and wanting to “get theirs” will punt enormous pressure on their younger associates not to rock the boat …. falsely promising that SOMEHOW, SOMEWAY, they’ll “get theirs” too, even if the funds go bust and pay-as-you-go is all that’s left.

      Fools ….. If they fall for that, I’ve got a bridge to sell them.

      Reply

  10. TL you are probably right but at some point people have to wake up. The younger people have been sold out and sooner or later they will realize the folly of it all.

    Reply

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