State of Emergency

Mark Magyar at NJSpotlight reported on how the New Jersey legislature is responding to Governor Christie’s threat to take “emergency measures” on state pensions:

“With the governor threatening to unilaterally make changes to the pension system but not explaining how or what he intends to do, the Office of Legislative Services engaged in extensive discussions and review of state laws to determine any possible way the governor could act by Executive Order,” according to a Senate Democratic memo issued by Sweeney and Executive Director Kevin Drennan on March 13 that was obtained by NJ Spotlight, along with an accompanying OLS report.

“OLS’s conclusion is that he does not have any power to unilaterally make any changes because the state’s pension laws are all set by statute, including the reforms that continue to restore financial stability to the pension system,” the memo continued.

“The governor can’t try to claim that the pension system’s finances are in such dire straits to constitute an emergency because OLS believes that the pension system is not in any state of emergency,” the memo said.

So if the OLS could be convinced that the New Jersey pension system were in “any state of emergency” then their position would be that benefits could be cut unilaterally by 70% (approximately what it would take to make the plans actuarially sound considering what is being contributed)?  Here are the arguments:

  • The plans are $50 billion short of being able to annuitize only (yes, ONLY) benefits for retirees.
  • Governor Christie claims over his 5 budgets to have put more into pensions ($5.4 billion) than any other governor in New Jersey history but because of deferrals and an arbitrary factor applied to the ARC he has also shortchanged the pensions ($12.9 billion*) more than any other governor in New Jersey history.
  • According to the 7/1/13 valuations there was $8.7 billion paid out to retirees with $4.9 billion contributed in.  These plans are not being funded but drained.

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Pension Contributions (in billions)
Year………ARC……Deposited…Not Deposited
2010……..$3.1……….$0.0………….$3.1
2011……..$3.4…… …$0.5………….$2.9
2012……..$3.6……….$1.0………….$2.6
2013……..$4.0……….$1.7………….$2.3
2014……..$4.2……….$2.2…………$2.0

TOTAL….$18.3………$5.4………..$12.9

24 responses to this post.

  1. Posted by Tough Love on March 17, 2014 at 12:13 pm

    The staff in the OLS office are also participants in NJ’s DB pension Plans. They too are preying for a miracle, not a freeze in further DB Plan accruals.

    Reply

  2. Posted by Anonymous on March 17, 2014 at 12:34 pm

    praying, preying was freudian slip

    Reply

  3. Posted by Javagold on March 17, 2014 at 2:26 pm

    Do you public takers finally Hear that sucking sound ???

    Reply

  4. Posted by haz on March 17, 2014 at 4:24 pm

    A lot retires i spoke to do not believe that (pension apocalypse is coming) Senate Democratic leader Sweeney and others like him it seems they don’t want to tell us the truth. You know why they will be booted out of office if they told the truth! At lease Christie is talking about it.

    Reply

  5. Posted by Anonymous on March 17, 2014 at 11:19 pm

    dont be a fool Christie isnt truthful either. He made you believe he was funding the pension system. all he did was take away the COLA and use that for pension contributions which didnt make a dent in the deficit. He used retirees money to make himself look good while making no difference in pension deficit, he actually let it slip further into debt.

    Reply

    • Posted by Tough Love on March 18, 2014 at 12:44 am

      Well, if the COLA suspension isn’t reversed by the Courts, it will indeed make quite a “dent” in what Taxpayers (whose Private Sector pensions are almost NEVER COLA-increased) would other have to pay to fund it.

      Public Sector workers make no less than their Private Sector counterparts in “cash pay”, so what justifies FAR greater TAXPAYER-FUNDED pensions, both in the MUCH richer formulas, MUCH younger (unreduced) retirement ages, and COLA-increases payouts ?

      Reply

      • Posted by Chuck on March 18, 2014 at 3:00 pm

        Can’t speak for all of the public sector unions, but I will speak for my Police/Fire sisters and brothers. As far as justification goes how many national holidays, midnights and disasters have you worked? When there is shooting nearby or a house with occupants on fire, are you running towards these situations or away to call us. How many family get togethers and your kids games have you missed? Not complaining that’s WE signed up for. When we signed up we were promised certain benefits. We negotiated in good faith with the politicians YOU elected and paid into our pension without the benefit of a pension holiday enjoyed by our local govts. Now that these pension holidays have caused the pension to be underfunded, it’s our fault because we are greedy. Now the govt wants to restructure the pension system unilaterally on our backs. Wish we knew that earlier when we were running towards the gunfire and into burning buildings. Maybe we should have stopped to renegotiate our deal, but we didn’t because we thought we would be taken care of and that’s what we do.

        Reply

        • Posted by Tough Love on March 18, 2014 at 4:00 pm

          Please read my comments to the following post, as well as my follow-up comments made by “SkippingDog” a retired California Police officer. Then, please tell me how that pension (and salary equivalency for a Private Sector worker to get the same pension) can possibly be justified.

          http://unionwatch.org/how-much-does-professionalism-cost/

          Reply

        • As a volunteer firefighter for many years, I can say that I have worked many the holiday (in fact, every one of them at one time or another, and without any form of compensation, let alone double secret overtime, fat pensions, and health care for life). Fortunately, I moved across the border into PA before the bill could come due. Eventually, you public sector ticks will figure out there is no blood left circulating within the dried out husk of a corpse that NJ has become, though I doubt you will ever accept responsible for it.

          You delude yourselves into thinking you are performing a service to your community while you literally suck the life out of its productive citizens and retiree (who do not share in your largesse their expense). But members of our military have and continue to die in service of their country – WITHOUT the gold plated benefits which you regard as your god given, inviolable, constitutionally guaranteed right.

          Soon, however, you will learn that the government which has the power to give you everything you want has also the power to take away everything you have. I suspect you will learn it good and hard, but the sad part is so will the taxpayers since the idiots in Trenton will try every trick they can before they are forced into doing the necessary.

          Reply

          • Posted by Chuck on March 18, 2014 at 5:18 pm

            First, Brian let me say thank you for your service as a volunteer firefighter. I also strongly agree with your sentiments of how poorly our military is treated. I am a little offended by your portrayal of public safety personnel as “ticks”. There are many of those “ticks” who have laid down their lives for all of us. Think of all of those (your words) “ticks” who died in the Twin Towers on 9/11.

            I would suggest that you educate yourself on the past status of our pension system when it was overfunded, before the govt stopped making their required contributions to the system. Many pension experts agree that this “pension holiday” was the proximate cause for the pension situation we find ourselves in today.

            By the way who elected the politicians who agreed to these “gold plated” benefit contracts? I don’t feel my pension is a “god given right”, but it is a contractual right that was negotiated with the people the taxpayers elected.

            Lastly, you’re going to find no peace in PA as they suffer from the same issues as NJ. You might want to try South Dakota.

            Best

          • Posted by truthnolie on March 19, 2014 at 1:07 pm

            @Chuck:

            It looks like you may have not checked around this site for other posts by those you’ve responded to but take my advice….don’t waste your breath.

            They are overall hyper jealous public employee haters and Christie sycophants who worship at his (4EEE size) feet.

            They’ve all drank the Kool Aid and blame the PE, never acknowledging that the problem was created (and probably planned by) the politicians who did not contribute the state’s share and also took from the plans.

            Most also seem VERY chagrined that they made a terrible career choice since they will have to work until they are old and gray, slaving at their menial jobs while those PE’s (esp. police/firefighters ) can retire at an early age and get a pension & benefits. Anyone with a passing knowledge in physiology or sociology can see that they are projecting their envy & resentment onto the public employees, people whom they consider beneath them…..this drives them even more insane (which can be seen in their hysterical, manic & delusional postings (the majority by Tough Love)).

            They see PE’s as their servants…….kinda sucks when their supposed servants have higher paying jobs with lifetime benefits, early age retirements, payouts, etc……you know…..it’s really quite understandable if you put yourself in their shoes (the ratty, torn up ones with holes in the soles since the PE’s are robbing them blind and they can’t afford new ones)……who would NOT be in a jealous rage when their servants became masters??

          • Shame on you for being an unpaid firefighter. Sour grape, don’t you think.
            You’re one on those who couldn’t get on a real paid fire Dept so you took the no pay job just to wear the uniform. Lol

      • Posted by Jomama on March 18, 2014 at 3:04 pm

        Again, your facts are incorrect. College educated state employees do in fact make less that their public counterparts. Easy to find–google it.

        If you believe what you say. I would take the approach that you are a fool for not being a public employee

        Reply

        • Unless you count the unemployed college graduates.

          Reply

        • Posted by Anonymous on March 20, 2014 at 9:20 am

          All college degrees are not equal. A masters in Education is NOT the equivalent of a bachelor’s in engineering. Most government employees have phony degrees in phony fields of study. They also have no sense of morality – to paraphrase you, “If being a thief is so lucrative, why didn’t you become a thief, too? You are a fool for not stealing.”

          Reply

          • Posted by Jomama on March 21, 2014 at 3:06 pm

            So using your argument, why should anyone major in education? They are clearly a burden to the state, and can make more money if they major in something else. Your analogy of being a “thief” is interesting as most people on this board discuss taking something that I have earned, as a contractual right, away from me. I believe THAT is the very definition of thievery.

  6. Posted by Anonymous on March 18, 2014 at 3:42 am

    not true

    Reply

  7. Posted by Jomama on March 18, 2014 at 3:01 pm

    So let’s see, the investment expenses are 15 million a year, contributions to the pension plan will go up on the part of the employee, and the municipalities are still getting a break on their contributions to the pension system (50 million/year). If the state and municipalities made their full contributions it would be another 3+ billion per year. Of course there’s no growth in NJ because businesses were given another 2B in tax breaks–and no jobs.

    Fact is, after this next fiscal year, the state is projected to be able to make the 2Bpayment. It took 20 years of no funding to get into this mess.

    Reply

    • And no there is no getting out of the mess. Best to amend the constitution, if necessary, to soak the 1% (i.e., those with pensions having a net present value in the millions at today’s low interest rates) by confiscating the value of their pensions and distributing to the most “vulnerablest” (a word coined by Sheila Oliver, former Assembly speaker and quite the erudite legislator by Democrat standards).

      Reply

      • Posted by truthnolie on March 19, 2014 at 1:12 pm

        You stated above you were a volunteer firefighter……figures……typical blue light whacker who couldn’t pass the test to get on as a paid firefighter with a pension and benefits & reduced yourself to working at a job you hate….huh??? Now you spew your jealousy & rage about not making the cut by attacking those who were better & smarter than you……Yeah..it shows

        Reply

        • “Typical blue light whacker” …. Nice one.

          Reply

          • Posted by Tough Love on March 19, 2014 at 8:03 pm

            Pity truthnolie ………

            He’s trying to pick himself up by climbing over your body.

            Quite pathetic………. and just another trough-feeder with an oversized sense of entitlement.

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