Checking Christie’s Math

New Jersey’s ‘required’ pension pension contributions will be reduced for fiscal years ending in 2014 and 2015 to $695 million and $681 million respectively as announced yesterday:
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Those numbers are supposed to represent the annual accrual for active participants reduced by the contributions made by those active participants as adjusted for interest and WITHOUT applying any 3/7th or 4/7th factor so Governor Christie can claim that the full accruals are being covered. I doubt if anyone else is going to check him on those numbers so I did and, if the latest actuarial reports on the state website are to be believed, his numbers are wrong.

I got the $681 million number that is supposed to be deposited as of 6/30/15 based on normal cost exhibits in the 7/1/13 reports put into a spreadsheet but I only get there if I apply that 7.9% assumed interest rate to 6/30/14 instead of 6/30/15.  Christie would have ignored that extra $54 million in interest so he could make those claims for savings you saw above.

Elated that I tied into a number I put the exact same exhibits from the 7/1/12 reports into another spreadsheet.  I did not get $695 million.  I got $895 million even with only one year’s interest applied to those 7/1/12 numbers.  With that extra year of interest the total contribution due next month would come to $965 million using Christie’s manufactured methodology.  I see three explanations for this difference:

  1. I and/or Excel messed up
  2. The 7/1/12 actuarial reports have not been updated for all subsequent gimmickry
  3. Somebody transposed a ‘9’ and a ‘6’ or an ‘8’ looked like a ‘6’ on Christie’s teleprompter

9 responses to this post.

  1. Posted by Tough Love on May 21, 2014 at 7:45 pm

    What’s would be more interesting (than the accuracy of Christie’s #s) would be to get a response from Christie as to whether by funding ONLY the current-year accruals of active workers, means that no part of active worker contributions (and the investment earnings thereon) can be used to continue payouts to current retirees once funds OTHER THAN those from current actives run out in a few years.

    Reply

    • Posted by skip3house on May 21, 2014 at 9:03 pm

      TL How close are we/they to the point of using active funds for retired? regards

      Reply

      • Posted by Tough Love on May 21, 2014 at 9:32 pm

        John, Do you know … I seem to recall you addressing that in earlier posts ?

        Reply

        • In theory we are there. With $76 billion in the fund (and that website hasn’t been updated since 12/31/13 so there may be issues with hedge funds tanking that they don’t want to acknowledge right now) that includes a large chunk ($25 billion?)
          in employee contributions that would need to revert to participants there is about half the money in there now to annuitize the retirees.

          Reply

  2. Posted by Anonymous on May 21, 2014 at 8:13 pm

    OMG you fools believe Chris Christie!

    Reply

  3. Posted by dentss dennagan on May 22, 2014 at 9:48 am

    Pension reform for idiots ….a good read NJ pension is insolvent ..http://www.publicsectorinc.org/2014/05/jersey-pension-system-beyond-saving-at-any-reasonable-cost/

    Reply

  4. Posted by Javagold on May 22, 2014 at 1:40 pm

    And now this slob , is taking away the property tax rebates for seniors and disabled. PUNK ASS LIAR !!

    Reply

  5. Posted by Anonymous on May 23, 2014 at 6:16 pm

    Has he given any justification for cutting the FYE15 payment? The answer seems like it is it’s still his term, but assuming he isn’t saying that. Revenues aren’t known for that year yet, agency requests aren’t until October, and his budget isn’t until February, so why cutting now?

    Reply

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