Not Adding Up

As far as the dollar amount goes it’s not earthshaking ($40 million) but what it says about innumeracy in the media and how unexamined mistakes morph into dodgy facts upon which flawed policies are based provides insight into why problems like unfunded pensions are never destined to be solved.

Yahoo Finance picked up that:

The governor said he will slash two large payments to the state’s $2.43 billion pension system as a means to cover unexpected revenue shortfalls in his budget, reports The Star Ledger.

PolitickerNJ also had the $2.43 billion figure which is now a fact in the public forum yet the initial Star Ledger story explains:

A payment to the pension fund scheduled to be made before June 30 will be reduced — from $1.6 billion to $696 million — via executive order, Christie said.  The governor also intends to shrink a $2.25 billion payment that was set for the next fiscal year to $681 million, but said he will seek the Democratic-controlled Legislature’s approval for that move.

A story in Bloomberg has that first contribution at $1.58 instead of $1.6 billion which is closer to the truth but going with the Star Ledger numbers:

6/14: $1,600 million – $696 million = $904 million

6/15: $2,250 million – $681 million = $1,569 million

$904 million + $1,569 million = $2.473 billion

It looks like that Star Ledger story had a typo and nobody cared to check.  Not a big deal in this case since it’s a phony contribution number to begin with but surely someone should be questioning more important numbers and assertions instead on unthinkingly accepting them:
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No! These payments when added to the employees’ own contributions will not come close to covering the accruals for active participants since the actuaries who put out this canard of sufficiency, even if every one of their numbers do add up, developed those numbers at the direction of politicians who made it clear what they wanted to see.  That would be obvious if anyone cared (or knew enough) to pose the right questions.