What the NJEA Is Not Telling Its Members

In the fight over getting New Jersey to make its pension contributions the New Jersey Education Association (NJEA) is urging its members to contact their legislators to ‘uphold the law’ and offering a Q & A for NJEA members on “The New Jersey Pension Crisis” where they cover the pertinent Qs but their As are mostly wrong or deceptive.  My suggestion for more accurate (and helpful) answers to the questions they pose:

How much does the state contribute to the pension system?

Whatever they damn well please.  There are no funding rules and contribution amounts are manufactured to politicians’ specifications.  (nb: the NJEA in their answer left out completely any mention that the contributions also include an amortization of the shortfall which for a variety of reasons is the biggest chunk of those contributions).

Does the state always make its required contribution?

The state never makes its required contribution and even that required contribution is based on willfully deceptive assumptions.

What happens when the state skips payments or makes only partial payments?

Nothing – to the state but your pensions will be summarily and arbitrarily reduced when the money runs out.

Why was the state allowed to skip pension contributions?

Because they could and you people didn’t care as long as you were getting your checks or promises of checks.

So, can the state just keep skipping payments legally?

Yes, if they keep getting to define that word ‘legal’.

What can you do?

Pay some attention – it’s New Jersey.


51 responses to this post.

  1. When it comes to skirting actuarially required contributions, New Jersey is a serial offender. You could say the same, though, about many states.

    Unfortunately, New Jersey has recently separated itself from the pack. Last month, as we all know, Gov. Christie announced his plan to remove $2.4 billion from the state’s pension system and redirect it into the general budget to cover other shortfalls. It’s a short-term “solution” that only exacerbates a long-term problem. Fitch told the state as much the day after the plan was announced.

    “Fitch views this reversion to prior practices — cutting pension contributions as a way to balance the state’s budget — as a form of deficit financing that is of particular credit concern at a time of economic recovery,” the ratings firm said in a statement.

    Christie’s logic for the decision was this: No one wants to see New Jersey raise taxes or cut education funding. That’s fine, and he’s right. But if you don’t make the ARCs now, then you’ll have to make them in greater amounts later. And when that time comes, the tax increases and cuts to social programs will be sharper and deeper.

    Pension360.org: Public pension news, trends and analysis from across the nation


    • Posted by Tough Love on June 12, 2014 at 8:23 pm

      Quoting … “But if you don’t make the ARCs now, then you’ll have to make them in greater amounts later.”

      Not if you do the eminently justifiably thing for the TAXPAYERS ….. considering how these excessive pensions afforded teachers (as well as all other Public Sector workers) are the direct result of the the Union’s BUYING the favorable votes of our elected officials ………. and materially reduce the promised benefit levels for the future service of all CURRENT workers, and (if as is likely NECESSARY) for the past service accruals of both actives and those already retired.


      • Posted by Anonymous on June 13, 2014 at 9:57 pm

        The problem is not excessive pensions, the problem is the state (taxpayers) not paying their share. Those states that have made their payments are in good shape.

        Pay now or pay later with interest.


        • Posted by RichardRider on June 13, 2014 at 10:14 pm

          NO state with a defined benefit plan is in “good shape.” They are not in as BAD a shape as New Jersey, but they ALL have unfunded pension liabilities — disguised by bogus actuarial assumptions that allow the problem “can” to be kicked down the road — for a while longer.


        • Posted by Tough Love on June 13, 2014 at 11:31 pm

          Well, the “share” assigned to Taxpayers is the 80-90% balance of total Plan costs after deducting the Public Sector employers contributions which (INCLUDING the investment earnings thereon) RARELY pays for more than 10-20% of total Plan costs.

          The current structure really sticks it to the Taxpayers, paying 80-90% of Public Sector pensions that are ROUTINELY 3x-4x greater in value at retirement than those Private Sector workers retiring at the SAME age with the SAME pay, and the SAME years of service.

          So not only are your Plans grossly excessive, but they also stick the Taxpayers with an absurdly high share of the cost.

          FUNDING isn’t the ROOT CAUSE of the problem, grossly excessive GENEROSITY is ….. and funding FOLLOWS generosity.

          And we’ll pay neither now nor later. Public Sector Pension AND retiree healthcare reductions are just round-the-corner.


          • Posted by Tough Love on June 13, 2014 at 11:44 pm

            Correction … the word “employers” in the i-st sentence of my above comment should have been “employee”.

  2. Posted by Anonymous on June 12, 2014 at 7:30 pm

    Why was the state allowed to skip pension contributions?
    Because they could and you people didn’t care as long as you were getting your checks or promises of checks.
    We sued but the courts said the state did not have to make contributions as long as it paid out pensions.


    • You may have sued but you always sue. What about challenging those bogus numbers the actuaries keep coming up with?

      And up until this year every public employee I know had an almost childlike belief that pensions were always going to be there.


      • Posted by Tough Love on June 13, 2014 at 12:04 am

        John, we BOTH know why the Unions don’t challenge the actuaries bogus assumptions ….. because using more appropriate assumptions would require MUCH MUCH higher contributions with 2 results:
        (1) less money for current raises, and
        (2) CLEARLY pointing out EVEN SOONER that their promised pensions are unaffordable, and must be reduced for the future service of CURRENT (not just new) workers.

        So they took a gamble that the Taxpayers would always be forced to pick up the tab for these absurdly generous pensions. Well, the odds have risen considerably that they bet on the wrong horse.


      • Posted by Anonymous on June 13, 2014 at 2:25 am

        We believed that you cant do anything about corruption


      • Posted by Anonymous on June 13, 2014 at 5:14 am

        We are also at the mercy of the unions,do you really think we have any say at all if so you also have a childlike belief! Have you ever been a member of a union and really gotten to know how things are run?


        • Posted by MJ on June 13, 2014 at 6:54 am

          It seems to me that as long as the raises, 9% pension bump, free health benefits, secured job, etc. kept coming nobody cared to question how it would all be paid for and it was graciously accepted. Now that reality is setting in and the public sector bubble has burst, y’all expect things to go on as they have. Im sure you non public friends, neighbors, family etc lost lots of money on their retirement funds, home values, loss of employment…..but the public takers should get everything bc it was “promised” Doesn’t sound like a level playing field to me.


          • Posted by Tough Love on June 13, 2014 at 8:22 am

            Oh please …. they have no interest in a “level playing field”. It’s all about insatiable greed.

        • Never been a union member but I doubt I would get to know how things are run through membership alone. I’m sure there are union members who are wondering, like I would, why their unions are:

          1) Using their dues to set up PACs that fund the political system that is perverting rational decision making;

          2) Sponsoring and running into the ground their multiemployer plans that often are in worse shape than government plans.


          • Posted by Tough Love on June 13, 2014 at 9:33 am

            John, Up until recently, the Union leadership thought their decision-making WAS rational … because they believed taxpayer would always be forced to make up for any Plan shortfalls.

            Union bravado (chest-beating) got in the way a rational thinking.

  3. Posted by Tough Love on June 12, 2014 at 7:47 pm

    Not surprisingly, the NJEA Q&A doesn’t mention the great generosity of their pensions …. easily 3x those of Private sector workers making the SAME pay, retiring at the SAME age, and having the SAME years of service.

    And, the those big employee contributions that they point out are rarely sufficient to fund more than 10-20% of their very generous pensions.

    And again, why no mention of the FREE retiree healthcare after 25 years of service that almost NOBODY in the Private Sector gets any longer. That alone is worth (for family coverage) several hundred thousand dollars.

    Reduce the pension by 50% and eliminate the retiree healthcare promises completely.


  4. Posted by Javagold on June 12, 2014 at 11:48 pm

    Throw them all on Obamadontcare. Most of them voted for him, so save millions there is a no brainer.


  5. Posted by RichardRider on June 13, 2014 at 1:55 pm

    What is seldom mentioned is that the dishonest actuaries (they don’t get the pension contracts unless they are dishonest) use outdated mortality tables — retires will live years longer than projected. Guess who is on the hook for ONE HUNDRED PERCENT of that “unexpected” pension funding shortfall.

    HINT: It ain’t the Tooth Fairy.


    • Posted by Tough Love on June 13, 2014 at 2:46 pm

      And of course the added cost longer-than-assumed life expectancy doesn’t hold a candle to the expected additional cost of discounting Plan liabilities at 7.9% in NJ.


      • Posted by RichardRider on June 13, 2014 at 3:04 pm

        At least there’s a CHANCE that 7.9% is achieved. No sane gambler would take that bet, but the pension proponents use this ridiculous return percentage as likely.

        But with mortality table tomfoolery, absent our retirees taking up 3 pack a day habits, we WILL have a guaranteed shortfall — having to pay for future retirees that likely will live AT LEAST five years longer than projected.


        • Posted by Tough Love on June 13, 2014 at 3:16 pm

          I suppose we offer Public Sector retirees a new perk … a heavily-subsidized high-fat, high-cholesterol diet.


          • Posted by RichardRider on June 13, 2014 at 3:26 pm

            I’m for bringing back the popular WWII program for our military — unlimited free cigarettes for our retiring “public servants”! Only requirement — if they take ’em, they HAVE to smoke ’em. NSA can monitor the the program with ease, I suspect.

          • Posted by Anonymous on June 13, 2014 at 9:18 pm

            Too Tough to proofread is your new name.

          • Posted by Tough Love on June 13, 2014 at 9:22 pm

            Guilty as charged…. and thank you for your thoughtful/constructive contribution to this discussion.

  6. Posted by Anonymous on June 13, 2014 at 11:44 pm

    tough love- 10 posts. Get you own blog.


  7. Posted by Tough Love on June 14, 2014 at 8:46 am

    Interesting reading for anyone who still doubts that Public Sector worker compensation is not COMPLETELY out of control …………….. and that very strong Taxpayer advocacy to reverse it is eminently necessary and just….



  8. Posted by Anonymous on June 14, 2014 at 10:49 am

    80 percent o fwhat you read is not true, that is a fact in itself. 99.9 percent of what TL spouts is fantasy.


    • Posted by Tough Love on June 14, 2014 at 11:01 am

      I’m perfectly willing to let the readers judge for themselves …..and I encourage independent fact-checking …..

      But a reminder to those readers ……….. beware of what those with a vested interest say (Public Sector workers riding this gravy train who don’t want their extraordinarily generous pensions & benefits reduced … even for FUTURE service years).


      • Posted by Pat on June 14, 2014 at 11:32 am

        And that would go for financial advisers who would profit from 500.000 (?) public employees thrown into 401Ks trying to figure out how to invest their money.


        • Posted by Tough Love on June 14, 2014 at 12:18 pm

          Likely true to some extent…. but a [(FAR FAR FAR) ^10] better chose than the current structurally unsound, unnecessary, and unaffordable gross overcompensation of Public Sector workers EVERYWHERE via current pensions & benefits..

          And, I would not directly or indirectly make even one dime in fees or commissions under such arrangements …….. sorry to disappoint you.

          I strongly advocate for change as a very well-informed Taxpayer thoroughly disguised with the current financial “mugging” being perpetrated upon us Taxpayers by very greedy Public Sector Unions/workers and their BOUGHT-OFF elected officials who allowed it to happen.


          • Posted by Carlos on June 14, 2014 at 12:47 pm

            Mr. Bury has been said the plan would be bust in 5 years back in 2008. Today it is funded at the same level according to state treasury numbers. Granted the fund is not well funded,but it isn’t broke. The only thing I am sure of is that the day after piggie is gone taxes are going to go up a whole lot. It won’t just be for pension costs either. I can’t think of one program that piggie has funded properly without stealing from one fund or another. The day of reckoning is coming maybe for pensions,absolutely for people like tough love who are completely naive to think she isn’t going to pay for this incompetent administration. It’s coming tough love it just depends how much they want to rape you. Honestly you need to hope piggie isn’t indicted by the Federal Grand Jury before his time is up. If that happens you won’t even have three years for him to protect you. Pensions may be reduced,but taxes without a doubt are going to go up.

          • Posted by RichardRider on June 14, 2014 at 1:32 pm

            Run your 401k plan the way I invest. Use index funds with 10th of 1 percent annual cost (sometimes even less) — about 1/5 to 1/10 the cost of defined benefit pension funds.

            A mix of index funds is easy to put together, requires no management skill by anybody, and empirically provides better results than most managed accounts.

            Make such an index fund option the DEFAULT option on 401k plans, with other options available if desired (or be a nanny central planner and FORBID all other options).

            The IMPORTANT thing about 401k-type plans is that they can’t be gamed by the unions. The employer/taxpayer and employee are obligated only to put money in (negotiated), but since the outcome is not guaranteed there is zero unfunded liability — the bane of our guaranteed defined benefit plans.

          • Posted by Anonymous on June 14, 2014 at 2:52 pm

            and what exactly have you dont to bring about these changes? absolutely nothing but incessantly rant on this blog. Otherwise nothing at all! I rest my case. By the way most of what you say may float in the toilet but not in a courtroom.

          • Posted by Tough Love on June 14, 2014 at 3:54 pm

            Well Anonymous, there is nothing I can do DIRECTLY to bring about change, but I have and I will continue to post the truth (even thought you’ll continue to deny it by spouting the distortions and lies coming from your Unions).

            Hopefully, I’m contributing to the eventually that enough taxpayers will understand how they are being ripped off by your grossly excessive pension & benefit promises … and demand that their elected officials either throw you under the bus and reduce these promises, or the taxpayers will throw them out of office and vote in those will fix this mess (by appropriately representing the interest of ALL Taxpayers, NOT just Public Sector workers) ..via pension & benefits reductions, NOT tax increases.

  9. Posted by Carlos on June 14, 2014 at 1:53 pm

    401k would be no better for the public employee. This incompetent administration would never put the required match in. It may be better for the tax payer in the future,but then the tax payer would have to pay the full boat of the costs for those retired. As it stands now active employees pay the most towards retirees not you. Imagine the shock when that bill came due. I shudder to think if this incompetent gov. was running our country. Honestly this hard to say,but Bush and Obama are more competent than this idiot. This idiot has borrowed from every fund available,borrowed from every bank that is stupid enough to lend him money and he still can’t plug the holes. He is so incompetent that 6 months ago he swore up and down we had plenty of money for a nice tax break. Thank god the dems told how f’n stupid was. I’m telling you this guy coudn’t run a popcorn stand.


    • Posted by RichardRider on June 14, 2014 at 2:19 pm

      What public employees infer is that their family should have a comfortable retirement JUST from their single pension. Unlike the rubes in the private sector, our “public servants” should not have to invest on their own. No IRA’s, not stocks, no nothing.

      Such is the viewpoint of our elitist government workers and their unions.


      • Posted by Carlos on June 14, 2014 at 10:44 pm

        Richard I have over 3/4 of a million dollars saved in addition to my pension and paid for home. I currently work with the rest of the rubes in the private sector. I won’t apologize for receiving a pension after 27 years as a Parole Officer stationed in Camden,just like you shouldn’t apologize for your Navy Reserve pension. I think everyone should save as much as possible,but it doesn’t negate the fact that pensions have been earned and should be paid. No one was strong armed either. Elections are held and results are tallied. If the public shared your rage we wouldn’t have a democrat legislature here in NJ nor would California where you live for all our readers who don’t know. In closing if those that are outraged can change something then go for it,but I know crying on a blog isn’t going to change a thing. Happy fathers day if you are one.


    • Posted by Tough Love on June 14, 2014 at 2:47 pm

      All distortions and misstatements of facts.

      By definition. DC (401K-style) plans are funded as earned, (not that a Gov’t employer couldn’t negotiate a lower contribution rate for FUTURE years only). There is NEVER a PAST service unfunded liability … EVER.

      And as to contribution requirements to current DB Plans, let’s set the record straight. Based on the current (very rich) “formulas” and “provisions” in NJ, all of the employee contributions (INCLUDING investment earnings on those contributions) RARELY pay for more than 10-20% of the total Plan costs necessary to fully fund their promised pensions over their working careers. The 80-90% balance comes from the ONLY other source…. Taxpayer contributions and the investment earnings thereon .(earnings that, in the absence of the need to fund these grossly excessive pension promises, would have stayed in the Taxpayers’ pockets, perhaps to help fund their much smaller retirements).

      But yes, while Taxpayers are “responsible” (theoretically) for that 80-90% balance, they have been contributing far less (for years). Why, because we simply don’t have the money to fund such a large share of such grossly excessive pension promises, and there is no rational justification for Taxpayers to do so.

      And we won’t now … or ever.

      Get used to the idea of materially reduced pensions …AND retiree healthcare benefits.


  10. Posted by Anonymous on June 14, 2014 at 3:40 pm

    yes you will because you have no control of the politicians who make the deals nor do you have an organization to vote for other candidates beside democrat or republican, neither of which will do anything to prevent you from paying higher taxes in some form or another


    • Posted by Tough Love on June 14, 2014 at 3:59 pm

      We’ll see….. Next up, Christie’s pension & healthcare reductions.


      • Posted by Carlos on June 14, 2014 at 10:15 pm

        Doubt it will pass the legislature. Senate isn’t up for six and he’s already failed. They certainly won’t help him to look better for his WH run. Let his incompetence,lies and record of failures be his own. Yes he cries about no money,but gives huge raises to his staff. Because workers in an incompetent administration deserve raises I guess. By the way he didn’t want you the tax payor to know he doled those raises out. http://www.northjersey.com/news/christie-staffers-get-hefty-pay-increases-as-other-areas-face-cuts-1.1025934?page=all
        Seems kind of strange to give out raises that average 23% when he cries poor mouth. I hate to say it but it is typical republican though. Blame everyone else,cut programs,dole out tax dollars to your pals.


        • Posted by Tough Love on June 14, 2014 at 10:30 pm

          And with his staff raises totaling perhaps one one-millionth of the financial pension/benefit Taxpayer ripoff perpetuated by the collusion between the Public Sector Unions and our Union-bought-off Democratic Legislature, what is the point of bring that up other than to distract the reader from the issue at hand ……. the VERY necessary, VERY just, and VERY material Public Sector pension & benefit reductions desperately needed?


          • Posted by Carlos on June 14, 2014 at 10:56 pm

            Yes the amount isn’t huge for the raises,but it shows what a poor leader he is. He talks sacrifice,but he doesn’t live it. It’s symbolic,but it matters. I have not distracted anyone I have stated reasons why his proposals won’t pass. Maybe I’m wrong,but I doubt it. The way I see it after he’s gone taxes will be raised,highways will be leased, marijuana will be legalized. As always a pleasure talking with you.

  11. Posted by Anonymous on June 14, 2014 at 5:58 pm

    bwahahahahhahahahhaahahhhahaha you still have faith Chris Christie. Sad very sad that you will never learn. Ask Brett Schundler about your misplaced faith and loyalty.


    • Posted by Tough Love on June 14, 2014 at 8:43 pm

      The one thing I’m sure about is that Christie won’t be even remotely funding your pensions at a level that will keep them from going bust in but a few years.

      Sure, he love to be able to fix it, but given the grossly excessive generosity (and THEREFORE the incredibly high funding requirements) and the incredibly poor shape they were in when he became Governor, doing so is an impossibility.


  12. Posted by Anonymous on June 14, 2014 at 9:30 pm

    He already fixed it, just ask him, at least that is what he said 2 years ago. He said we would all be thanking him in a few years down the road!


  13. Posted by fouls123 on February 14, 2015 at 2:38 am

    Tough Love is a bitter old person who just wants to listen to its own bitter voice. If the state can reneg on its obligations, it can reneg on bond obligations, and any spending it does and leave its creditors holding the bag. Such debts are no different than paying pensions. Debt obligations are debt obligations and a contract is a contract whether you approve of the terms or not. Have you studied every state contract to decide if you think they are fair contracts? No you are just a jealous, misinformed old fool. If you runa business you know you can’t unilaterally renegotiate a contract after the terms of the contract are completed. Now go away.


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