New Jersey COLA Decision Released

This morning the Appellate Division of the New Jersey Superior Court published their decision in Berg v. Christie.

Some highlights:

Mindful of our required hesitancy to infer legislative contracts, and the practical difficulties the Court described in Spina, we nonetheless find that the non-forfeitable rights statute enacted in 1997 created a contractual right. (page 41)

During the May 20, 1996 hearing, a union-retained actuary* explained the employees’ concern that, as a result of skipping pension payments, the State would eventually find itself facing a need to make a much larger contribution in the future, would balk at such a large expenditure, and would instead try to cut benefits. The actuary urged, “it is critical that this Legislature guarantee the benefits that employees have earned” and argued that the Legislature should accomplish that goal by providing a contractual right to the benefits. Pension Hearing at 68-69.  (page 44)

For all of these reasons, we conclude that the non-forfeitable right provision, which creates a contractual right to receive pension benefits, applies to COLAs.(page 54)

Because the trial court did not address the contract clause issue at all, and because a contract-impairment claim presents “a mixed question of fact and law,” N.J. Educ. Ass’n, supra, 412 N.J. Super. at 206 n.10, a remand is required to allow all sides to create a complete evidentiary record. Hence, we remand this case to the trial court for further proceedings consistent with this opinion. (page 61)

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* For those of you who may be wondering who that “union-retained actuary” was here is the transcript of that hearing and it was not an actuary who made that point.  It was John Loos, CWA Legislative/Political Coordinator.

PS: nj.com story now up and there will be much more from me in detail on this decision in the coming days so, if you haven’t already, sign up for this blog.

55 responses to this post.

  1. Posted by Anonymous on June 26, 2014 at 11:34 am

    Therefore the contractual rights of the employees require the State of NJ to provide revenues to make the required payments. I question the application of the “Disaster Control Act”, to reduce the 2014 pension payment. What’s the next move CC?

    Reply

    • Posted by Tough Love on June 26, 2014 at 12:27 pm

      Quoting… “Therefore the contractual rights of the employees require the State of NJ to provide revenues to make the required payments. ”

      Gee, I don’t see in the Court’s opinion, the leap from “the contractual right to receive pension benefits, applies to COLAs” to the “requirement to make payments”.

      There isn’t now, and it is very unlikely there will EVER be sufficient revenue to fully pay even the basis formula pensions (given their grossly excessive generosity and hence HUGE cost), let alone the incremental value of the COLAs.

      Court decisions don’t create money…… and insatiable greed HAS consequences for the greedy.

      Reply

      • Posted by Al Moncrief on June 26, 2014 at 3:35 pm

        TL, a recent survey by the New York Times found that state and local governments in the U.S. give away $80 Billion each year in corporate welfare transfers. It’s quite difficult for state and local governments to plead poverty before the courts when they give away a substantial portion of their revenues. Why should a court permit a pension plan sponsor to escape contractual obligations when such unearned transfers are made for non-contractual policy preferences? In Colorado, our state and local governments give away thirteen percent of all revenues. Visit saveperacola.com for the full story.

        Reply

        • Posted by Tough Love on June 26, 2014 at 3:44 pm

          That indeed seems to be a problem in NJ as well. In theory, such Corporate welfare (actually tax forgiveness) is believed necessary to attract new business and keep businesses from leaving. It certainly isn’t clear if the benefits of such practice are greater than the cost.

          This area certainly warrants examination in great depth so that NJ isn’t wasting it’s resources.

          But we need to keep in mind that 2 wrongs do not make one right. If we are wasting our money on Corporate welfare, we should reduce the funds allocated for such purposes accordingly, but the saved resources CERTAINLY should NOT be used to continue (for FUTURE Employee Service years) a Public Sector pension structure that is grossly excessive and unfair to all but the participating Public Sector workers.

          Reply

          • Posted by Al Moncrief on June 26, 2014 at 8:55 pm

            TL, I’m glad to see that you’re not quite as strident about breaking existing contracts as you have been over the last few years. Make your case that public pension contracts should be altered on a prospective basis, but don’t try to claw back money from people that has already been earned. That is manifestly immoral (and unconstitutional.)

          • Posted by Tough Love on June 26, 2014 at 9:46 pm

            Al, While I agree in principal that it would be best if we need not reduce past service accruals for both current actives and those already retired, I suspect that some Plans are in such dire straits that EITHER that must be done (in addition to future service accrual reductions) or taxes must be raised.

            For the Plans that find themselves in such dire straights (with only future service reductions being insufficient), if collusion between the Public Sector Unions and their elected officials resulted in pension promises greater than what would have been granted in the absence of that collusion, you would have a hard time convincing me that reductions in past service accruals is not the more appropriate solution.

      • Posted by Carlos on June 26, 2014 at 6:13 pm

        I’m thrilled with the ruling. I’m sure you aren’t. As a matter of fact I’m sure your scared to death. With only a couple more years of piggie protecting the coddled elitists of our state,you just know deap in your heart the raping you are going to get in the form of taxes is going to be severe. How will you stop it ? Your ilk don’t control the legislature,you couldn’t even gain one seat with piggies historic win. Republicans won’t win the gov. mansion again for 12 years after piggie is gone. Remember the only thing the public hates more than public workers are the elitist,coddled wealthy of our state who are ALWAYS CRYING about how much they pay for everything. Hopefully Sweeney puts the tax hike on a ballot. It will pass easy. The average Joe is so sick of the cry baby elitists.

        Reply

        • Posted by Tough Love on June 26, 2014 at 6:36 pm

          Wow, you’re in for a rude awakening when the politicians (knowing where their bread is buttered … the MAJORITY of the Taxpayer) throw you under the bus once pension pay-go hits, and kicking the can down the road is no longer an option.

          Yes, the average JOE is indeed sick of the elitists, but they have wised up to the financial “mugging” perpetrated upon them by your ilk, and they even MORE sick of you.

          Reply

  2. Posted by truthnolie on June 26, 2014 at 11:40 am

    Ahhhhh……..it’s good to be right!!!

    Reply

    • Posted by Tough Love on June 26, 2014 at 12:47 pm

      Is has been suggested that the emperor of japan stated the following after the Japanese attack on Pearl Harbor ………… “I fear all we have done is to awaken a sleeping giant and fill him with a terrible resolve.”[

      Sometimes it’s not good to be right.

      It THIS case, a reinstatement of the COLAs will only advance the date of the NJ Plans’ collapse.

      Reply

      • Posted by Anonymous on June 26, 2014 at 1:02 pm

        shut your piehole! hahahahahahahahahahhahaha

        Reply

        • Posted by Tough Love on June 26, 2014 at 1:13 pm

          Very mature.

          Reply

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

            Jeez. Best course of action now is to give those COLA’s to anyone hired prior to 2005, none for anyone after that and immediately create a DC plan for any new hires. Put the DB plan to bed and fund it with 30 year bonds. Enough already with the lawsuits and fighting.

          • Posted by Tough Love on June 26, 2014 at 3:23 pm

            At the VERY LEAST, a DC Plan should replace the pensions of not only NEW workers, but the FUTURE Service of all CURRENT workers.

            Are ALL of you Public Sector workers BLIND to the gravity of the financial situation … which pointedly includes YOUR financial security ?

            If THAT was implemented it “MIGHT” be possible (with great fortune in the stock market) and over an extended period, to amortize the Past Service pension accruals of current actives and those already retired.

            Do you want to throw that possibility away for the EXTREMELY remote possibility that even FURTHER (future service) accruals can be accommodated ?

          • Posted by Anonymous on June 26, 2014 at 7:24 pm

            Shut your greasetrap you old battleaxe

      • Posted by Al Moncrief on June 26, 2014 at 3:39 pm

        TL, state and local government pension plans consume a few percentage points of all public sector revenues in the U.S. according to the U.S. Census Bureau. Why are you not screaming about the other 97 percent of public sector expenditures? Logically, you should be most concerned with the 97 percent rather than the paltry three percent, given your self-appointed position as a taxpayer’s advocate.

        Reply

        • Posted by Tough Love on June 26, 2014 at 3:49 pm

          Well, we BOTH know that that 3% is more like 10-25% at the local level and rising rapidly.

          It’s only a very small % at the State level due to HUGE fixed costs that overwhelm everything else ….. such as Medicare, education transfers, etc.

          Reply

          • Posted by Al Moncrief on June 26, 2014 at 9:00 pm

            “Indeed, the National Association of State Retirement Administrators issued a recent study that showed that, on average, pension costs represent only about 3 percent of total state and local government expenditures. In Colorado, state and local government expenditures to fund retirement benefits totaled only 2.16 percent.” http://www.copera.org/pera/about/issues.htm#42611.

          • Posted by Tough Love on June 26, 2014 at 10:46 pm

            Al, It’s silly to argue minutia or irrelevant issues.

            Where Public Sector “Total Compensation” (cash pay + pensions + benefits) is excessive, meaning more than VERY marginally greater than that of comparable Private Sector workers ….. and it is just about everywhere, due not to cash pay differences, but to very material PUBLIC Sector advantage in pension & benefits……….. it must be reduced, and it doesn’t matter one iota what the level of State of Local spending on such pensions or benefits may be.

  3. Posted by truthnolie on June 26, 2014 at 11:56 am

    “a union-retained actuary explained the employees’ concern that, as a result of skipping pension payments, the State would eventually find itself facing a need to make a much larger contribution in the future, would balk at such a large expenditure, and would instead try to cut benefits.”

    The “union actuary” nailed it and turns out to be a modern day Nostradamus.

    See…..instead of hateful, vengeful morons (TL, Javagold etc.) espousing their rage at public employees, they should be venting it towards the corrupt politicians who were advised about the issue EIGHTEEN YEARS AGO!!!!!!!! and failed to take ANY substantial actions to start fixing the problem then……MOST helpful would have been for the state to start making the REQUIRED contributions (if they had the systems would have self sustained with the three pronged solution of state contributions, employee contributions & compounding interests on those funds).

    I really hate to use the phrase “the emperor has no clothes” when it comes to Christie (the imagery is horrifying) but the sycophants supporting this demagogue hopefully will one day come to the realization what an empty and incompetent “leader” he really is and stop buying into his cult of personality.

    Reply

    • Posted by Tough Love on June 26, 2014 at 12:36 pm

      No, it didn’t take a trained actuary to reason that through, only someone with VERY basis math skills and a logical mind.

      As to my being a “moron”, look unto thyself, starting with your insatiable greed and loathing of the Taxpayers who pay your way …. your salary, your pension, and your benefits.

      While your placing “blame” (for the granting of these grossly excessive pensions and benefits) on the decades of prior politicians has merit, you conveniently ignore the FACT that it is the Public Sector workers are the financial beneficiaries of that political double-dealing ….. so THAT’s where Taxpayers must look to right this wrong, by reneging on that (50+%) share of those promises that would NOT have been made in the absence of the Public Sector Union/Politician collusion.

      Reply

      • So what your saying is that after working very hard and my blood sweat and tears bringing several times my now 80K salary for 35 years (and getting a pension after paying into in religiously for 35 years) and my pension being worth about 38 K ( 50% salary of 3 highest years) is EXCESSIVE? You, Mr. Tough Love do not understand the value of hard work or contract law. I agree they have criminally underfunded it and there needs a resolution. I want my pockets to stop being picked.

        Reply

        • Posted by Tough Love on June 26, 2014 at 2:56 pm

          Before I answer, lets put a few facts on the table:

          (1) If you were to take each of your annual contributions and accumulate them to the date of your retirement (including all the investment returns thereon) the accumulated sum would likely be sufficient to buy more than 10-20% of your VERY Generous promised pension. The responsibility for the 80-90% balance has been foisted upon the Taxpayer whose retirement packages from THEIR employer are rarely more than 1/4-1/3 the value of yours when factoring in BOTH your much richer pension “formulas” AND the much more generous pension “provisions” such as the much younger full (unreduced) retirement ages, and COLA increases should they be reinstated.

          (2) If your pension is 50% of final average pay after 35 years, the pension “formula” is just about 1.43% of pay per year of service. While I’m not privy to the specific formulas of all NJ’s Plans. I am aware of none with a formula that low. I believe you have understated your pension (or overstated your “pensionable compensation”).

          (3) Based on today’s Court decision that will likely result in a reinstatement of COLAs, your $38,000 starting pension is just about equivalent to a LEVEL annual pension of $50,000. Since Private Sector pensions RARELY include annual COLAs, THAT (the $50,000 figure) is what should be measured against the pensions afforded Private Sector workers in a “fairness” comparison.

          And to answer you question, unless you were underpaid in “cash pay” vs your Private Sector counterpart (which does happen in some high level professional occupations) there is no justification for taxpayers to fund a pension for you greater than what they typically get from their employers. And while I’m sure you will say…. but that was the deal …. I respond by saying that your generous “deal” (the grossly excessive pension & benefit promises) were ONLY granted because your Union BOUGHT the favorable votes of our elected officials with campaign contribution and election support. And as such, Taxpayers are justified in reneging on that share of your pension that likely would NOT have been granted in the absence of that collusion…… and a fair estimate would be to bring it down to the level typically granted comparable Private Sector workers.

          Reply

          • Posted by Tough Love on June 26, 2014 at 2:59 pm

            In the 3-rd line in # (1) of my above comment the word “more” should have been “no more”.

          • Posted by Al Moncrief on June 26, 2014 at 9:04 pm

            TL, we honor contracts in the United States. Our entire economy rests on the sanctity of contracts. You may not like certain contracts that exist in the U.S. Nevertheless, parties to those contracts have obligations that will be carried out.

          • Posted by Tough Love on June 26, 2014 at 9:54 pm

            Al, Contracts negotiated in bad faith are abrogated all the time, and nobody involved in any of the discussions granting Public Sector pension TRULY represented the Taxpayers’ interests.

            As the ultimate payer, don’t you believe they had the right to fair (if not forceful) protection of their interests ?

      • Posted by Al Moncrief on June 26, 2014 at 3:45 pm

        TL, those who expect their contracts to be honored do not suffer from “insatiable greed.” They are simply parties to contracts. My right-wing buddies all expect contracts to be honored under the U.S. Constitution. If you are not fond of existing contracts, then by all means support the negotiation of future contracts more to your liking. Visit saveperacola.com and read about Colorado’s public pension theft in 2010.

        Reply

        • Posted by Tough Love on June 26, 2014 at 3:57 pm

          Al, Those who benefited from their Union’s BUYING of the favorable votes that resulted in these grossly excessive pensions (with the betrayed Taxpayers on the hook to pay for them) DESERVE to have them reduced to the level that would have been granted in the absence of that collusion.

          If they want someone to “blame” a good place to start would be to look to their Union executives and the elected officials (past and present) who so gladly accepted their Union’s campaign contributions and in turn granted pensions and benefits SO GENEROUS that they either knew (or should have known) had little chance of ever being fully paid.

          Reply

          • Posted by Al Moncrief on June 26, 2014 at 9:14 pm

            TL, I recall informing you on a number of occasions that Colorado’s public sector “unions” are weak to the point of not deserving the title “union.” Republicans controlled the state for much of the last century. Dems have been in control for about the last ten years, but most of these Dems are not union supporters. Our “unions” haven’t colluded to improve Colorado PERA pension benefits. They have minimal influence.

            Further, as I have also told you, it was a Republican Governor (Bill Owens) who has driven up the cost of public pensions in Colorado. Governor Owens pushes through his “service credit fire sale” last decade. His idea was that if he could encourage older, more expensive Colorado PERA members to retire, then he could shift governmental labor costs from Colorado state and local governments to the Colorado PERA pension system. This Republican cost the Colorado PERA pension system billions. His action was recently condemned by a conservative columnist for the Denver Post, Vince Carroll. You can Google this to read about it, or visit saveperacola.com and read about it, or I can also dig it all out for you if you like. Al

          • Posted by Tough Love on June 26, 2014 at 10:00 pm

            Al, well the Unions in Colorado may be weak, but they certainly aren’t in NJ, and this blog is primarily a discussion of the issues surrounding NJ’s Public Sector pension problems. The “collusion” (corruption, double-dealing, graft, etc.) in NJ is RAMPANT and so in-your-face that it’s disgusting.

            I suggest that you bring those issues/concerns up on a blogs that focuses on Colorado pension issues.

  4. Posted by brooklyn91941 on June 26, 2014 at 12:17 pm

    Let’s get this straight. Christie and his allies want to cut benefits and eventually do away with DB plans. this will be a long war.

    Reply

    • Posted by Tough Love on June 26, 2014 at 12:38 pm

      Not really. It will come to a head (WITH clear decisions) once pay-go hits in about 5 years ….. although likely even sooner.

      Reply

  5. Posted by Javagold on June 26, 2014 at 12:22 pm

    Truthnolie. If you think I’m a fan of Christie. You are sadly. Sadly. Mistaken.

    There is no more money. Simple math. Doesn’t matter what u say. Or I say.

    Reply

    • Posted by Tough Love on June 26, 2014 at 12:39 pm

      Nailed it.

      Reply

    • Posted by truthnolie on June 26, 2014 at 12:54 pm

      Javagold…..glad to know you’re not a Christie fan.

      Regret lumping you in with the Christie lovers and while we agree that the money is disappearing from the funds (although at what rate is questionable even two-faced, triple chinned Christie claims there is money there for at least 30 years of payments) where we diverge is where the blame lies and whom should be held responsible.

      Although it’s been said over and over again it bears repeating that public employees have NEVER been able to miss or skip a payment. And the “unions” have tried to demand such payments be put in (as stated in JB excerpt starting at least 18 years ago) but the state chose to ignore and finagle the courts to issue judgments benefiting their illegal actions.

      There are many places the state can cut and/or increase revenue……the millionaire’s tax, gas tax, privatizing state run venues/properties, toll increases, going after double pensioners (most of whom are political insiders and not the average retiree) and disability cheats, etc., etc.

      Look at that……we got through an exchange without insults…….maybe there is hope for the Middle East.

      Reply

      • Posted by Tough Love on June 26, 2014 at 1:32 pm

        Quoting …”it’s been said over and over again it bears repeating that public employees have NEVER been able to miss or skip a payment.”

        Yes that’s true, but for completeness you should have also stated that ALL of the workers own contributions accumulated to the date of retirement (INCLUDING all the investment returns thereon) will RARELY be sufficient to buy more than 10-20% of these incredibly generous pensions …….with the 80-90% balance being unjustly foisted upon Taxpayers.

        Reply

  6. Posted by Anonymous on June 26, 2014 at 12:55 pm

    now I can get off food stamps and welfare which TL was paying for anyway

    Reply

    • Posted by truthnolie on June 26, 2014 at 2:18 pm

      Hahaha…..NAILED IT!

      Good one….I don’t see her attacking those programs…..perhaps she takes advantage of them….would go far in explaining her hypocrisy.

      Reply

      • Posted by Tough Love on June 26, 2014 at 3:01 pm

        So are you saying that those who cannot afford food should be denied so you you can keep your over-stuffed pensions ?

        Reply

        • Posted by Anonymous on June 26, 2014 at 3:20 pm

          NO. those who cannot afford food should be financied more by millionaries instead of cutting benifits to $35000 a year retirees who will eventually be part of the food stamps crowd

          Reply

          • Posted by Tough Love on June 26, 2014 at 3:33 pm

            Gov. Christie stated that the 10 top individual Taxpayers in NJ paid as much in taxes as the bottom 2 Million tax filers (HALF of the 4 Million fillers in total).

            He further stated that if you think we have a problem now, just consider how bad it would be if by raising their taxes, they moved out of NJ.

            The answer is not raising taxes, but getting our expenditures in line with reasonable revenue projections. While there are likely many other appropriate place to cut expenses (not the least of which is the firing of the many political “hacks” and useless appointees), because of the HUGE amount of cuts that are necessary, AND the current structure of GROSSLY EXCESSIVE pension and benefit promises to all Public Sector workers, the latter certainly belongs at the TOP of the list for cuts …. for the future service of all CURRENT employees.

          • Posted by truthnolie on June 26, 2014 at 3:42 pm

            “Gov. Christie stated…”

            HAHA……I stopped reading there as should anyone else.

            Sycophant.

  7. “We nonetheless find that the non-forfeitable rights statute enacted in 1997 created a contractual right.”

    Who has the obligation? The politicians that got political support in exchange? Or people who got nothing in exchange, and probably were unaware this was going on?

    That’s the problem.

    Reply

    • Posted by truthnolie on June 26, 2014 at 3:46 pm

      Both……the politicians who represented you and those unaware constituents that were asleep at the switch when all this was going on and chose instead to watch “Seinfield” and not be actively involved in their elected officials actions…..anyway you slice it….payment is coming due so be ready to pay it.

      Reply

      • Posted by Tough Love on June 26, 2014 at 4:04 pm

        Your delusional if you think the Taxpayers will be making you whole…… not even close.

        Reply

  8. Posted by Anonymous on June 26, 2014 at 5:49 pm

    The case, which was brought by the unions, will now be heard again. A lower court will decide whether the state’s decision to break the contract and stop paying the cost of living amounts was “reasonable and necessary to serve an important public purpose.”

    Does anybody really think the Judge Hurd will decide in favor of restoring the COLA? He will not cross Christie. Then it will be appealed again and only then will his decision be overturned and then the State will appeal to the NJ Supreme Court. This will take years.

    Reply

    • Posted by truthnolie on June 26, 2014 at 6:32 pm

      Who says it’s going back to Christie’s piss boy Hurd???

      Hopefully the unions will push and prevail that it is heard by a tenured Judge and not some suck up, scared of Christie’s shadow (although that is quite enveloping & all encompassing) non tenured, connected one.

      Reply

      • Posted by Anonymous on June 26, 2014 at 6:45 pm

        Hurd was promoted to Presiding Judge hopefully he will not hear the case again although logic says he will take it.

        A real Judge would just affirm the findings of the appellate court. However I fear that Christie will not accept that and tie it up longer by appealing to the NJ Supreme Court.

        Reply

  9. Posted by Anonymous on June 26, 2014 at 7:27 pm

    John, will Hurd hear it again and will he still side with Christie for obvious reasons?

    Reply

  10. […] Berg cases quoted this passage as justification for ruling COLAs as contractually guaranteed hey presumed him to be an actuary which could account for their decision. […]

    Reply

  11. I hope and pray that they pay us what we are owed. It is because of greedy politicians
    without honor that caused this problem. Thank you Lord

    Reply

  12. […] state of New Jersey will appeal Berg v. Christie and NJEA v. New Jersey decisions of June 26, 2014 to the Superior Count of New Jersey on the issue […]

    Reply

  13. […] as part of  the 2011 reforms signed into law by Governor Christie.  Last year, an appellate court ruled that the indefinite suspension of COLAs  violated the contractual rights of all retired public […]

    Reply

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