Who To Believe

Panels of experts or letter writers and anonymous commenters?

On August 7, 2014 Paul Mulshine of the Star Ledger wrote a confusing piece on the New Jersey pension mess that overstated the roles of the Government Accounting Standards Board (GASB) to which I commented and got a response.

john b

john b 12 days ago

FASB and GASB don’t regulate.  They promulgate standards so bondbuyers think they get unbiased information.  But governments have a better way of making their bonds look good:

http://www.countywatchers.com/wp-content/uploads/2014/08/ratings-agencies.xlsx

Paul Mulshine | The Star Ledger

Paul Mulshine | The Star Ledger 12 days ago

@john b Well, the experts I talked to say that if private pensions don’t meet FASB standards then they lose tax deductions under ERISA.

john b

john b 11 days ago

@Paul Mulshine | The Star Ledger

They are wrong.  FASB numbers are for balance sheets and actuaries tolerate having to come up with them. Their methodologies were developed internally by accountants and have no force of law.
However, ERISA through the Internal Revenue Code does have teeth and  private plans have to follow their rules or risk disqualification.

That being said, an ERISA for public plans is absolutely essential to bringing some level of integrity to funding public pensions.

Four days later a letter to the editor appeared in the Star Ledger bearing me out:

August 11, 2014:

Paul Mulshine’s column (“Don’t blame Christie, blame the alphabet,” Aug. 7) rightly describes the importance of better understanding the pension obligations owed by state and local government to their retired employees.

However, neither the Financial Accounting Standards Board nor the Governmental Accounting Standards Board plays the role — nor wields the power — Mulshine ascribed to them.

Both the FASB and GASB — private, independent boards that operate under the supervision of the Financial Accounting Foundation — set accounting standards that determine how public and private companies and state and local governments report their financial conditions, including pension obligations. Neither, however, can compel a company or government to meet those obligations.

By requiring governments to recognize pension liabilities on their balance sheets, the new GASB pension standards enable cities and states to make informed decisions to address those liabilities. But it’s up to taxpayers and their elected representatives to make those difficult decisions, not the FASB or GASB.

Robert W. Stewart, Financial Accounting Foundation

But I still have questions:

  1. Who are these ‘experts’ that Paul Mulshine believed?
  2. What motivated them?
  3. How did they get to remain anonymous even after disseminating such misinformation?
  4. Are any of them part of panel of experts tasked with saving New Jersey pensions?

An expert with an agenda is far more dangerous to honest debate then a layman guided by common sense.

More letters that should have been heeded:

July 21, 2011

Tom Moran’s Sunday column “Christie’s big favor to liberals” fails to note that the only significant savings we can expect from Gov. Chris Christie’s reforms would be due to the elimination of contractually obligated cost-of-living-adjustments on pensions. If not overturned in court, the legacy of this reform will be the eternal debasement of the state’s promise.

And even if savings are forced, who can guarantee that localities like Union County will be spending that money on aiding the disenfranchised and not on getting a bigger headliner than Blondie for their Musicfest?

November 2, 2011

It is not breathing room that the latest pension and benefit reforms have bought for New Jersey. We still have three years until all that remains will be the employees’ own contributions and five more years after that until the trust is completely exhausted. There is plenty of time to breathe but, unfortunately, what our governor and legislators continue to take in are the fumes of political expediency.

Gov. Chris Christie and Senate President Stephen Sweeney are unwitting Frankensteins building the “pension monster” that will turn on New Jersey as it has Central Falls, R.I., and Prichard, Ala., with Philadelphia and Illinois next up.

After the suspension of cost-of-living increases — which is the heart of this latest reform — gets overturned in the courts, we will have lost more time deflecting attention from real solutions and there will be no choice but bankruptcy. The only question is whether it will be for public employees or taxpayers.

May 13, 2014

Another New Jersey budget hearing and another stupid idea as state Treasurer Andrew Sidamon-Eristoff considers delaying the state’s pension contribution a week to balance the current budget (“Jersey may hold pension payment,” May 9). Of course, the $1.58 billion payment is far less than what is needed to cover the escalating liabilities, but in this fantasy fiscal world, where any number will do as long as it is small enough and you follow proper procedures, there are a few details to address.

Will there be a one-week interest adjustment on the late payment, since the payment due June 30 was adjusted for interest from the July 1, 2012, valuation it was based on?
The current budget year may be balanced, but where does this payment fit into the 2014-15 budget, which already includes a $2.25 billion pension payment?

Senate President Stephen Sweeney threatened to “shut down government if Chris Christie reneges on pension payment,” yet he kept quiet as that payment was reduced by $94 million through actuarial gimmickry and now will be severely reduced, if not for 2013-14, then certainly for 2014-15.

 

31 responses to this post.

  1. Posted by skip3house on August 19, 2014 at 3:41 pm

    Having an established reputation allows you to say ‘the experts I talked to…’ every so often, and could be possible, though experts might be neighbors or another thought in your own head?

    Reply

  2. Posted by RealRep on August 19, 2014 at 4:20 pm

    I trust John more than whatever misinformation trickles down from the crowned prince of Bayhead.

    Reply

  3. Posted by Anonymous on August 19, 2014 at 4:43 pm

    Most of what Mulshine says may float in the toilet but it will never float in court. That is a well known fact!

    Reply

  4. Posted by Tough Love on August 19, 2014 at 6:30 pm

    Quoting …. “We still have three years until all that remains will be the employees’ own contributions and five more years after that until the trust is completely exhausted. ”

    That’s the part Public Sector workers should be focusing on. For pensions to continue being paid after we hit pay-go, they will require a $5+ BILLION Annual tax increase.

    Since that will never happen, if they know what’s good for them, putting some VERY material (e.g., 50+% reductions in the pension accrual rate for future service) givebacks on the table immediately is in THEIR best interests.

    Reply

  5. Posted by Anonymous on August 19, 2014 at 6:59 pm

    yadda yadda yadda. how about a 100 percent reduction in your repeating the same thing over and over which by the way isnt going to make it come true. You need to stop voting in these crooks that you trust

    Reply

    • Posted by Tough Love on August 19, 2014 at 7:18 pm

      When I see BOTH the pension formulas AND “provisions” of Public Sector pensions & benefits for the future service of all CURRENT NJ workers reduced to a level EQUAL TO (but not greater than) those typically granted Private Sector workers, “fairness” will have been achieved and my commenting will end.

      I’ll even leave it to officials, developing financials, and reality to determine whether past service accruals of actives and the pensions of those already retired must ALSO take a hit.

      Do I expect such “fairness” to happen?

      No, Public Sector workers are WAY to greedy to accept “equal”.

      Reply

      • Posted by Anonymous on August 19, 2014 at 8:41 pm

        dream on

        Reply

      • Posted by Anonymous on August 21, 2014 at 1:36 pm

        I worked 30 years so I could get a 14k per year pension. My COLA has been taken away and this a**hole TL wants to reduce my pension by 50 percent.

        Reply

        • Posted by Tough Love on August 21, 2014 at 1:46 pm

          Unless you retired 20 years ago at a MUCH lower salary, I do not believe a NJ Public Sector with 30 years of FULL-TIME service in NJ pension systems could get a pension of $14K., as the implied salary is simply too low.

          Perhaps you had 30 years of part-time service (e.g., councilman) with a low “pensionable compensation”. In that case you should have be granted no pension AL ALL …… in the Private Sector, you get no service credit unless you have 1,000 hours of paid employment in a given year. PUBLIC Sector workers should be held to the SAME standard.

          Reply

  6. Posted by Anonymous on August 20, 2014 at 12:40 am

    Give me my equal pay for the 30 years I worked starting in 1970, manuel.

    Reply

    • Posted by Tough Love on August 20, 2014 at 12:50 am

      Most got equal (or better) “cash pay” alone since the1980s …. and FAR FAR FAR greater pensions & benefits….. WAY WAY WAY more than offsetting any lower cash pay in the 1970s.

      Reply

      • Posted by truthnolie on August 20, 2014 at 1:07 am

        “Capitalism and communism stand at opposite poles. Their essential difference is this: The communist, seeing the rich man and his fine home, says: ‘No man should have so much.’ The capitalist, seeing the same thing, says: ‘All men should have so much.”

        Reply

        • Posted by Tough Love on August 20, 2014 at 1:21 am

          And the Public Sector workers say …. let’s get our Unions to BUY the Legislator’s votes needed for bigger pension and better benefits with campaign contributions and election support.

          Reply

      • Posted by Anonymous on August 20, 2014 at 3:03 pm

        TL spouts lies unashamedly and quite often. her motto, no facts need apply!

        Reply

  7. Posted by Anonymous on August 20, 2014 at 3:35 pm

    And TL says first and foremost, Pass the Dutch baby!

    Reply

  8. Posted by MJ on August 21, 2014 at 8:42 am

    Anon and Anon, what specific reforms do you think would help? Your immature comments are not helping to contribute to the discussion. While you may not agree with all that TL writes, she does always advocate for fairness to everyone. What is your solution to the problem? The pensions will NOT ever be fully funded so where will that leave everyone? Serious comments only.

    Reply

    • Posted by skip3house on August 21, 2014 at 10:19 am

      Like very much !

      Reply

    • Posted by Anonymous on August 21, 2014 at 1:40 pm

      It really frustrated me that you say that TL advocates for fairness. It is a bold faced lie but I dont expect you to admit it so end of conversation. I worked 30 years and got paid alot less than private sector counterparts. I am receiving 16k per year in pension without a COLA and now she wants to reduced my pension by 50 percent. That sounds fair to you?????? Of course it does because you dont know the facts and will never admit to it. By the way how about the reform of Christie living up to his sworn word of making the pension contribution, it still rings clearing in my ears. Talk about dishonesty, Christie takes the cake! How can he bet trusted? he cant

      Reply

      • Posted by Tough Love on August 21, 2014 at 2:04 pm

        The pension “formulas” and “provisions” determine the pensions.

        REGARDLESS of your salary, due to the MUCH MUCH more generous PUBLIC Sector pension formulas and MUCH MUCH more liberal PUBLIC pension provisions, when the pensions of 2 workers (one Public and one Private) with identical work histories in pay, service years, and age at retiemwent are compared the PUBLIC Sector worker’s pensions will ALWAYS be AT LEAST 2 times greater in value at retirement, most often 3x-4x greater, and even higher for safety workers.

        Public Sector workers do NOT deserve a better deal than the Taxpayers that pay their way.
        —————————————–

        And as to THIS statement …… “I worked 30 years and got paid alot less than private sector counterparts. ”

        We hear a lot of that from Public Sector workers …… no offense, but I really doubt it on an apples-to apples basis.

        E.g. Private Sector IT professionals in places like Google, Intel, Facebook, etc., indeed make more than their Public Sector counterparts and Public Sector IT workers like to point that out supposedly justifying their MUCH greater pensions & benefits.

        Really ? Such companies seek to employ brilliance and passion with a risk-taking entrepreneurial bent where 24/7 days to beat the competition to the market are looked at as a challenge. I doubt such companies would seek to employ Public Sector workers where 9-5 PM is the rule of the day, overtime pay is expected the minute the clock strikes 5 PM, and meeting critical deadlines on time on on budget … is a bad joke.

        Reply

      • Posted by MJ on August 21, 2014 at 3:52 pm

        I think that whole reform thing with Sweeney was a sham and they all knew it. If the pensions were truly salvagable then the payments would have been made years ago and now. Whether you agree with TL or not she advocates for a level playing field and bc the publics have had such an overly generous benefit and pension program for so long you have to play catch up in the new normal which means reforms, cut backs, lay offs of publics and more contributions from publics. The private sector has been reforming for the past several years. Sorry, I didn’t make the mess, your politicians and unions made the mess. You all should have been paying closer attention.

        Reply

        • Posted by Tough Love on August 21, 2014 at 4:44 pm

          Yes, the politicians and their Unions created this (pension/benefit) mess.

          While the Primary blame belongs with our self-serving, vote-selling, contribution-soliciting, taxpayer-betraying Elected Officials, it is the Public Sector WORKERS (via their grossly excessive pension/benefit promises) that are the financial BENEFICIARIES of the collusion between their Unions and our Elected Officials (with the former BUYING the favorable votes on pensions & benefits with campaign contributions and election support from the latter), so THAT’S where Taxpayers must look to right this wrong ….. via VERY material (50+%) reductions in promised pensions & benefits for the future service of all CURRENT workers (and if our dire financial condition demands such, for the PAST Service accruals of current actives and for those already retired as well).

          Greed HAS consequences.

          Reply

  9. Posted by Tough Love on August 21, 2014 at 1:34 pm

    Below is a comment I just posted elsewhere … quite relevant to this discussion of Public/Private Sector pension “fairness”:
    —————————————————————————————————-

    With “cash pay” in the vast majority of Public Sector occupations no less (and often more) than their Private Sector counterparts, and with equal Public/Private Sector “Total Compensation” (cash pay plus pensions plus benefits) a reasonable and appropriate goal, there is ZERO justification for greater Taxpayer-funding of PUBLIC Sector pensions and benefits than what PRIVATE Sector employers typically contribute towards THEIR workers retirement Plans.
    ———————————————————————————————————————
    Re Pensions:

    In the Private Sector, employer pension contributions rarely exceed their Social Security contribution on the employee’s behalf (6.2% of pay) plus another 3-5% into a 401K Plan …. totaling about 10% of pay.

    The total cost of TYPICAL Public Sector pensions (fully funding the promised pension over the employee’s working career and using appropriate assumptions.. ala what Moodys now uses) is a level annual 25%-40% of pay for non-safety workers, and 40%-60% of pay for safety workers. Subtracting the employees’ own pension contribution (typically 5%-10% of pay) leaves a Taxpayer-required contribution of about 20%-35% of pay for non-safety workers and 30-50% of pay for safety workers.

    And we should keep in mind that nationally, 75% of all Public Sector workers DO participate in Social Security. So what are the final Public/Private Sector comparisons ?

    For Public Sector workers that DO participate in Social Security, the 20%-35% Taxpayer-required pension contribution for non-safety workers and the 30%-50% of pay taxpayer-required pension contribution for safet workers is DIRECTLY comparable to the 3%-5% of pay Private Sector workers get. In THIS case Taxpayers are TYPICALLY required contribute 7 to 10 TIMES more towards the pension of their workers than what THEY get from their employers… and all while those Public Sector workers generally earn no less in cash pay.

    For Public Sector workers that DO NOT participate in Social Security, the 20%-35% Taxpayer-required pension contribution for non-safety workers and the 30%-50% of pay taxpayer-required pension contribution for safety workers is DIRECTLY comparable to the 3%-5% + 6.2% = 10% of pay Private Sector workers get, In THIS case Taxpayers are TYPICALLY required contribute 2 to 5 TIMES more to the pension of their workers than what they get from their employers… and all while those Public Sector workers generally earn no less in cash pay.

    BOTH of the above situations represent an unjustified financial “mugging” of the Taxpayers, a mugging that must stop, and not just via reduced pensions for NEW public Sector workers, but via VERY material (50+%) reductions in both the pension formulas AND provisions for the FUTURE Service of all CURRENT Public Sector workers.
    ———————————————————————————————————————

    Re Retiree Healthcare benefits:

    In the Private Sector, rarely do employee accrue ANY retiree healthcare benefits any longer, and when they do, it is typically in the form ( NOT benefit promises, but) of a $300-$500 annual contribution into a Health Savings Account (HSA).

    While we are just stating to see some pullback in the PUBLIC Sector, the current and very typical structure is free or heavily subsidized Retiree healthcare. This comes at great cost, especially when the retiree is younger than age 65 and ineligible for Medicare, and given the MUCH MUCH younger full (unreduced) retirement ages for PUBLIC Sector workers, this is a VERY common occurrence, especially for safety-workers retirees. A very reasonable estimate for family coverage is $250K-$500K per family.

    Given the generally EQUAL “cash pay” and EQUAL “Total Compensation” goal discussed above, there is absolutely NO JUSTIFICATION for this. All Public Sector retiree healthcare should be frozen for all current workers beyond that same $300-$500 into an HSA that Private Sector workers sometimes get from their employers.

    Reply

  10. Posted by Anonymous on August 21, 2014 at 6:20 pm

    Every public employee is not the same you imbecile!

    Reply

    • Posted by Tough Love on August 21, 2014 at 6:31 pm

      Yes, but what I stated above (and pasted just below) IS true …
      ——————————————————————————
      The pension “formulas” and “provisions” determine the pensions.

      REGARDLESS of your salary, due to the MUCH MUCH more generous PUBLIC Sector pension formulas and MUCH MUCH more liberal PUBLIC pension provisions, when the pensions of 2 workers (one Public and one Private) with identical work histories in pay, service years, and age at retiemwent are compared the PUBLIC Sector worker’s pensions will ALWAYS be AT LEAST 2 times greater in value at retirement, most often 3x-4x greater, and even higher for safety workers.
      —————————————————————————-

      There is ZERO justification for this ….. and it must end, for all CURRENT workers.

      Reply

      • Posted by Anonymous on August 21, 2014 at 7:00 pm

        I am a retiree who makes 16k with no cola and worked 30years, how much do you want my pension reduced?

        Reply

        • Posted by Tough Love on August 21, 2014 at 7:36 pm

          Well, you sound like the same “Anonymous” who commented with the same thing three times above (just changing your pension from $14K in the 1-st to $16K in the 2-nd and 3-rd …… which makes the truthfulness of your comments suspect ….. PLUS the fact that your first 2 comments were only 4 minutes apart). My SAME response to your 1-st comment applies (pasted just below):
          ————————————————-
          Unless you retired 20 years ago at a MUCH lower salary, I do not believe a NJ Public Sector with 30 years of FULL-TIME service in the NJ pension system could get a pension of $14K, as the implied salary is simply too low.

          Perhaps you had 30 years of part-time service (e.g., councilman) with a low “pensionable compensation”. In that case you should have be granted no pension AT ALL …… in the Private Sector, you get no service credit unless you have 1,000 hours of paid employment in a given year. PUBLIC Sector workers should be held to the SAME standard.
          ————————————————

          And re-read the comment to which you replied …. read it a FEW times. Perhaps the concept of “fairness” will sink in.

          Reply

          • Posted by Anonymous on August 21, 2014 at 7:48 pm

            I am sure you will wind up in hell. Have you ever thought that may happen to you or dont you have any conscience? You don t believe what is true but even if the facts are right there for you too see you will come up with some malarkey to cover you arse. You really have no idea how public employee pensions work probably because you never worked for the government and all you have to rely on is what you hear and you believe what you choose to. I hope I at least get my COLA back so you can have something else to bitch about while you drive to Whole Foods in your mercedes which you purchased with the money you rip off all citizen by grossly overcharging them for insurance. You are a major part of the biggest scam in the country

          • Posted by Tough Love on August 21, 2014 at 7:55 pm

            Responding to Anonymous……

            Where do the insatiably GREEDY go when THEY die ?

        • Posted by MJ on August 21, 2014 at 7:41 pm

          I would hope that the largest reductions will apply to those receiving higher payouts. You don’t mention if you receive SS and life time health benefits for you and your spouse which count towards your overall package. Reductions and reforms should correspond to current pay out amounts and you can pay for your own health benefits if this is what you choose to do

          Reply

          • Posted by Tough Love on August 21, 2014 at 7:52 pm

            There are an infinite number of ways to reduce Public Sector pension promises, but great care must be taken in structuring those changes.

            E.g. while there may be some justification for not reducing a $20K pension (assuming NO SS benefits) to a retiree who worker for NJ for 30 years, the $20k pension to a much higher paid retiree but who only worked for NJ for 10-years should definitely be on the table for reduction, as he/she either has a pension from work elsewhere or should have saved on his own..

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