New Jersey’s Abject Failure

Within hours of NJ Governor Chris Christie calling President Obama an “abject failure” in office Fitch ratings said essentially said the same about him:

From a story about a report to be released by Fitch Ratings today:

Six of New Jersey’s seven funds, for example, disclosed depletion dates as of their June 30, 2014 valuations. The two largest – covering retired state employees and teachers – said their tipping points would come in 2024 and 2027, respectively.

Under the previous actuarial methods, those plans were funded at 49.1 percent and 51.5 percent, a distressed level far off the minimum 80 percent generally considered healthy. Under the new calculations, which included a lower blended rate of return, those levels look even worse, at 27.9 percent and 28.5 percent.

Even Illinois, with among the worst-funded state retirement systems in the U.S., doesn’t have depletion dates until 2065 for two of its three biggest funds and is able to use higher blended rates. It has no depletion date for the third fund, Fitch Senior Director Douglas Offerman told Reuters in an email.

“Deep as the state’s pension problems are, Illinois is much closer to making full contributions to its plans than, say, New Jersey,” Offerman said.

If anyone has a copy of the full report please send it over since it would be interesting to see if Fitch ranks any state worse than New Jersey.  Illinois doesn’t seem to be even (or especially) when you go behind the numbers.

 

 

25 responses to this post.

  1. Posted by Tough Love on February 13, 2015 at 12:51 pm

    I thought Illinois was in much poorer condition than that suggested by this release.

    Reply

  2. Posted by Anonymous on February 13, 2015 at 1:00 pm

    Karma, what you wish for others comes back to you tenfold. His staff should submit their resignations asap, who will hire those losers. So sad.

    Reply

    • Posted by Tough Love on February 13, 2015 at 2:06 pm

      Ok …………… suggest YOUR solution to the HUGE pension shortfall.

      and P.S> only a VERY small portion can be accommodated via tax increases.

      Reply

      • Posted by Anonymous on February 13, 2015 at 2:27 pm

        Your challenge is misplaced, the NJ legislature feels the reforms would work if the payments are made, it appears the Senate President knows state employees will very soon pay the full cost of their health benefits. This move to employee full pay of health premiums will transfer employee dependent healthcare ie spouse/children from the employer (state) to the employee. The State unions could offer group health benefits, like federal unions.

        Reply

        • Posted by Tough Love on February 13, 2015 at 3:14 pm

          Quoting …”…the NJ legislature feels the reforms would work if the payments are made,”

          Of course they would work if the scheduled payments were made. So would a pension 10 times as great “work” IF THE PAYMENTS WERE MADE.

          The point that you are ignoring is that taxpayers cannot afford those payments. and the ROOT CAUSE of the very high payment requirements is that the promised pensions are simply too generous, always AT LEAST 3x-4x greater in value at retirement than those of similarly situated Private Sector workers retiring at the SAME age, with the SAME pay, and the SAME years of service.

          And as currently structured, all of the workers own contributions (including expected investment returns thereon) rarely accumulate to a sum at retirement sufficient to to buy more than 10-20% of their VERY rich promised pensions….. with the Taxpayers responsible for the 80-90% balance.

          Think about how outrageously unfair that structure is to NJ’s taxpayers….. we pay for almost the full expected cost of pensions 3-4 times greater than what we typically get.

          The in transience of Public Sector workers/Unions to material reforms will cause few taxpayer tears to be shed when these Plans fail catastrophically with material pension reductions.
          ———————————-
          That said, an ELIMINATION of retiree healthcare would certainly help fund the pension shortfall as the saved money could be shifted to that Purpose. And keep in mind, employer-sponsored retiree healthcare subsidies are now extremely rare in the Private Sector. You would just be getting EQUAL to what Private Sector workers typically get in retiree healthcare subsidies …. nothing.

          Reply

          • Posted by Anonymous on February 13, 2015 at 3:59 pm

            Next step for private sector employees is indentured servitude, the Constitution protects against slavery. At what point do private sector workers seek better compensation protections, or would that undermine the path to becoming a member of the one percent.

          • Posted by Tough Love on February 13, 2015 at 4:48 pm

            A common “tactic” of those who oppose the CLEARLY needed (and justifiable) Public Sector pension reform is to divert attention from their excessive compensation (primarily via the pension & benefit components) to what is SUPPOSEDLY under-compensated Private Sector workers.

            Clearly this is BS ….. with 85% of all workers working in the PRIVATE Sector, it’s THEIR compensation that sets “market rate” pay (what a willing seller of their services is willing to work for), NOT that of our over-compensated Public Sector workers.

            Your comment is an example of that “tactic”.

          • Posted by Anonymous on February 13, 2015 at 5:57 pm

            The public sector employment market also determines compensation levels. The private sector seems to feel that employees pay is more than enough to support healthcare and retirement. TL maybe you sold your skills for too low a compensation level.

          • Posted by Tough Love on February 13, 2015 at 6:29 pm

            Public Sector Unions/workers push us to accept that the Public Sector employment market is distinct from the Private Sector employment market and compensation for those in the Public Sector should only be compared to others IN THE PUBLIC SECTOR.

            Do you really believe Taxpayers are that stupid, given the decades-long collusion between the Public Sector Unions and our elected officials, whose favorable votes on Public Sector pay, pensions, and benefits are BOUGHT with campaign contributions and election support?

            It is that COLLUSION that has resulted in the CURRENT STRUCTURE of roughly equal (on average) Public/Private Sector “cash pay”, but VASTLY greater taxpayer-funded Public Sector pensions and benefits. Structured as such, is easy to see why you advocate for comparing PUBLIC Sector compensation ONLY to other PUBLIC Sector compensation.

            With the exception of Police and to SOME extent fire and corrections (for which there actually ARE private sector services available) most all Public Sector occupations have Private Sector counterparts (or jobs with similar risks and comparable educational, experience, and knowledge requirements).

            There is ZERO reason for Taxpayers to accept that they must pay a Public Sector worker more than what a comparable position would earn in the PRIVATE Sector.

            And while Police services are unique in not having a Private Sector counterpart, the risks are WAY overblown (not even being on the US Gov’t list of the 10 most dangerous occupations and being paid far more than those ON the list), and the skills and knowledge requirements do not justify the sky-high compensation. In cash pay ALONE, they are VERY well paid. And, we layer on top of that (the MOST egregious) pensions that are MOST OFTEN 4x-6x greater in value than those of Private Sector workers making the SAME pay, retiring at the SAME age, and having the SAME years of service, AND, often free or heavily subsidized family retiree healthcare coverage (often starting at age 50). Clearly their “Total Compensation” package is completely absurd and a gross abuse of the Taxpayers.

        • Posted by Anonymous on February 14, 2015 at 12:06 pm

          The point you are ignoring is we are a part of a nation governed by laws. The NJ State Legislature passed laws that govern pensions and benefits. The Governor signed the laws, the his economist and treasury appointees underestimated the revenue needed to support his budget. The Governor’s actions were intentional create a crisis to reduce expenditures employee benefits, social programs and infrastructure to name a few budget items. He is a true disaster and the State of affairs we exist in today are tied to his political ambitions. The legislature must fix this mess with enough votes to prevent a veto, CC needs to resign. Enough is enough.

          Reply

          • Posted by Tough Love on February 14, 2015 at 1:49 pm

            Too bad NJ’s laws can’t seem to prevent the collusion between the Public Sector Unions and out elected officials ….. the ONLY reason Public Sector pensions & benefits are so grossly excessive.

            In any event, the MATH governs in the end-game … and the Plan assets will shortly be gone.

            And when you say …” Enough is enough.”, you’re correct, but with the wrong goal …. it’s WAY past time to HARD FREEZE (Zero future growth) all of NJ’s Public Sector DB pension Plans and replace them for future service with 401k-style DC Plans with a taxpayer % of pay “match” comparable to what Private Sector taxpayer typically get from their employers … 3%-5% of pay.

            AND NOTHING towards retiree healthcare.

          • Posted by Anonymous on February 14, 2015 at 2:21 pm

            Silly you TL public employers contribute a percentage of employees salary for pension, the public employee contributes a percentage, determined by state law, where is the opportunity for collusion?

          • Posted by Anonymous on February 14, 2015 at 2:24 pm

            the public employer contributes a percentage of employees salary.

          • Posted by Tough Love on February 14, 2015 at 2:37 pm

            Yup Anon ..”public employers contribute a percentage of employees salary for pension, the public employee contributes a percentage, determined by state law, where is the opportunity for collusion?”

            How about in the split of the expected total costs between the employer and the employee. While the employEE share is “fixed” (usually between 5 and 10% of pay) the employER’s share (meaning the Taxpayers of course) is NOT “fixed”, but is the balancing item …… i.e., whatever it takes to pay the full promised pensions,

            Well, if you took all of your (the employEE) contributions and accumulated them (WITH INTEREST) to the date of your retirement, RARELY would the accumulated sum be sufficient to buy more than 10%-20% of your extremely rich promised pension. Taxpayer contributions (and the investment earnings thereon) are responsible for the 80-90% balance.

            So essentially we (the Taxpayers) pay for 80%-90% of the total cost of Public Sector pensions that are TYPICALLY 3x-4x greater in value at retirement than what we get from our employers.

            Sorry buddy, but these grossly excessive pensions (AND benefits) granted to you by elected officials BOUGHT-OFF with your Unions campaign contributions and election support are more than ample evidence of “collusion”.

  3. Posted by javagold on February 13, 2015 at 1:09 pm

    No wonder why he is never in NJ. Boy those public takers better be saving their gold and silver because that pension ponzi is toast !!!

    Reply

    • Posted by dentss dunnigan on February 13, 2015 at 2:48 pm

      Java …you and I know this but the union leaders keep insisting CC is making the pension look a lot worst than it really is …………said the man sinking in quicksand “it’s only up to our necks ” ….

      Reply

  4. Posted by Carlos on February 13, 2015 at 8:16 pm

    When Christie says Obama is a failure he sounds ridiculous. Obama sure isn’t the best,but he does have accomplishments: 9-11 perp. dead, record high stock market, $2.00 per gallon gas,insurance for those with pre-existing conditions. If we look at the Christie years we see a much less positive picture here in our own NJ. Down grade after downgrade,very high unemployment,casino industry destroyed,pension fund worse than when he took over,transportation trust fund empty,property taxes highest still in the nation. I won’t accuse of corruption,but it does still linger. He is very rude and arrogant as well as we have seen time and time again. If the republican party has any chance in 2016 they would muzzle him in a hurry and find a more reputable politician.

    Reply

    • Posted by Tough Love on February 13, 2015 at 8:32 pm

      Oh yeah, Obama is a real winner…… national debt when he was elected, about $11 Billion, today, $18.2 Billion.

      Reply

      • Posted by Carlos on February 13, 2015 at 10:32 pm

        Fair enough,but I don’t see you disputing the long list of failures I cited for Mr.Christie. The bottom line is he has zero business pointing his finger at anyone. If we had an election between Obama and Christie Obama would win easy. It wouldn’t even be fair.

        Reply

      • Posted by Anonymous on February 13, 2015 at 11:05 pm

        Still paying Halliburton contracts from the war. What tactics will CC use to pull NJ out of its looming budget crash? NJ Republicans are silenced by the abject failure of the Christie Administration. How’s that Koch Connection working for ya? New Fitch downgrade by Tues, whose the real failure.

        Reply

        • Posted by Anonymous on February 14, 2015 at 12:19 am

          TL will vote for Christie for president, need i say more

          Reply

          • Posted by Tough Love on February 14, 2015 at 1:59 am

            I don’t really like Christie, but he has been a GREAT DEAL more honest and transparent about NJ pension mess than all others before him ….. and, he is trying to do something positive with absolutely no good choices.

            If he runs against Hillery Clinton, I’d probably vote for Hillery. If she gets elected, what would they call Bill … the “First Gentleman” ? I can only imagine the jokes on the late-nite talk shows.

  5. Posted by Anonymous on February 14, 2015 at 6:08 am

    you will vote for Christie, you believe him, you are the only one who does believe his lies. Christie is not honest or transparent.

    Reply

    • Posted by Anonymous on February 14, 2015 at 8:41 pm

      TL would be the perfect campain manager or VP for CC. Kudos

      Reply

      • Posted by Tough Love on February 16, 2015 at 2:54 pm

        Well, I would certainly spot and accurately counter the rampant Public Sector Union BS opposing the eminently justifiable Public Sector pension reform efforts.

        Reply

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