Pension Liabilities Push N.J. Debt to $152 Billion

Though the headline screams $85 billion when you actually read New Jersey’s Debt Report for the year ended June 30, 2014 that was released today you see that the Net Pension Obligation component of this $85 billion debt number is only $16 billion and is explained in footnotes:

page 14:

••Per GASB 25 and 27, Net Pension Obligation (NPO) amounts are not developed for multi employer cost sharing plans.  Since the Public Employees’ Retirement System and Police and Firemen’s System are multi employer cost sharing plans the NPO amounts do not include any amounts from these two systems.  GASB 67 numbers are in an Appendix in the last two pages and when you do the spreadsheet.

So the state portion of PERS and PFRS are excluded which means the $16 billion is only for the TPAF (Teachers plan) and the smaller Judges and State Police plans.  Then on page 15:

** Pension data included on this page is consistent with the requirements of GASB 25 and 27 whereas data reflected later in the report beginning on page 74 is developed per the requirements of GASB 67 – the new pension financial reporting standard.

Since the state did not bother to provide any totals with GASB 67 pension numbers, I did:  $152 billion……..but you’re still not supposed to know that.

15 responses to this post.

  1. Posted by Tough Love on February 13, 2015 at 9:58 pm

    Could they have tried any harder to hide the truth?

    Thanks for your analysis.

    Reply

  2. Posted by Eric on February 14, 2015 at 9:42 pm

    Tough Love:
    Good one! I spent a whole lot of time in East Berlin. The people back then would kill for the West German Mark! My how things have changed.
    Eric

    Reply

  3. Posted by Tough Love on February 15, 2015 at 12:25 am

    Interesting proposal to “fix” NJ’s pension problems from US News:

    http://www.usnews.com/opinion/economic-intelligence/2014/08/11/how-chris-christie-can-fix-new-jerseys-pension-problem

    To all the Public Sector “Anonymouses” …. read the last paragraph 3 times.

    Reply

    • Posted by PatB on February 15, 2015 at 1:40 am

      But would switching to a DC pension really work? One study thinks not: http://www.reuters.com/article/2015/02/11/usa-pensions-ners-idUSL1N0VK31Y20150211 The study itself does look biased, but I have a question: which states have successfully transitioned to a DC plan from a distressed DB plan?

      Reply

      • Posted by Tough Love on February 15, 2015 at 1:57 am

        Besides the obvious, as noted in THIS sentence from your linked article:

        “Critics of the report said it used faulty methodology and was politically motivated. They said NERS has an agenda to keep traditional public pensions in place”

        Anyone who believes such transitions have failed because the contributions of new workers are needed to fund the pensions of those already (and soon to be) retired need a serious education in financial economics … concentrating on what is meant by a “Ponzi Scheme”.

        Reply

      • Posted by Tough Love on February 15, 2015 at 2:39 am

        The VERY substantial savings realized from the 1997 DB to DC switchover in the Michigan State Employees’ Retirement System is documented here:

        http://www.mackinac.org/15672

        Reply

  4. Posted by Titon7 on February 15, 2015 at 11:44 am

    The author, Eileen Norcross, of the Mercatus Center which accepted 9.8 million from the Koch brothers. Credibility? No math just dictated talking points. Next

    Reply

    • Posted by Tough Love on February 23, 2015 at 10:03 pm

      What Anthony F. Weiners, president, New Jersey State PBA fails to mention is that the “required funding” is DETERMINED BY and directly PROPORTIONAL TO the generosity of the promised pensions.

      ANY and EVERY Plan …. even one with 10 times the currently promised pensions ….. would be sustainable IF the annually required contribution were religiously paid.

      That dialog form Anthony F. Weiners sidesteps issues of GENEROSITY and affordability …. and reality:

      (a) Public Sector pensions are ALWAYS multiples greater in value at retirement than those grant similarly situated Private Sector workers, and

      (b) The annually required contributions tied to current NJ Pension Plans promises are simply UNAFFORDABLE.

      Reply

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