Arguing For Making the NJ Pension Mini-Payment

There was a lot of activity yesterday in the New Jersey pension payment case as those seeking to have the ‘full’ payment made filed 1,073 pages of briefs and appendices making their points.  After skimming through the material this is what I got out of it:

Respondent’s (58 pages)

But an outside observer would rightfully observe the irony that the current Executive, now railing against claimed “fabrications” of right, is the very same Executive who fashioned such a right in the first place. Compounding this irony is an Executive who now seeks to fabricate for himself, whole cloth, an avoiding exception to the very statute championed as a model to mend the pension deficits once and for all.

Retirement Systems Board of Trustees (40 pages)

Accordingly, Chapter 78 put the Retirement Systems on the path to actuarial solvency with unprecedented funding discipline and annually required contributions mandated to be included in all annual appropriations acts “as a dedicated line item.” N.J.S.A. 43:3C-9.5(c)(l). For the first time in their history, the Boards were given the express authority to bring suit to enforce these historic statutory and contract rights. N.J.S.A. 43:3C-9.5(c)(2).

• It is no coincidence that the most poorly funded state retirement systems in the country are in those states where the courts have rejected requiring legally enforceable pension contribution discipline by the state. For example, Illinois is now widely understood to be one of the worst funded state retirement systems in the country along with New Jersey. Alicia H. Munnel, State and Local Pensions: What Now ? at p. 117 (Brookings Institute Press 2012). By holding that there is no right to enforce contribution levels, the Illinois courts laid the groundwork for today’s mounting pension funding difficulties in Illinois. See People ex. rel. Sklodowski v. State, 695 N.E.2d 374 (Ill. 1998).

Amazingly, Defendants argue that contract rights are not impaired because the governmental employees have “reduced expectation interests” because they are public servants.

Board of Trustees Appendix 1 (268 pages)

Board of Trustees Appendix 2 (450 pages)

CWA, NJEA Response (118 pages)

The pension systems’ unfunded liability has mushroomed to the point where the pension funds will run out of assets over the course of the next 10 to 15 years. Then, the non- forfeitable pension benefits to which retired employees are entitled will have to be paid from the general treasury at a cost of approximately $8 billion a year based on current payments to retirees.

Raising taxes was not the Governor’s only option. For example, Governor Christie did not reduce payments to the holders of contract bonds, notwithstanding the fact that such bonds, as the Petitioners repeatedly emphasize, are subject to appropriations. Instead, the State chose to “prioritize payment of other State contracts above payment of the contractual guarantee the State made with its public employees.”

CWA, NJEA Appendix (139 pages)

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The state’s reply brief is due this Friday with oral arguments set for Wednesday, May, 6.

43 responses to this post.

  1. Posted by truthnolie on April 21, 2015 at 3:00 pm

    This just in:

    http://www.nj.com/politics/index.ssf/2015/04/njea_shuts_down_pension_talks_with_christie_admini.html

    Just one more implosion to add to the litany of the elephantine Gov’s failures & lies, of which there are legion.

    Reply

    • Posted by Tough Love on April 21, 2015 at 3:12 pm

      I’m not surprised, as they STILL believe the Feds will ride to the rescue WHEN (not IF) their Plans run out of assets and neither further service cuts and/or tax increases are acceptable “solutions” …. likely resulting in the retiree’s checks getting halved.

      DENIAL is NOT a strategy.

      Reply

    • Here is the njea offical press release:

      http://www.njea.org/news/2015-04-21/njea-demands-full-pension-funding

      Not terribly surprising though I see Christie coming out with a statement along the lines of : “I am disappointed that the unions will not work with us to fix this problem that everyone but me and my administration has created.”

      Reply

      • Posted by Tough Love on April 21, 2015 at 3:32 pm

        He DIDN’T create it, and he is the first Gov. actually trying to fix a serious problem the prior administrate KNEW was on a path to exactly where it is today.

        There ARE no solutions other than:

        (a) BIG additional service cuts
        (b) VERY material tax increases
        (c) VERY material reductions in the promised pension & benefits

        Given the fact that PUBLIC Sector pension & benefits are FAR more generous than Private Sector counterparts, it CERTAINLY seems that THIS should (and MUST) be a major element of any solution.

        Reply

        • Which is exactly why I think he will use the word ‘created’ in any official statement.

          His bumbling has exacerbated the situation to the point where checks will be bouncing when they try to liquidate those hedge fund investments but he can honestly say that in 1991 when Florio started playing with assumptions he was out of the picture.

          Reply

          • Posted by Tough Love on April 21, 2015 at 3:57 pm

            True, but he was a very minor player (in the beginnings of the developing mess) at that time.

        • Posted by Anonymous on April 21, 2015 at 3:47 pm

          John can you believe that TL actually believes Christie’s lies? I actually didnt think she was that much in denial. And as far as saying he is the first governor to try and fix it, dead wrong, Corzine tried but he tried to do it a bit more honestly and the politicians preferred Christies lies since they know thats all they were.

          Reply

          • Posted by Tough Love on April 21, 2015 at 3:58 pm

            What a hoot ….. you’re asking John what I think.

            Focus on the problem…. the pension/benefit mess … not what I think.

          • Posted by Tough Love on April 21, 2015 at 4:01 pm

            Corzine didn’t try to fix it “honestly”. He tried to snooker the Taxpayers by looking to sell a State asset (the Turnpike) that at least conceptually, belongs to ALL of NJ’s Taxpayers, not the insatiable greedy Public Sector workers.

        • Posted by Anonymous on April 21, 2015 at 3:48 pm

          d) raise taxes substantially on millionaires

          Reply

      • Posted by Anonymous on April 21, 2015 at 3:50 pm

        Things have gotten way worse under Christies reign than under any other governor and he will blame them for that. He takes absolute on responsibility even though he claimed to have saved the pensions 4 years ago

        Reply

        • Posted by Tough Love on April 21, 2015 at 4:44 pm

          You focus on Christie because you have nothing helpful to add to the discussion ……. and because, being a Public Sector “taker”, you’re not will to consider taking LESS as a justified option.

          Reply

  2. Posted by Tough Love on April 21, 2015 at 3:05 pm

    I’m quite sure not one of those legal briefs touched upon the promised “generosity” of Public Sector pensions, and how when added to (equally excessive) retiree healthcare benefits and cash pay, the Total Compensation of NJ’s Public Sector workers is (on average) 23% higher than that of their Private Sector counterparts …… and 34% if you included the incremental value of the much greater job security.

    Source … Figures 6 and 13 for this link:

    https://www.aei.org/wp-content/uploads/2014/04/-biggs-overpaid-or-underpaid-a-statebystate-ranking-of-public-employee-compensation_112536583046.pdf
    —————————————————————————————-

    Taxpayers should give some SERIOUS thought to that. How big would YOUR retirement be if you had an ADDITIONAL 23 (or 34%) of pay annually to save and invest ?

    The ROOT CAUSE of NJ financial mess is CLEARLY grossly excessive pension & benefit “generosity.

    Taxpayers must stay focused on the fact that “funding” requirements FOLLOW from (and directly in proportion to) Plan “generosity”. Not being able to fully fund a very “generous” Plan is usually NOT due to a lack of political will, but due to the fact that the HUGE sums needed to do so are simply not available (while meeting a city’s essential service needs)….. with the ROOT CAUSE of this (incorrectly labeled) “funding problem” being directly traceable to grossly excessive pension/benefit “generosity”.

    “Funding” problems are a CONSEQUENCE of that excessive generosity, not a CAUSE of the financial pension mess many States and Cities now find themselves in.

    Reply

    • Posted by S Moderation Douglas on April 21, 2015 at 6:43 pm

      That study was based on data from 2009 to 2012. Before chapter 78. (And before AB340 in California)

      The insights in the paper are still very illuminating, but the data is obsolete.

      It’s a brave new world.

      Reply

      • Posted by Tough Love on April 21, 2015 at 6:59 pm

        (1) Data through 2012 is hardly “obsolute”.

        (2) Chapter 78 made little changes to the pensions of anyone but NE workes

        (3) that Study excluded Safety workers with FAR greater pensions and better benefits. Had they been included, the 23% and 34% of pay PUBLIC Sector Compensation “advantage” would have been even greater

        Reply

      • Posted by S Moderation Douglas on April 21, 2015 at 10:18 pm

        “In the CalPERS policymaker report, the example is a worker with a starting salary of $46,000 who retires after 20 years at age 62. The pension for the pre-reform or “classic” worker is $2,140 a month, compared to $1,705 for the new hire — $435 less.”

        A 20% reduction in pension AND 80% to 100% increase in employee contribution. In my opinion, that makes the old data “obsolute.” (If you can’t afford a spell checker, there are several free ones available.

        A NJ worker paying higher contributions for health and retirement would likely agree.

        Face it, 23% was a stretch to begin with, and 34% laughable. The only people who bought those figures were already predisposed to that. As I originally said, “lazy reporter bait”

        Reply

        • Posted by Tough Love on April 23, 2015 at 11:19 pm

          Qoting … ““In the CalPERS policymaker report, the example is a worker with a starting salary of $46,000 who retires after 20 years at age 62. The pension for the pre-reform or “classic” worker is $2,140 a month, compared to $1,705 for the new hire — $435 less.”

          That pension of $2,140/mo is based on the worker’s final (or final-average) salary … which you did not provide.

          Provide it, and I’ll show the fallacy of your position.

          Reply

        • Posted by Tough Love on April 23, 2015 at 11:29 pm

          Quoting …”Face it, 23% was a stretch to begin with, and 34% laughable. ”

          So you praise and repeatedly quote this AEI study when it suits your purpose, but when it doesn’t, the study’s conclusions are … “a stretch” and “laughable” ?

          Reply

        • Posted by Tough Love on April 23, 2015 at 11:37 pm

          Quoting ….. “A 20% reduction in pension AND 80% to 100% increase in employee contribution. ”

          Given that the 20% pension reduction applies to only the very small % of current workers hired AFTER the recent law change, there will be minimal savings for decades to come. As such the “data through 2012” study results are VERY representative for many years to come ….. and certainly NOT obsolete.

          Reply

  3. Posted by Anonymous on April 21, 2015 at 3:58 pm

    just wait until Christie starts rant and raving and bullying hilliary clinton Every women will undoubted vote for him at that point, even TL.

    Reply

  4. I have read the briefs and pleadings a the very convincing point is both the Governor and the Legislature intended to make the payment of the ARC constitutionally protected, inalienable, right. Taxes must go up or services must go down, but the pension payment WILL be made. Sell the Turnpike!

    Reply

    • Posted by Tough Love on April 21, 2015 at 5:39 pm

      No, reduce PUBLIC Sector pensions & benefits so that the Taxpayers’ contribution is no greater (on average) than the amounts Private Sector employers contribute towards their employee’s pensions and retiree healthcare (which for the latter is typically NOTHING).

      Public Sector workers are NOT “special” and deserving of a better deal on the Taxpayers’ dime.

      Reply

      • Posted by BH on April 22, 2015 at 8:49 am

        Yes they are!

        Reply

        • Posted by Tough Love on April 23, 2015 at 9:38 pm

          OK, let’s pursue that ….

          How much does that “specialness” translate into greater pensions and better benefits ?

          Most Taxpayers (myself included) would not object to a somewhat greater pensions for police …… say being able to collect a full/unreduced pension at age 60 instead of 65. THAT, is mathematically equivalent to a 1/3 increase in value of their pension……. a multiplier of 1.33.

          Let also be generous and say that their pension formulas should be a bit richer, say 25% ……. a multiple of 1.25.

          Those multipliers are not additive, but multiplicative, making a pension so calculated 1.33 x 1.25 = 1.66 or 66% (i.e. 2/3) GREATER than that of a similarly situated (in pay, years of service, and wages) Private Sector taxpayer.

          Rich enough for you ? Most (including myself) would think so.

          But it evidently is FAR from sufficient for NJ’s Police or the Elected Officials BOUGHT with their Union’s campaign contributions. You see, NJ police pensions (assuming the COLA is reinstated as most expect) are easily FOUR times greater in value at retirement ….. yes, not 66% greater, but 300% “greater” than those of comparably situated Private Sector Taxpayers.

          And evidently our Elected Officials felt that even THAT doesn’t sufficiently compensate for their “specialness”, granting (what at the Local level is) FREE retiree healthcare (which almost nobody in the Private Sector gets any longer) which for family coverage, costs Taxpayers an ADDITIONAL $30K annually.
          ——————————————————–

          At what point is their “specialness” costing Taxpayers TOO MUCH ?

          Reply

  5. Dear God I am so so so glad that we sold our house in NJ for full asking price to a public worker. There will never be a solution, it will go on and on until who knows what. At least now I have a better quality of life without the burden of outrageous real esatate taxes. Good luck to you all I sure do hope it gets resolved!

    Reply

    • Posted by Tough Love on April 21, 2015 at 9:33 pm

      It’s the real estate tax that bugs me as well. And simply to enable very MATERIALLY over-compensating our Local workers in pay, pensions, and benefits.

      I’m sure similar over-compensation at the State level impacts my NJ State income taxes ….. it’s just less visible and annoying than the absurd and VERY in-your-face Proper tax abuse.

      Reply

  6. Posted by Anonymous on April 21, 2015 at 9:31 pm

    All double dipping must be stopped, a ceiling of no more than $50,000 a year
    must be implemented on all retirees. If initiated, C.O.L.A. can be reinstated and the
    pension system will become healthy once more. With a cap, the the money saved
    will go directly into the system with a ratio of 3 to 1, that is, those at the top end will
    in essence pay the benefits of 3 retirees at the bottom end.
    Many at the bottom end receive less than $20,000 a year, you do the math, it is
    fair to all and there is no reason that a current retiree should collect $150.00 dollars
    a year in some cases, and more in others cases.

    Reply

    • Posted by Tough Love on April 21, 2015 at 9:38 pm

      Quoting …”All double dipping must be stopped, a ceiling of no more than $50,000 a year
      must be implemented on all retirees. If initiated, C.O.L.A. can be reinstated and the
      pension system will become healthy once more.”

      Beyond being financially illiterate, CLEARLY you have a financial goal here … Likely as a Public Sector retiree not double-dipping. I can SMELL the self-interest.

      No. End the Double-dipping and do NOT reinstate the COLAs, COLAs NEVER being included in employer-sponsored Private Sector pensions.

      You’re NOT “special” on the Taxpayer’s dime.

      Reply

    • Posted by S Moderation Douglas on April 22, 2015 at 1:09 am

      “With a cap, the the money saved will go directly into the system with a ratio of 3 to 1, that is, those at the top end will in essence pay the benefits of 3 retirees at the bottom end.”

      It may sound “fair”, but actually isn’t. Plus, IRS will never let you do that.

      Double dipping isn’t really a costly problem. It “looks” bad, but eliminating that will save little, if any money.

      Reply

      • Posted by Tough Love on April 22, 2015 at 1:36 am

        The reason double-dipping occurs AT ALL is because PUBLIC Sector pensions are WAY too generous and full/unreduced retirement is available at WAY too young an age. E;g. the extreme example of 90% COLA-adjusted pensions to 30-year-service CA Safety workers beginning as young as age 50.

        In the Private Sector (the almost entirely GONE) Final-Average-Salary DB pensions of Large corporations rarely provided over 50% of pay with no COLA adjustments and rarely starting before age 65 (sometimes 62 with very long service) without early retirement reductions of about 5% for each year of age that you begin to collect before age 65.

        Yet PRIVATE Sector Taxpayers are called upon to pay for 80-90% of the total cost of those FAR richer Public Sector pensions. Is that fair ?

        There is ZERO justification for Pubic Sector pensions:
        (a) being richer in “formulas” factors than Private Sector Plans
        (b) including COLA increases (NEVER included in Private Sector Plans and increasing the Plan’s total cost by 25%-35%)
        (c) allowing full/unreduced retirement before age 65 (perhaps 62 for safety workers)

        Taxpayers should REFUSE to fund them until reduced to a level no greater than what THEY get from their employers.

        Reply

    • Posted by S Moderation Douglas on April 22, 2015 at 9:19 pm

      Let’s just demonize double dippers. Its not like they actually *earned* their pay and pension…..wait, yes they did. I worked with dozens of them. My wife’s brother is one. 20 years Coast Guard, retired at 38, now drawing 50% of final pay (COLA adjusted) and family healthcare…..FOR LIFE. Now working on a second pension at a private sector company; at social security age he will be drawing three pensions. Or the retired Warrant Officer my department hired as assistant superintendent. Over $3,000 a month pension in today’s dollars, health coverage and commissary privileges. I’m thankful for their service, even though neither saw combat. (As I understand, fewer than 20% of military do.)

      Just like in the military, there is good reason for early retirement for safety workers, to keep the force younger and healthier. To a fireman or cop who retires at 55 with 90% of pay, or 50% with 20 years, I say: “Thank you for your service.”

      Reply

      • Posted by Tough Love on April 22, 2015 at 11:11 pm

        No, they didn’t earn their pension. They “earned” about 1/3 of it. The 2/3 balance is the direct result of the the Public Sector Unions’ BUYING the favorable votes of our Elected Officials with campaign contributions and election support.

        I believe the military is a different breed and don’t take issue with their pension/benefits. Besides the FEDERAL Gov’t has a printing press (until China get pissed), The States & Cities don’t.

        To a fireman or cop who retires at 55 with 90% of pay, I will thank them for their services (if honestly given), but want to puke at the Taxpayer ripoff associated with the absurdly generous pension and $30K annual retiree healthcare costs beginning at age 55

        Reply

        • Posted by BH on April 23, 2015 at 5:32 pm

          Where do you come up with your numbers ?? 90% of their pay?? What cop retires with 90% pay???
          You don’t take issue with military pensions? But you’ve got an issue with a cop or firefighters pension??? You make no sense.
          You’re just a very angry and jealous person TL. I honestly feel bad for you now. Before I thought you were just misinformed, but now I see how jaded you are.
          Keep copying and pasting the same ol’ venom. People will eventually tire of it and not even read it.

          Reply

          • Posted by Tough Love on April 23, 2015 at 9:10 pm

            S. Moderation Douglas and I were discussing the extreme pensions of CALIFORNIA Police offices … who can get 90% of pay after 30 years.

            As discussed in comments above.
            ——————————————-
            Quoting …”You don’t take issue with military pensions? But you’ve got an issue with a cop or firefighters pension??? You make no sense.”

            Yes, absolutely !
            ————————————————
            And no, I’m not “jealous”, just too well versed on pension design, funding, and cost ….. to NOT be pissed-off at the enormity of the Public Sector pension/benefit ripoff of Private Sector taxpayers.
            ____________________________
            So how your self-admitted “family-affair” of Public Sector workers sucking at the Taxpayers’ teat going ? Are they confident they’ll get all of their promised pensions & benefits, or have they delegated to you to be their spokesperson ?

      • Posted by S Moderation Douglas on April 23, 2015 at 2:38 am

        You forgot to say “in my opinion”. And I notice, like your governor, you like to cite the highest benefit as if it were average. Insurance for a single person without medicare is less than half what you quoted.

        Reply

        • Posted by Tough Love on April 23, 2015 at 11:11 am

          I’d bet most safety workers get “Family” coverage when retired. The $30K retiree healthcare figure is just about right for the cost in NJ.

          Reply

          • Posted by Tough Love on April 23, 2015 at 12:24 pm

            And, as already shown in an earlier comment on this blog:

            NJ AETNA Freedom 10 Plan (non-Medicare Family Coverage). 2015 cost:

            State Retirees ….. Monthly Cost = $2,848.68 …. $34,184.16 annually

            Teachers …………..Monthly Cost = $2,597.73 …. $31,172.76 annually

            Other Local ……… Monthly Cost = $3,044.83 …. $36,537.96 annually

      • Posted by BH on April 23, 2015 at 5:38 pm

        I say thank you for your service and good on ya for making intelligent career choices. Let the others….who obviously have tried and failed continue to hate and cast blame. It’s so adolescent. Yet typical of this “all about me” mentality of today’s ego. I can’t or didn’t do the right thing to set my life up, so now instead of working harder, I’m just gonna cry and whine about how unfair it is and not be happy until I get what everyone else has. For free, simply because I complained it’s not fair or equal!!! Complete and utter rubish!!!!

        Reply

        • Posted by Tough Love on April 23, 2015 at 9:01 pm

          Does …. “making intelligent career choices.”

          mean that they financially benefited by belonging to a Union that, in collusion with our Elected Officials (that they BOUGHT with campaign contributions and election support), royally ripped off the Taxpayers ?

          Well, don’t beat your chest just yet, as I really doubt that anything even remotely close to these absurdly generous “promises” will actually be met.

          Reality and the Math always governs in the end-game.

          Reply

  7. Posted by Anonymous on May 23, 2015 at 7:32 pm

    TL and devout followers; individuals presenting a right wing conservative perspective based on half-truths and lies.

    TL continual posts repetitive misinformation citing sources with extreme ideology. Yet sumarial dismisses other posts with conflicting opinions and sources.

    Specifically, purposely misstated the tax status of public pensions in the following post; https://burypensions.wordpress.com/2015/05/22/christie-curses-out-nj-media/#comments When called to task tried to double talk their way out of it. Standard operating procedure for most of their commentary.

    Fair and equal for all is the mantra. Fair enough, but not when I suggest Federal workers and members of our beloved Armed Forces be part of the bigger conversation. The response, they’re different. But why, because they risk their lives like first responders at home. Their DBP are paid with Federal tax dollars as opposed to State or Local. Everyone knew the job risks when they accepted employment. But they also knew what their salary, pension, and benefits were supposed to be.

    To blame and demonize public workers for the current situation is unfair and untrue. Do politicians make “deals” with unions that don’t always have the taxpayers best interest? I think everyone knows the answer to that is yes. But politicians are always making “deals” it’s what they do. Just ask the various segment market corporations; defense spending (lucrative contracts), farming (subsidies) and the list goes on and on.

    Your bully tactics and demeaning attitude only motivate me more to push back your parties ridiculous vision for NJ and America. Yes I’m sure John knows all of our IP address, so you and your business name can be exposed as well.

    The purpose of continually posting this comment is to allow the counterpoint perspective to be heard. I will no longer personally engage your comments tit for tat.

    Reply

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