Looking Beyond the Pension Payment Case Decision

This story in Politico Europe seems to have all the answers.  First as to the decision in the pension payment case:

The expectation within the legal community is that Christie will lose this case.

Even Stuart Buck, vice president of research and integrity at the Laura and John Arnold Foundation — an organization that public-sector unions revile for promoting reductions in pension benefits — says the 2011 law was “pretty clear” in prohibiting Christie’s $1.57 billion cut. “It’s kind of astonishing,” Buck told POLITICO, “for the governor to go back on that and try to withhold payments … that were promised by law.”

and second as to Christie’s presidential aspirations:
Patrick Murray, director of New Jersey’s Monmouth University Polling Institute, said that while a court ruling against Christie wouldn’t likely affect voters, it might well hinder fundraising. “If I’m a donor and sitting there,” Murray said, “why would I bother to take a risk on him?”

Indeed, many former Christie supporters are already shifting their loyalty to his key rival for support of the party establishment, Jeb Bush. These include New Jersey state Sen. Joe Kyrillos, who chaired Christie’s 2009 campaign; Brian Nelson, a lobbyist who led Christie’s gubernatorial transition team; New York Jets owner Woody Johnson; and Lawrence Bathgate, an influential New Jersey attorney.

That may be so but for anyone familiar with your typical New Jersey politician these realities won’t enter into the equation of what will actually happen.  What seems logical to me is that….

  1. The Supreme court will rule that the $1.57 billion payment need not be made for some reason that includes the word ’emergency’
  2. Chrisite will announce his presidential bid around Memorial Day

Nothing else seems possible since…..

  1. Requiring the $1.57 billion payment means that future payments would also be required even when we get to the 7/7th level of the ARC and amounts in the $5 billion range.
  2. Christie still believes the rest of the country is laughing with him (and us)

37 responses to this post.

  1. Posted by Anonymous on May 8, 2015 at 9:51 am

    Hey TL , don t worry, you use your write vote for Chris Christie when you vote for president! All is not lost!

    Reply

  2. Posted by BH on May 8, 2015 at 10:13 am

    And the TL fans will continue to call the workers greedy and unfair and yet not say a thing about corporate greed. Look in the right places, ask the right questions and stop with the public employee badgering!!! If all these things (management fees, non pension funding for decades etc…) added up –would put a huge dent into the sustainability of the funds… Why not look there. Why not put blame where it belongs?
    So sick of the constant open thievery of the public sectors money while they take alllllll the blame.

    Reply

    • Posted by Tough Love on May 8, 2015 at 10:34 am

      Payback for the “consequences” of insatiable greed is harsh,…… and it will arrive in NJ just as it is in San Bernadino, CA. with the Exit Plan for their Bankruptcy now dropping just about all retiree healthcare subsidies. The retired safety worker in his/her early 50s will now be seeing an annual bill for $25+K for that formerly free or near free retiree healthcare coverage. ….. just like Private Sector workers retired in their 50s.

      EQUAL …. but not better.

      ————————-
      http://www.reuters.com/article/2015/05/07/usa-bankruptcy-bernardino-idUSL1N0XY3SL20150507

      Reply

      • Posted by BH on May 8, 2015 at 11:25 am

        Unfortunately the State of NJ cannot file for bankruptcy!! So your position makes little sense.

        Reply

        • Posted by Tough Love on May 8, 2015 at 11:41 am

          It’s the MATH…………..

          There will be no other options …. and retiree healthcare promises will be the first to go.

          Reply

      • Posted by BH on May 8, 2015 at 11:28 am

        And public workers already pay 35% of the healthcare premium. How much do you pay for insurance TL?? Now, consider how much safer your job is…. What’s reasonable and fair for a public safety member to pay for healthcare?

        Reply

        • Posted by Tough Love on May 8, 2015 at 11:42 am

          100%

          Reply

        • Posted by Tough Love on May 8, 2015 at 11:47 am

          All public Sector workers should get a Taxpayer-funded retiree healthcare subsidy EQUAL TO the retiree healthcare subsidy that Private Sector workers typically get from THEIR employers ….. almost always, NOTHING today.

          EQUAL, but NOT better.

          The taxpayers are fed up with the Public Sector Union/worker GREED.

          Why is EQUAL not sufficient …. other than GREED ?

          Reply

          • Posted by BH on May 8, 2015 at 4:00 pm

            Ahhhh!! Why bother. All you do is soew the same old venom here and at least 5 other forums that span all the way to California. I’m not gonna give you a second thought. Instead of compromise…. You DEMAND it all!!! It’s an asinine way to think, one that will never happen anyway. So, I’ll continue to monitor the situation…. Read your rants… All the while knowing the public safety workers will be taken care of. Like they should be.
            Local plans will will fine once the creepy politicians and private sector brokers get their GREEDY fingers off the money. People like you come and go….. I’ve seen you have been bitching about equal and fair for some time now….. Where’s that got ya?? Sleep easy at night???
            Later….

          • Posted by Tough Love on May 8, 2015 at 4:34 pm

            Venom ???

            You’re simply greedy.

            “Corporate Greed” impacts manly the Corporation’s shareholders (NOT Taxpayers … as it does with PUBLIC Sector greed). And Unlike with the products and service of PRIVATE companies (where it’s customers can shop elsewhere if it’s prices become uncompetitive), Public Sector service providers (as MONOPOLIES) care little about attractively pricing their services …. because they look at the Taxpayers as the suckers in the equation who can always be taxed MORE.

            If “Corporate greed” bothers you, be my guest, and make it your mission, but as a Taxpayer, I’m Fed-UP with the insatiable greed of the Public Sector Union/worker/retiree greed, and especially with our Elected Officials who have betrayed their responsibility to look out for the best interests of ALL Taxpayers, and NOT just the interests of their Public Sector workers whose Unions feed their re-election campaigns.
            ——————————–

            And you’re correct, I don’t want half way ….. I want reforms to take Public Sector pay, pensions, and benefits ALL THE WAY down to what comparable Private Sector workers get.

            And yes, for the few Public Sector workers who may make LESS inn cash pay, we can RAISE that pay UP to the level of their Private Sector counterparts ….. as long as their pensions & benefits are reduced ALL THEY WAY down to the level granted those same Private Sector counterparts.

            Got a problem with EQUAL ?

  3. Posted by Javagold on May 8, 2015 at 3:57 pm

    TL. You are too nice. Why should a servant ever get EQUAL to the Master. The public servant should always get LESS. If they don’t like it. They can always leave and join the private sector that pays for the public takers.

    Reply

    • Posted by BH on May 8, 2015 at 4:02 pm

      Lol!!! The private sector pays for the public sector?? Oh great!! Yet another creep who obviously can handle their jealousy!!!

      Reply

      • Posted by Tough Love on May 8, 2015 at 4:42 pm

        What a twisted sense of reality ….. must come with the job.

        Reply

        • Posted by BH on May 8, 2015 at 4:57 pm

          Equating public workers as servants isn’t a twisted sense of reality??
          You can’t be expected to be taken seriously if you subscribe to that notion. It’s idiotic, immature and pure hatred to view anyone like that!!!
          But the picture is becoming clear. You and you minions could care less about NJ. Doubt you even live here. What you want is to spread your propaganda borne from jealousy and laziness. It’s you and your kind that will ruin this country. Not the hard working public employee…. But you give it to me now… Lazy finger pointing gossip starters!! I’ve got no fear. NJ will be fine. Get rid of Chrispy, pay our obligations and treat our workers with respect.

          Reply

          • Posted by Tough Love on May 8, 2015 at 5:09 pm

            I repeat ….. What a twisted sense of reality…………..

            But what not perfectly clear to me is…… does Public Sector employment ATTRACT people predisposed to have such a twisted sense of reality, or do Public Sector workers once hired DEVELOP that twisted sense of reality AS A RESULT OF working in the Public Sector.

            I’d bet that it’s primarily the latter …. not a small contributor to which is certainly the BS that continuously flows from their Unions.

  4. Posted by Anonymous on May 8, 2015 at 7:38 pm

    Please excuse my typos and grammar.

    Sorry to post and run, BH if you’d be so kind to pick up the slack on responding to TL’s responses. Quick TL disclaimer, “the DBP and HB have been too generous” I’d say that’s a separate discussion and subsequent analysis.

    This is not political but purely financial, reference to State is interchangeable with local governmental entities.

    It won’t solve the problem but it will highlight the cause, and you need to acknowledge the cause before you can solve the problem. We’ll need some data from Treasury, P&B and an actuarial. Question to be answered is this a benefit and/or a funding problem, understanding the two are interrelated.

    Assumed starting point the unforgettable Whitman POBs and the moment in time when there was zero unfunded liability. Recalculate the unfunded liability and the State’s corresponding ARC from the starting point to present assuming the following reforms were in place as of the starting point.

    1. The PERS & TPAF denominator stayed at 60, ie no 9% increase. Need to recalculate reduced retirement benefits and COLAs. PWs’ responsible $ TBD.

    2. The member pension contribution was not reduced around the time the POBs were issued. PWs’ responsible $ TBD.

    3. The graduated health care premium share was implemented, we’d need historical premium costs and adjusted salaries to determine employee contributions. PWs’ responsible $ TBD.

    4. The pension funds rely on ROR to grow the investments which is the sole responsibility of the State Investment Council. I’m sure the Great Recession played an enornums role in our current unfunded liability, compounded by the fact the State wasn’t making its ARC and buying into the market lows therefore missing out on potentially big gains. Point here is, to be fair at least in my estimation of fair, reduce the unfunded liability by the amount lost by the pensions funds in the worst year of the Great Recession. A little wordy but what I’m trying to say is the State’s on the hook for the worst ROR year during the Great Recession. State’s responsible $ TBD.

    5. The illustration assumes the State made its ARC each and every year and the ROR analysis would be recalculated accordingly, except for 4 above. State’s responsible $ TBD.

    6. COLAs not currently a factor and for illustration purposes should remain as a pension fund outflow.

    The task is a bit daunting and the results wouldn’t be exact but should provide a good estimate of the pensions funds, adjusted for 1 thru 5 above, unfunded liability and the underlying factor(s) of today’s actual (used loosely) unfunded liability.

    Reply

    • Posted by Tough Love on May 9, 2015 at 1:21 am

      Interesting exercise, but one VERY big problem. You want to only back-off the 9% pension increase, thereby making the assumption that the pre-increase pension benefit level is reasonable.

      It’s not …and never was. The formula factor ALONE (at 1/60, or equivalently 1.67% per year of service) was better than the BEST private Sector plans at that time, and when combined with VERY young full/unreduced retirement ages, and COLA increases unheard of in Private Sector Plans (and both being VERY costly provisions), the value at retirement of such a Public Plan is easily 3 times greater than the better Private Sector Plans.

      It would certainly be an interesting exercise to determine if ACTUAL taxpayer contributions-to-date would have fully funded an appropriate, reasonable and fair level of benefits, but you CANNOT do so by “starting” with the (already excessive) benefit level/provision combination in existence BEFORE the 9% increase.

      Reply

    • Posted by Anonymous on May 8, 2015 at 8:08 pm

      Come on TL can only take so much good news at one time, hello WI & the land of Walker.

      Reply

    • Posted by truthnolie on May 8, 2015 at 8:09 pm

      From the article:

      “State lawyers contended the government had the right to exercise “police powers” in time of crisis, and that the 2008 recession, which decimated retirement fund investment portfolios, provided the crisis. But under close questioning from the bench, the state’s lawyer acknowledged that past governors and legislatures shorted pension payments to save money in the short term.”

      Hmmm…that sounds familiar…..now where else have I heard that???? LOL

      Reply

    • Posted by Anonymous on May 8, 2015 at 8:11 pm

      Stop the madness, WI would crush them like the PW’s they are and TL can only handle so much good news at once.

      Reply

    • I could be wrong but I believe in Illinois, the pensions are part of their state constitution. In NJ, they are not. Anyone care to clarify?

      Reply

    • Posted by dentss dunnigan on May 10, 2015 at 12:25 pm

      The big difference with Illinois pensions and New Jersey’s would be Illinois is protected by their state constitution ,NJ’s is not .this ruling is meaningless in this state

      Reply

      • Posted by Anonymous on May 10, 2015 at 3:28 pm

        Yes that’s what I thought so I’m not sure why publics in NJ feel that the IL ruling will help them avoid significant and much needed reforms

        Reply

        • Posted by Tough Love on May 10, 2015 at 4:07 pm

          With PROSPECTIVE pension changes (reductions or Plan FREEZES) for the FUTURE Service of CURRENT workers both legal and quite routine in Private Sector pensions plans, and with taxpayers responsible for 80-90% of the total cost of PUBLIC Sector pension Plans, there is ZERO justification for greater protections from PROSPECTIVE change than there is for Private Sector Plans..

          The Laws, regulations, Case Law, and Constitutional protections in place today got there BY (yes BY) Public Sector workers FOR (yes, FOR) Public Sector workers.

          Such self-dealing should NOT be honored by the betrayed and beleaguered Taxpayers.

          Reply

  5. Posted by Anonymous on May 8, 2015 at 8:06 pm

    BTW, there’s been general agreement health benefits are key specifically changing everyone to so called “gold” coverage but a 100% employee/retiree premium share is delusional. Active workers and medicare eligible health benefit premium share will remain unchanged, “early retirees” will probably have a premium share similar to active workers. TL sorry but guess it’s time to move to WI and the land of Walker.

    Reply

    • Posted by Tough Love on May 8, 2015 at 8:09 pm

      Scott Walker for President !

      Reply

    • Posted by Tough Love on May 8, 2015 at 11:11 pm

      100% employee premium share is NOT delusional for Public Sector RETIREE healthcare coverage because, with Private Sector workers typically getting ZERO subsidy towards employer-sponsored retired healthcare coverage today, that what THEY must pay …. 100% of the cost.

      EQUAL …. but NOT better.

      Reply

  6. TL, these are typcial of the stages of loss……denial, anger, bargaining…..acceptance.

    Reply

    • Posted by truthnolie on May 10, 2015 at 1:28 pm

      Yes…I agree…..that means that at some point you, your friend TL and those others envious/jealous of public employees will eventually reach the “acceptance” stage…that is, accept the fact that your taxes will go up in order to pay for what was agreed to in legally binding & negotiated contracts.

      As it stands now, you all seem to be stuck in the “anger” stage.

      Reply

      • Posted by Tough Love on May 10, 2015 at 4:12 pm

        truthnolie, It seems that you are the one stuck in the “denial stage”. Quoting the first 3 paragraphs of a recent article:
        ———————————————————————-
        “New Jersey is beset by one of the worst government pension problems in the nation, thanks to decades of bad management, deceptive accounting and the continual awarding of higher benefits to workers without adequate funding by Jersey governors and legislatures.

        For years, some observers have argued that the New Jersey pension system is so deeply in debt, to the tune of at least $60 billion, that it is beyond saving at a reasonable cost. Now, an expert commission consisting of Democrats, Republicans and independents who were asked by Gov. Christie to examine the issue has agreed.

        In a recent report, the New Jersey Pension and Health Benefit Study Commission warned that, “There are no plausible solutions for closing the pension funding gap” in the state without serious new reforms. Trying simply to pay its way out of the current funding mess would require the state to increase its income tax by 29 percent or raise the sales tax to 10 percent, in a state that is already one of the nation’s highest taxed.”
        ———————————————————————-

        Source: http://www.manhattan-institute.org/html/miarticle.htm?id=11341#.VU-s8fCYGns

        Reply

        • Posted by Tough Love on May 11, 2015 at 4:03 am

          And by the way …… Mr. Bury, owner of this blog (and a pension actuary), believes the $60 Billion deficit noted above is really $166 Billion. You’d think the NJ Pension Commission would have given an even SMALLER chance at survival.

          Yup …. “denial” seems about right.

          Reply

  7. I agree with the blogger who clearly stated that this is NOT a political problem but a financial one. The only thing I might add is that the “politicos” are in charge of things much to the detriment of publics and privates alike.

    Reply

    • Posted by Tough Love on May 9, 2015 at 5:04 pm

      So you’re agreeing with YOURSELF …. sure looks like YOU made that earlier comment?

      Reply

  8. Posted by Anonymous on May 11, 2015 at 8:08 pm

    twitter #fundnjpension

    Reply

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