The New Jersey Education Association (NJEA) is releasing an ad that appears to be hard hitting:
But there is no context. Fortunately, we have 15 years of TPAF valuation reports on the state website and it is fairly easy to make up a spreadsheet to check the numbers. Projecting out, state and local contributions look to have been closer to $5 billion than $3 billion while member contributions would come in at $9 billion instead of $10 billion over the last 20 years but there is one number conspicuously absent from the NJEA story.
Over $40 billion in payouts with the amounts steadily escalating. A plan that for the year ended June 30, 2000 had $36 billion in assets and was paying out $1.15 billion annually (3,2% of assets) had as of June 30, 2014 $27.6 billion and was paying out $3.8 billion annually (13.8% of assets).
Consider also that
- a substantial portion of those remaining assets ($10 billion?) consist of employee contributions that would need to be returned to participants upon plan termination;
- about 25% of the assets are invested in alternative investments (i.e junk);
- there is no revenue source willing or able to come up with anywhere near the $7 billion annually that this plan as currently constituted requires now; and
you have a zombie plan.