Actuarial/Political Miscellany

There were four items that were brought to my attention today that this readership may find of interest:

  1. AMT16 mortality table being out
  2. Abbott requirements triggering New Jersey pension crisis
  3. Status report on the COLA case from NJTV
  4. The Clintons say they want good pensions and healthcare for all – but when it comes to their own employees…

AMT16 Ignores SOA’s RP-2014

The heading pretty much says it all but for those of you who may need a bit of a reminder the Society of Actuaries came up with an updated mortality table with longer life expectancies that they were expecting the IRS would incorporate into the tables they put out impacting pension funding and payout amounts.  IRS may do it but not in 2016.

The Role of Abbott Funding in NJ’s Pension Crisis

Interesting article

Former NJ Supreme Court Justice on where the COLA case is headed
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Clinton Foundation Employees Walmarted

A client called wondering how well Hillary Clinton’s employees fare in regard to pension and health insurance benefits so we did a little research.  The Clinton Foundation website lists:

  • Health Plan — The Foundation offers hospitalization and medical coverage for employees and their spouses and dependent minor children. The Foundation pays 100% of employee, spouse and minor dependent health insurance costs. Dental coverage is also available for employees and their eligible dependents.

  • Flexible Spending Account — A Flexible Spending Account is offered that can provide employees a means of reducing their tax burden for eligible out–of–pocket medical expenses.

  • Retirement — The Foundation offers a tax deductible retirement plan, and will match up to 6% of employees’ salaries that are contributed to such plan.

  • Life and Disability Insurance — Term Life Insurance and Supplemental Term Life Insurance are available for employees and their eligible dependents. Short-Term and Long-Term Disability Insurance is provided for employees that become totally or partially disabled.

Note: We review our benefits plans and policies on a regular basis and may modify or eliminate benefit plans and policies at any time for any reason.

That is what they tell their employees and the public but what do they tell the government?  From their 5500 filings for 2013:

001 – 401(k): immediate eligibility with company match up to 6% of pay.  As of 12/31/13 there were 510 active participants, 110 (22%) of whom did not have account balances (ie. did not make 401(k) deferrals). Average 401(k) deferral – $4,800.  Average company match: $3,350. Average account balance of all participants: $29,733.

501 -Group: Covers long-term disability, stop loss (large deductible), and accidental death. 264 participants (52% of employees)

502 – Cafeteria: Covers Vision, Accident – Cancer, and Life Insurance. 128 participants (25% of employees)

The Clinton Foundation may provide health and dental benefits outside of a qualified plan but my takeaway from the benefits we do know about:

  • No Defined Benefit plan which Hillary Clinton will be championing in her campaign for public employees arguing that taxpayers can afford it (though the Clintons obviously can’t for their own employees).
  • Lot of turnover at the Clinton Foundation since of the 510 people they average on staff only half make it long enough to collect benefits under plan 501 and a mere one-quarter make it to 502 eligibility.
  • That line about eliminating “benefit plans and policies at any time for any reason.” Is that prosperity and progress for Clinton employees?

107 responses to this post.

  1. Posted by Tough Love on August 5, 2015 at 7:35 pm

    (1) I would be tickled pink (and would STOP all future commenting on Public Sector pensions) if PROSPECTIVELY for all Public Sector workers (including CURRENT ones) the Taxpayer’s commitment was EXACTLY 6% of base cash pay in every year and NOTHING more … ever.

    (2) the description of the healthcare benefits seems to apply to ACTIVES, likely with ZERO employer-sponsored retiree healthcare benefits. And while paying 100% of premiums for family coverage “seems” quite generous, dollars-to-donuts the Plans deductibles, copays, coinsurance, and coverage is nowhere near as generous as the typical PUBLIC Sector Healthcare Plan.

    AND, did you see the “Note:” ……

    “Note: We review our benefits plans and policies on a regular basis and may modify or eliminate benefit plans and policies at any time for any reason.”

    That’s standard fare in ALL Private Sector plans. Try that with a PUBLIC Sector plan !

    Reply

    • Posted by BH on August 5, 2015 at 7:52 pm

      TL= Hatred, jealousy, stubborness, ignorance, drama and lies…..

      Reply

      • Posted by Tough Love on August 5, 2015 at 8:07 pm

        I figured you’d chime in.

        Greed, delusion, and stupidity* are a tough thing to overcome.

        * the Pension your family (or YOU) are counting on is “toast” w/o material reforms …. meaning VERY material benefit reductions for the future service of all CURRENT workers..

        Reply

      • Posted by MJ on August 5, 2015 at 9:30 pm

        BH. We get it you don’t care for TLs posts but can you comment on the article as opposed to calling names. TY

        Reply

      • Posted by Sean on August 6, 2015 at 11:20 am

        BH, I just LOVE watching you and others make personal attacks on TL (whomever he/she is). She hits you, right between the eyes, over and over and over again, and the result is always the same: personal attacks about his/her mental or emotional health. LOVE it. You have no rational, fact-based rebuttal, and you know it. The other interesting thing is this blog. I live in the other cesspool (Illinois), but it’s nice to see that the highest concentration of union goons seem to reside in NJ, and on this particular blog. I frequently read financial blogs by people who actually know what they’re talking about, and they “get” it. Union shills just do not want to face the reality of what they have done to taxpayers, and they darn sure don’t want to face the reality of what’s becoming of their grip on the taxpayer’s money. Not to worry though, because the markets, and mathematics are going to silence you all for good. These little verbal skirmishes will be fond memories of good ole days gone by. But I hope you feel better with your attacks. The sad, inconvenient reality, is that this TL person is actually right. Get used to it.

        Reply

        • Posted by Anonymous on August 6, 2015 at 11:29 am

          Good luck with that, your constitution trumps NJ’s hands down – union or not, LOL!

          Reply

          • Posted by Sean on August 6, 2015 at 11:54 am

            Yep. You are right about that. Corruption is rampant, and deeply entrenched in the land where the governors make the license plates! But, sooner or later, when enough people have left, and enough people are pissed off, and the financial hole becomes so big that even the stupid get it, we will all see that words on paper can be changed, that words on paper can never create the money needed, and that words on paper can’t force people to crap money.

        • Posted by BH on August 6, 2015 at 1:00 pm

          Well, I guess her constant attacking of the public workers gets a pass because you’re of the same mind. And I take it you’ve not read my other non combative posts as well. I just get sick of the venom she spews unchecked!!! Most of her ideology is born from hatred and jealousy regardless if she is right or wrong.
          As for my fact based rebuttal…. Every post I send is a rebuttal to her. I just recently showed an article in contrast to her. I showed evidence how those unions she calls cancer have created 37 positive things within the workforce. I give my opinion of how and why we are in this mess. As a nj taxpayer…. My opinion counts just as much as hers!!!! So, while I don’t expect you to share my sentiment, but go back and read my posts to see for yourself!!!!
          And they are not 90% copy paste drivel.

          Reply

          • Posted by BH on August 6, 2015 at 1:08 pm

            MJ——–From TL later in this post……”and the other of average intelligence, uninspiring, do only what’s in your job-description mentality, and risk-adverse.””
            That’s an attack on the public sector!!! But it’s ok right??
            So whatever!!!! I’ll continue to attack her while defending the middle class public worker from these idiots!!! Don’t read my posts or ban me from this blog.

          • Posted by Tough Love on August 6, 2015 at 1:34 pm

            BH, Not true. Beyond calling them “greedy”, I do not “attack” Public Sector “workers”. Never the “workers”, only their grossly excessive pensions and benefits. As I’ve stated before, NJ Elected Officials are 90+% to blame for the mess we are in …. for trading their favorable votes on Public Sector pay, pensions, and benefits for campaign contributions and election support. The other 10% of blame belongs to the Public Sector Unions for their insatiable greed and arrogance towards the taxpayers.

          • Posted by Tough Love on August 6, 2015 at 1:38 pm

            Quoting BH …. “I showed evidence how those unions she calls cancer have created 37 positive things within the workforce.”

            Wrong, and I responded as such to your comment, pointing out that they were through the efforts of PRIVATE Sector Unions …… a far cry from PUBLIC Sector Unions, indeed a CANCER inflicted upon civilized society.

          • Posted by Tough Love on August 6, 2015 at 1:50 pm

            BH, I’d hardly call referring to Public Sector workers as ….. “and the other of average intelligence, uninspiring, do only what’s in your job-description mentality, and risk-adverse.” ……… and “attack”.

            And I’m sure you’ll find this interesting ……….

            http://reason.com/blog/2013/05/01/court-oks-barring-smart-people-from-beco
            ———————————————————-
            If the shoe fits ……..

          • Posted by Tough Love on August 6, 2015 at 2:08 pm

            Quoting BH …. “Every post I send is a rebuttal to her.”

            Would your above comment (timestamped August 5, 2015 at 7:52 pm) wherein you responded to me with …….. “TL= Hatred, jealousy, stubborness, ignorance, drama and lies…..”

            be an example of such “rebuttal” ?

          • Posted by Sean on August 6, 2015 at 4:16 pm

            BH, I DO see your point, and in the interest of maintaining some civility, I will acknowledge that it does get hostile from both sides from time to time. I have a lot of friends who work in the public sector, and they are genuinely good people who do a good job. I also don’t think that anyone wants to destroy pensions and benefits for anyone.

            I think one thing that I usually jump all over though, is when I hear union people writing off any non-union person’s viewpoint as “pension envy.” No, it’s not envy. It’s like seeing someone pull up and park in a parking space that is designated for the handicapped, putting up the “Handicapped” placard, then jumping out of their car and walking sturdily into the store. It’s not “envy” that I feel towards that person, it’s more like social anger. It makes me angry that this person is legally “gaming” a system that was designed with good intent.

            Same with public pensions. I certainly don’t want to see anyone eating cat food and living under a bridge, but what the unions have done to enrich themselves at taxpayers expense is simply unconscionable.

          • Posted by BH on August 6, 2015 at 5:07 pm

            Sorry Sean, but I don’t see it that way at all. They are not raping the system like freeloaders. They work very very hard for what they receive. They negotiate their salaries and benefits with their respective municipalities. They pay the most into the system.
            And most of it —is —derived from jealousy. The tax you pay for public safety is minimal. Take a look here for an example… Plug in your town to see what you pay for fire and ems in your town…. I pay $1.00 a day!!!!!!!!
            http://firefighterfactsnj.org

            Let chapter 78 work for a second. It will if given a chance.
            A line needs to be drawn and the pensions separated. Local. State. Two separate animals with different funding and sustainability. To lump them all together is wrong.
            To call unions a cancer is wrong. To say a cop or firefighters job is comparable to any private sector job is wrong. I’m just telling the facts here.

          • Posted by Tough Love on August 6, 2015 at 11:04 pm

            Last 2 comments above … interesting discourse between Sean and BH…

            With Sean summarizing his point saying:

            “Same with public pensions. I certainly don’t want to see anyone eating cat food and living under a bridge, but what the unions have done to enrich themselves at taxpayers expense is simply unconscionable.”

            BH … ” doesn’t see it that way”, going on to say:

            “They are not raping the system like freeloaders. They work very very hard for what they receive. They negotiate their salaries and benefits with their respective municipalities. They pay the most into the system.”

            —————————————————————————-

            BH, I agree with what you stated above ….. but you completely ignored (and apparently refuse to respond to) Sean’s assertions. You also conveniently have a blind eye to the unfairness of the “negotiations” to which you refer. Are the workers not “negotiating” with Officials who their Unions effectively put into the job with campaign contributions and election support? It doesn’t work that way in the Private Sector, where the workers DON’T get to choose their bosses, bosses who are then beholden to them

            I don’t know what I pay (per day) for Police services. Even if not individually material, all of these little amounts add up to a heavy tax burden What I do know FOR CERTAIN is that the Total Compensation for a patrolman with 5 year’s experience in my town is over $200K annually …. and that is grossly excessive by any and every reasonable metric given the jobs risk, and Officer’s experience, education, knowledge, and skill sets.

            Your single answer to everything is simply … they work hard, they contribute a lot, they negotiated they pay and benefits. NONE of that addresses the issue at hand. With a BASE PAY of over $125K (with just 5 year’s service) unquestionably very generous and far higher than that of any occupation excepting those requiring far greater education and training (e.g., Doctors … 8+ years, not 6 months in the Police Academy), there is ZERO justification for layering on TOP of that ANY greater pensions & benefits let alone free retiree healthcare (at a cost for family coverage of $25K-$35K annually), and pensions that are ROUTINELY 4x-5x greater in value at retirement than those of Private Sector workers making the SAME pay, with the SAME years of service, and retiring at the SAME age.

  2. Posted by Anonymous on August 5, 2015 at 10:17 pm

    All seems reasonable and necessary but let’s not stop there. Prospective changes need to account for private sector profit sharing and for publicly held companies the benefit of stock options?

    Reply

    • Posted by Tough Love on August 5, 2015 at 10:51 pm

      Yes ….. in comparable jobs, the TOTAL Compensation of Private Sector workers (including profit sharing and stock options) vs the TOTAL Compensation of Public Sector workers including the TRUE (not phoney/understated) value of their pensions, retiree healthcare benefits, sick/vacation cashouts, “DROP Plans (if applicable) and easy-as-pie “disability” retirements, etc.

      Let the games begin !

      Reply

      • Posted by BH on August 6, 2015 at 1:11 pm

        What private sector job equates to a police or firefighter TL?? You say comparable ad nauseam, but never answer my question!!
        Make their jobs as safe as yours and we can begin to discuss comparable, equal and fair!!

        Reply

        • Posted by BH on August 6, 2015 at 2:11 pm

          ……….and I’ll keep waiting!!!

          Reply

        • Posted by Tough Love on August 6, 2015 at 2:14 pm

          Well, for a Firefighter, how about a Private Corporation that provides firefighting services. I’d bet that the total compensation of their workers is no more than HALF that of Public Sector firefighters.

          There is no Private Sector job analogous to Policemen, but there are many jobs with comparable risks, education and experience requirement, knowledge and skill sets ….. with most paying NEAR HALF the Total Compensation of Police Officers in NJ.

          Reply

          • Posted by BH on August 6, 2015 at 2:25 pm

            http://www.earthisland.org/journal/index.php/elist/eListRead/fighting_fires_is_big_business_for_private_companies/

            The title pretty much explains my point!! And as a direct rebuttal to you.

            Again, you simply cannot compare police and fire to the private sector which is why I always advocate for a clear separation of the state vs. local funds.
            I’m not saying they are any better, but facts are facts. Their jobs are different and since there’s no comparable private sector job that DIRECTLY relates to them, they should be handled differently.
            Once you and I pass that hurdle, we can begin a dialogue on the state plans and what a mess they are in. Until then, I will continue to speak out against what I feel is venom filled with hate against a group of people who risk their lives every single day!!!

          • Posted by BH on August 6, 2015 at 2:31 pm

            And MJ, that goes for you as well. I simply cannot stand a keyboard hero, sitting in a climate controlled basement of his mothers house, speaking against me, when all I’m doing, as a taxpayer is advocating for the public safety professions while people like TL call their unions a cancer!!! It insults me and I’m ashamed for all of you. Pray the day you need these selfless strangers!!!!!
            They pay the most into their pensions, they always have. They now pay over $800 per month for medical, while dealing with people you could care less about. The sick, And the injured!!! During hurricanes and snow storms. In the heat and all hours of the night. They are there. While their families are home clueless as to their return. While you people call them cancer and not deserving of their pensions and salaries!!!! What a joke!!!!Their pensions are funded in the 70’s and will continue to be sustainable due to employee and employer constant contributions!!

          • Posted by Tough Love on August 6, 2015 at 3:02 pm

            Quoting ….”all I’m doing, as a taxpayer is advocating for the public safety professions ”

            Didn’t you stop that comment a bit too soon ? Per your past comments, a more lay-your-cards-on-the-table-statement would have been ……………………………..

            “all I’m doing, as a taxpayer is advocating for the public safety professions, which includes several member of my own family”

            Self-interest ? Greed?

          • Posted by Tough Love on August 6, 2015 at 3:07 pm

            Quoting BH …”While you people call them cancer and not deserving of their pensions and salaries!”

            STILL spouting this BS? Nobody on this or any other Blog that I’m aware of (especially myself) has ever called the Public Sector WORKERS a “CANCER”.

            The UNIONS ……. YES.

            And the “workers” not deserving of such grossly excessive pensions …… YES.

  3. Posted by Anonymous on August 5, 2015 at 10:18 pm

    This coordination of health benefits is a nightmare, retired through NJ and now active through FL!

    Reply

    • Posted by Tough Love on August 5, 2015 at 10:53 pm

      Would be a LOT simpler if you were PRIVATE Sector NJ retiree …… as you likely would not be getting ANY retiree healthcare benefits.

      Reply

      • Posted by Anonymous on August 6, 2015 at 8:21 am

        True and sooner then most expect. Which is why I’m being proactive in controlling my own destiny.

        No one should assume this will resolve itself without significant change. Question is when and how much, sooner is better for all.

        Reply

      • Posted by Anonymous on August 6, 2015 at 9:34 am

        Forgot to mention alleged private sector brightest and best. The intelligent and correct answer is why are you enrolled on FRS health benefits when you CURRENTLY get them FREE? And the answer is that’s exactly what I do, as you indicated to BH above, thought I’d hear from you on this.

        And as MJ indicated above, no reason for name calling.

        Reply

  4. Posted by Anonymous on August 5, 2015 at 10:45 pm

    Few observations:

    What’s NJ’s % contribution for employees DCP?

    What does billionaire presidential candidate The Donald provide to his rank and file employees, excluding his son and daughter – LOL?

    How does all of the above compare to mega tech giant Google’s employee’s benefits package?

    Reply

    • Posted by Tough Love on August 6, 2015 at 12:18 am

      Are you looking to compare the benefits provided Google’s workers VS the typical benefits provided Public Sector employees?

      Of course it’s an absurd comparison as the employee groups are about as different as one could imagine ….. one group mostly brilliant, passionate, entrepreneurial, and risk-taking, and the other of average intelligence, uninspiring, do only what’s in your job-description mentality, and risk-adverse.

      Guess which is which ……. LOL

      Reply

      • Posted by Anonymous on August 6, 2015 at 8:11 am

        Yup there goes that misperception and you ask what on a previous blog. No I won’t do your work for you.

        The best and brightest like Wall Street and the GREAT RECESSION. Private sector loves to take credit for the good and shed ALL responsibility for the bad.

        Yup America’s brightest and best, maybe that’s why we’re in this mess.

        Reply

  5. Posted by Greg Lamon on August 6, 2015 at 1:06 am

    Pension reform zealots who blame state employee pension benefits for the so-called pension crisis in New Jersey should be required to read the “Interesting article” linked under the heading in the above article of “The Role of Abbott Funding in NJ’s Pension Crisis.” It is a bit long, but assigns blame squarely where it belongs, and that is not the workforce of state employees.

    Reply

    • Posted by Tough Love on August 6, 2015 at 2:06 am

      Greg, I read that linked article, which can be summed up in a few of it’s sentences …

      “the pension system had fundamental problems that grew into disaster as the state taxed too little and spent too much. This essay focuses on where New Jersey spent too much. ”

      The “problem” with that sentiment is that it “assumes” that if we had the money to do so (which we don’t, at least partially do to Abbott) we SHOULD fully fund the pension AS PROMISED.

      I couldn’t DISAGREE more. NJ’s Taxpayer SHOULD provide it’s Public Sector workers with “Total Compensation” EQUAL TO (but no more than) what jobs with comparable risks, experience and education requirements, knowledge, and skill sets would pay in the Private Sector. Paying MORE is unnecessary (to attract and retain a qualified workforce), and is unjust/unfair to Taxpayers, EVEN IF AFFORDABLE.

      The AEI compensation study previously referenced on this blog concludes that CASH PAY to non-safety NJ’s Public Sector workers is 4% LOWER than comparable Private Sector workers, but 23% HIGHER when the value of the MUCH richer Public Sector pensions and benefits are included. To put that in perspective, taxpayers should consider how much better THEIR retirement would be if THEY had 23% extra income EVERY YEAR (tax deferred, as are the pension and benefits of Public Sector workers) to save and invest over their entire careers. Assuredly, for most that would add $1+ Million to their net worth at the time of retirement.

      There is ZERO justification for NJ’s Taxpayers to PROVIDE such rich pensions/benefits in the first instance, and THEREFORE, zero justification to fully fund an ARC that is A FUNCTION OF those richer than necessary or just pensions.

      It gets back to what I have repeated identified as the ROOT CAUSE of NJ’s pension mess ….. grossly excess pension & benefit “generosity”.
      ——————————————————————————

      A helpful technique I’ve used in business analysis for decades is to test the validity of a position by examining an extreme example.

      Lets do that here………

      Suppose that Private Sector compensation is exactly the same as it is now, but that Public Sector workers were even MORE successful in getting NJ’s elected officials to grant them rich pensions and benefits, so much so that their pension and benefits are 3 times GREATER in value than they are right now, and hence 3 times MORE costly. Lets also assume astoundingly high investment returns in pension Plan assets, so that we actually had sufficient funds to fully fund those 3x greater ARC payments.

      Under this scenario, WE DO HAVE the available funds …. but is it fair to Private Sector Taxpayers to provide Public Sector such rich benefits, likely pensions 10+ times greater in value at retirement than what THEY typically get from their employers? Do we not have better and more important uses for available funds IN EXCESS OF the amount necessary to provide pensions and benefits EQUAL to what Private Sector Taxpayers get ?

      Reply

      • Posted by Sean on August 6, 2015 at 11:43 am

        Well said! Excellent example, too.

        I also like to use extreme examples, though far simpler. I get so tired of hearing public sector union people saying, “if only the politicians had funded our plans, we wouldn’t be in this mess. We did our part” etc, etc, ad nauseum.

        I use this example:

        Suppose I’m lying in bed, feeling really sick. I want very badly to have a bowl of soup. So I say to one of my sons, “Hey buddy, would you please go and get dad a bowl of soup?” Seeing an opportunity, my son uses the situation to leverage his position. “Ok dad, but only if you give me a million dollars!” “Ok son, I’ll give you a million dollars!” So he goes and gets it. Later, after I’ve recovered, my son is constantly reminding me that, had I only funded his account, he would be a millionaire. After all, he did his part, a promise is a promise, and so on.

        Well, the problem is not that I did not fund his account, it is the symptom (as I’ve heard you say). The REAL problem is that I should never have made such a ridiculous promise to begin with (but hey, I was desperate, and therefore willing to promise anything to get what I wanted – sound like any politicians we know?). Yes, my son DID do his part, and he did it faithfully. Bravo. But does his contribution REALLY warrant such a high level of compensation? No.

        In the pit of my stomach, I believe that public employees really do understand this; they just don’t want to accept it.

        Reply

        • In your example you ascribe goodwill to the politician asking for the soup. In reality the politicians who supported these insane benefit programs had no goodwill but were craven in trolling for both votes and financial support. Add to that that they usually benefited personally from these outrageous programs and you have the perfect storm whose wreckage we now face. In NJ the only “constituent” that politicians support is themselves.

          Reply

          • Posted by Anonymous on August 6, 2015 at 12:28 pm

            Yep. Sad but true…

          • Posted by Sean on August 6, 2015 at 12:29 pm

            Yep. Sad but true…

          • Posted by Tough Love on August 6, 2015 at 1:57 pm

            Yep. Sad but true… and ALSO why they will EVENTUALLY change sides and SUPPORT MATERIAL pension reform.

            Will just take a bit more of NJ’s Private Sector taxpayers to wise up to the decades-long financial “mugging” that has been perpetrated upon them by the insatiably greedy Unions and enabled by their taxpayer-betraying Eected Officials.

            Once these politicians realize that it’s EITHER material pension reform … or being voted out of office … change will be swift and material.

          • Posted by Anonymous on August 6, 2015 at 4:06 pm

            How many of you private sector righteous bloggers are millionaire business owners? Cash value now not present value of a future “perceived” benefit?

          • Posted by Tough Love on August 6, 2015 at 5:57 pm

            Do you mean “millionaire” like in the VALUE AT RETIREMENT of the grossly excessive pensions and retiree healthcare benefits of all but the VERY lowest paid of NJ’s full career Public Sector workers ?

            That “value” is no less REAL than cash in the bank, or the business-interest value of Private Sector business-owners not graced with such grossly excessive pensions & benefits.

          • Posted by Anonymous on August 6, 2015 at 6:59 pm

            Ever the double blogging deflector, undoubtably someone with political ties – if the shoe fits!

      • Posted by S Moderation Douglas on August 6, 2015 at 5:33 pm

        “A helpful technique I’ve used in business analysis for decades is to test the validity of a position by examining an extreme example.”

        Illogical. That sounds like the Rush Limbaugh method, in re “increase in tax rates always leads to a decrease in total tax revenue” as “proof”, he suggests you speculate what would happen if taxes were raised to 100%……. It’s a ludicrous example, of course, and shows a complete misinterpretation of the Laffer curve. There are continuous marginal corrections, in both tax policy and pension policy as they react to current conditions, that produce results the opposite of what extreme changes might make.

        “pension and benefits are 3 times GREATER in value than they are right now” is a ludicrous assumption, even as a pure mental exercise. In fact, “23% more” is a gross exaggeration, in spite of your oddly fanatical devotion to it.

        I have heard the argument that, if public workers “claim” they are underpaid, why don’t they go to work in the private sector? Or, conversely, if private sector workers believe public benefits are superior, why not apply there?

        As my old friend Tom West said:

        “Following that line of reasoning, it’s tautologically impossible to *ever* be ‘screwed on pay’, in either the public or private sector.”

        Reply

        • Posted by Tough Love on August 6, 2015 at 6:07 pm

          With you, EVERYTHING that doesn’t support the status quo and continuation of the grossly excessive pensions & benefits (AND Total Compensation) of NJ’s Public Sector workers …. is “Illogical”and GIGO.

          Yeah, when you have nothing of value to offer in rebuttal.

          Reply

          • Posted by BH on August 6, 2015 at 6:36 pm

            With you TL, you glaze over things that you can’t answer or are proven wrong.
            As an example-
            In the above posts you claim camparabilty between public and private sector with same this and same that. And although I showed you neither police nor fire fit your comparable reasoning. You then say some BS about privatizing firefighters. I showed how insanely costly that is with the article I posted. And you admit no other private jobs are comparable to police. Thus agreeing with my statement. And still you battle. Just confess….. State and local plans should be separate. The local plans will survive if left alone and ch78 will do its job. There are no comparable private jobs to police and fire. So your equal and fair garbage is without merit…… When comparing public police fire vs. private. That’s the only point I’m trying to make here…..

          • Posted by BH on August 6, 2015 at 6:37 pm

            Once you concede that. We can begin productive agreeable dialogue about the state plans.

          • Posted by S Moderation Douglas on August 6, 2015 at 8:00 pm

            “Have you stopped beating your wife?”

            “grossly excessive” is your clearly biased and emotional opinion.

            I don’t support any so called “reform” (reduction) that assumes ALL public employees are overcompensated.

            Suppose some (not all) state employees earn more than the private sector. Where do you cut?

            California, according to you-know-who, has a 23% compensation advantage over the private sector.

            According to Biggs, they have a 7% advantage in healthcare costs, and a 12% advantage in accruing retiree healthcare. That accounts for 19% of the difference. Could the alleged difference be solved by instituting national single payer healthcare?

            Face it, your biggest gripe is with police and fire, who pretty routinely are excluded from pension reform anyway.
            Ironic.

          • Posted by Tough Love on August 6, 2015 at 9:57 pm

            Quoting … “And although I showed you neither police nor fire fit your comparable reasoning. ”

            Oh really, when and where was this …. must have missed it.

            ——————————————————–
            Quoting …. “You then say some BS about privatizing firefighters. ”

            Why is that BS …. because it might put your over-compensated family members out of work ? Why should Taxpayers not research alternatives, and seek out effective fire protection at the least possible cost.

            And your “example”, being about the high cost of fighting the large forest fires in the far western States has VERY little to do with NJ.
            —————————————————————-

            Quoting …” And you admit no other private jobs are comparable to police. Thus agreeing with my statement.”

            Wow, can you twist the meaning of my words …….. which were:

            “There is no Private Sector job analogous to Policemen, but there are many jobs with comparable risks, education and experience requirement, knowledge and skill sets ….. with most paying NEAR HALF the Total Compensation of Police Officers in NJ.”
            ———————————————————-
            Quoting .. “State and local plans should be separate. The local plans will survive if left alone and ch78 will do its job. :”

            I don’t care if the State and LOCAL Plans are separate, BOTH have EXTREMELY poor funding ratios (with the State Plans in a worse position) and BOTH should be FROZEN, as proposed by the NJ pension Commission.

            Even putting aside the poor funding level, as I laid out in my above response to Greg Lamon (timestamped August 6, 2015 at 2:06 am) EVEN IF WE HAD THE AVAILABLE FUNDS, we should NOT fund these unnecessary, unjust, unfair, grossly excessive pension & benefit promises.

            Notwithstanding your overt protestations to the contrary, Public Sector workers are NOT “special” and deserving of a better deal …… on the Taxpayer’ dime.

          • Posted by Tough Love on August 6, 2015 at 10:12 pm

            Quoting S Moderation Douglas ……….. “I don’t support any so called “reform” (reduction) that assumes ALL public employees are overcompensated.”

            We have addressed this before, and I conceded that there are some highly educated Public Sector (the PHD’s and “Professionals” in the AEI Study) in NJ that earn less in Total Compensation than their Private Sector counterparts, and agree that shortfall should be eliminated ……… just as compensation REDUCTIONS are in order for all of the Public Sector workers with greater Total Compensation.

            But ….. with, for ALL WORKERS TAKEN TOGETHER, there being a 23% Public Sector Total Compensation ADVANTAGE …… the NET of all of the increases and decreases rightfully should come out to a 23% REDUCTION in total pay.

            I just satisfied the issue noted in your above quoted statement ……. but I’m sure you’ll find something else to complain about because come-hell-or-high-water, you’ll will not support any materiel pension reforms (yes, “reductions”), even though eminently justifiable.

          • Posted by S Moderation Douglas on August 7, 2015 at 1:47 am

            “See my long comment above.”

          • Posted by Tough Love on August 7, 2015 at 1:54 am

            S Moderation Douglas,

            As expected ……. along with your “illogical” and GIGO”.

          • Posted by S Moderation Douglas on August 7, 2015 at 7:33 am

            Oh please.

            “I just satisfied the issue noted in your above quoted statement ……”

            You just took another shot in the dark, again, and shot yourself in the foot, again.

            “Looking at those who are among the lowest earners in each sector, using the bottom 5% as a cut off point, public sector workers earned on average around 13% more than private sector workers in 2013 when adjusting for the different jobs and personal characteristics of the workers.”

            “For the higher earners, using the top 5% as a cut off point, public sector workers earned on average around 6% less than private sector workers in 2013 when adjusting for the different jobs and personal characteristics of the workers. When further adjusting for the different organisational sizes the estimate was around 11%.” less.

            You seem to have a simple solution. Higher educated public workers earn less than the private sector. Increase their compensation. Lower level public workers earn more than the private sector. Reduce their compensation.

            Before you begin either arbitrarily reducing ALL public compensation equally, (because all public compensation is [grossly] excessive), or cutting compensation from one group while increasing for another, would it not be prudent to at least consider …..why….. this disparity exists?

            The above quotes describe the phenomenon of public sector wage compression. Not just in New Jersey or California, but apparently in every state. These particular quotes are from the United Kingdom.

            Public and Private Sector Earnings – March 2014

            https://www.google.com/url?sa=t&source=web&rct=j&url=http://www.ons.gov.uk/ons/dcp171776_355119.pdf&ved=0CCwQFjADahUKEwig2PPw2pbHAhUIKYgKHaKwAO4&usg=AFQjCNHnVVp6Ut2SlDx7H9HYCj-QveTW4Q&sig2=Qc2z0i2dFIYqvirFdlGSTg

            “There is always a well-known solution to every human problem-neat, plausible, and wrong.” H.L. Menken.

          • Posted by Tough Love on August 7, 2015 at 9:48 am

            S Moderation Douglas,

            You just can’t accept that FACT that the 23%-of-pay PUBLIC Sector ADVANTAGE when ALL workers are included (both those paid too much and those paid too little) means that after adjusting ALL of the Public Sector workers’ compensation to EQUAL that of their Private Sector counterparts …… means that the NET change- in-pay must be a 23% “REDUCTION”.

            It’s not “illogical”, it’s not “GIGO”, it’s VERY basis MATH…… and distracting the readers by throwing the kitchen-sink into the conversation, WON’T change that.

          • Posted by S Moderation Douglas on August 7, 2015 at 12:05 pm

            LOL!

            It’s not “VERY basis MATH…… ”

            It’s bonehead math. Math entirely devoid of logic or common sense. The Walmartization of America. A pathetic race to the bottom.

            Read my long comment from a previous post, Aug. 27, 2014:

            “On the other end of the scale, lower educated state workers, as Juvenal said, earn much MORE than in private sector (in TOTAL compensation). They actually make about the same in cash wages, but much more in benefits. And, if you look closely, the biggest advantage is not pension costs, but retiree healthcare. Read the study distinction between percentage (pension) benefits, and fixed price benefits. A worker who earns $3,000 a month may get over $1,000 a month (over 30% of pay) in healthcare ….PLUS a calculated “risk free” $1,000 a month value for RETIREE healthcare. That puts him mathematically way ahead of the private sector worker. As Juvenal put it: “sorry for giving them benefits other than Medi-Cal.”

          • Posted by Tough Love on August 7, 2015 at 12:30 pm

            S Moderation Douglas,

            There we go, MORE of the “illogical”. Where is the “GIGO” this time ?

            It’s NOT a “race to the bottom”, it’s ending the taking of WAY more than a fair- share by the insatiably greedy Public Sectro Unions/workers.

            Then more of the kitchen sink thrown-in to distract from the VERY simply issue and VERY simply math ….. PUBLIC Sector workers in NJ are VASTLY Over-Compensated (by 23%-of-pay per the AEI Study)….. and it MUST come to an end for all CURRENT workers.

          • Posted by S Moderation Douglas on August 7, 2015 at 3:05 pm

            To be clear.

            A CalTRANS highway maintenance worker makes about $3,000 a month. ( $34,476 – $39,312 year) Minus about $300 pension contribution.

            He is clearly compensated more than his private sector peer, according to all the studies. You want to cut his compensation. Somewhere? Where?

            And a Los Angeles public sector emergency room physician who makes $165,000 should get a raise? According to Biggs, to bring his pay up to private standards, his raise would need to be over $30,000 (roughly equal to the take home pay of that maintenance worker.)

            1) In what universe does this make sense?
            2) How could one get such a scheme past any legislature?
            3) Are you freaking kidding me?
            4) Illogical
            5) GIGO

          • Posted by Tough Love on August 7, 2015 at 4:08 pm

            S Moderation Douglas, It’s the structure that CA has created that makes fixing it difficult, NOT the rightful “justification” to reduce the compensation of the Maintenance worker.

            In the Private Sector maybe the “wages” of a comparable job are a bit higher, perhaps $40K instead of the $36.9K (the average of your wage range).

            The Private Sector worker likely gets current benefits (e.g. primarlity subsidized healthcare) and deferred benefits (likely a 401k Plan with a 3%-of-pay match and zero retiree healthcare benefits) worth perhaps $10K, giving a Total Compensation of about $50K.

            The Public Sector workers likely gets far richer current healthcare (worth about $10K annually), a defined benefit pension (that if fully funded over his career using the methodology/assumptions Moody’s now uses …. which is NOT interest-free-rate discounting) worth a level annual taxpayer-contribution of 40% of cash pay, and heavily subsidized retiree healthcare worth an additional $7.4K* annually, bringing his Total Compensation to ($36.9K x1.40) + $10K +$7.4K = $69K

            69/50 = 1.38 or 38% higher Public Sector Total Compensation.

            The bottom line is that the $69K is INDEED the “cost” to Taxpayers and when the equivalent Private Sector worker’s Total Compensation is $50K, that is, as I have stated many time ….. unnecessary, unjust, unfair, and unaffordable.

            The BEST answer is for CA (and all the other States and Cities with similar structures) is to reduce the current grossly excessive pensions and benefits to a level EQUAL to their Private Sector counterparts so that we have OTHER options (to get to that equality) beyond reducing “wages” to a very very low level.
            ————————————————————–

            * Studies have shown that the level annual cost of retiree healthcare for AVERAGE WAGE Public Sector earners is about a level annual 12% of pay. With ACTUAL COST of such coverage NOT a function of pay, for a LOWER than average wage earner (as is this maintenance worker), that cost is likely closer to 20% of pay. 20% x $36.9K= $7.38. Hence the $7.4K I used above
            ————————————————————–

            I’m stunned at the audacity of your suggestion that due to the low “WAGES” of this maintenance worker that nothing can be does, via your statement… ” You want to cut his compensation. Somewhere? Where?”

            Yes something CAN and SHOULD be done ….. if lower that his Private Sector counterpart, bring his “wages” up to that higher level, but REDUCE his pension and benefits ALL THE WAY down to that same Private Sector counterpart.

            And if it takes FORCING the equality through wage reductions ALONE because Union Bought-off Elected Officials won’t fix the real underlying problem, SO BE IT.

          • Posted by S Moderation Douglas on August 7, 2015 at 6:14 pm

            And what about the ER Dr.

            Are we going to give her a raise?

          • Posted by S Moderation Douglas on August 7, 2015 at 6:16 pm

            Even if it takes FORCING her to take it?

            Fair is fair. Not necessarily logical, but……….

          • Posted by Tough Love on August 7, 2015 at 6:17 pm

            S Moderation Douglas,

            Absolutely, the SAME process should apply to the ER Doctor, resulting in EQUAL “Total Compensation” EQUAL to the Private Sector Doctor with comparable experience, knowledge, and skills.

          • Posted by S Moderation Douglas on August 7, 2015 at 7:09 pm

            You’ve outdone yourself. I was being facetious. That is, hands down, the most inane thing I have read today.

          • Posted by Tough Love on August 7, 2015 at 7:27 pm

            S Moderation Douglas,

            Sorry to disappoint you but my 6:17 comment was in response to to your 6:14pm comment, not having seen your 6:16 pm comment when I responded.
            ——————————————-

            So now that you see that I’m not cherry-picking ……. increases for Public Sector workers who earn less (in Total Compensation) and decreases for those who earn more…….. with the goal of EQUAL.

            On board ?
            —————————————-

            Just kidding I know that you will NEVER support the OVERALL AVERAGE 23% reduction in Public Sector Total Compensation that would result ….. no matter how justifiable.

      • Posted by Greg Lamon on August 7, 2015 at 12:04 pm

        Well, now that the trustees of several state pension funds have awakened to their fiduciary responsibilities as evidence by their fling a lawsuit against the state for billions of dollars in contributions the state should have made based upon actuarial analysis to the pension funds over the years, let’s see how this one plays out. The taxpayers may yet wind up having to pay for the incompetence of the people they have elected over the decades.

        Reply

        • Posted by Tough Love on August 7, 2015 at 12:24 pm

          That lawsuit is nothing but a frivolous attempt to do an end-run around the exact same issues ALREADY decided by the NJ supreme Court.

          It will likely be dismissed in the initial hearings.

          Reply

          • Posted by Greg Lamon on August 7, 2015 at 12:50 pm

            Since when is exercising one’s fiduciary responsibility frivolous? I would categorize it as protecting their backsides from personal liability, and that seems wise to me. How about a wager? If you are right, I will not post to this site for 2 weeks. If you are wrong, you will not post to this site for 1 week. Deal?

          • Posted by Tough Love on August 7, 2015 at 1:03 pm

            Personal liability …. for an elected official or Gov’t employee ???

            Boy, you are indeed naive.

          • Posted by Greg Lamon on August 8, 2015 at 11:28 am

            You deflect the opportunity to take the bet and shut me up! How about it?

          • Posted by Tough Love on August 8, 2015 at 11:34 am

            What’s the bet on your side …. that they win their lawsuit and are awarded personal liability damages payable out of THE POCKETS of our elected officials or Gov’t employees (and NOT covered or reimbursed by the gov’t or any insurance) ?

            If so, you’re on ……….

          • Posted by Greg Lamon on August 9, 2015 at 2:30 pm

            The personal liability issue would result from the pension board members sitting idly by why the state under funds the system. The fact they have filed suit removes that liability. They are taking action to sue and in so doing relieve themselves of any personal liability related to ignoring the state’s failure to fund..

            Your bet is that, as you said, it is likely it will be dismissed at the initial hearings, my bet is that it will not be dismissed at the initial hearings. (of course, still open to debate is what your definition of “initial hearings” is, the fact that you used the plural of the word gives you a tremendous amount of wiggle room and that is a bit worrisome).

            As to the personal liability issue, certainly you have heard of public officials and employees going to the slammer, being fined, etc in relation to their government duties. It happens. The vulnerability as a fiduciary is big and personal – ask Chris Street about his experience as a Fruehaulf bankruptcy trustee.

          • Posted by Tough Love on August 9, 2015 at 6:42 pm

            Greg L.,

            Nope, you’ve got the easier side of the bet. While I believe it will be dismissed it may not be at the initial hearings. I misunderstood your earlier comment, thinking that you thought that they WOULD BE held personally liable…. my mistake.

          • Posted by Greg Lamon on August 11, 2015 at 5:23 pm

            I thought your statement that it is likely the legal action will be dismissed at the initial hearings was a bit dismissive and flippant, and that is what I wanted to bet you about. Too bad, as I was willing to give you a 2 for l payoff too!

          • Posted by Tough Love on August 12, 2015 at 2:00 pm

            If it was proportional to # comments*, you’d have to give me 8 to 1

            * Truthful advocacy for necessary, just, and FAIR (to the Taxpayers) pension reform.

          • Posted by Greg Lamon on August 14, 2015 at 1:38 am

            There you go again quoting from the playbook of the pension killers – Fair to the taxpayers is such an over-used focus group product anymore, right up there with greedy,selfish, trough feeders,rich, crooked politicians, meaningful dialogue and so on.. What may resonate at one time becomes much less effective with over use, especially when reform advocates across the nation are using the same hot-button words over and over and over.

          • Posted by Tough Love on August 14, 2015 at 3:35 am

            Greg, Public Sector pensions are TYPICALLY 3 to 4 times greater in value at retirement than those granted Private Sector workers retiring at the SAME age , with the SAME pay, and the SAME years of service.

            The is NO WAY your Unions (or the workers) will “negotiate” that advantage away …… an is necessary, just, and fair.

            Thus we (the Taxpayers) indeed must advocate to END Public Sector DB pensions, and for the future service of all CURRENT, not just new workers.

            And similarly for retiree healthcare promises. Public Sector workers deserve no more from their employers (the Taxpayers) than Private Sector Taxpayers get from their employers …. generally NOTHING.

  6. The Abbott article seems to imply that if you don’t provide decent services to one group of your citizens, it costs less money. The state, however, could have eliminated public education in wealthy districts, on the assumption the parents are wealthy enough to pay for private school, and gotten the same results.

    NJ school spending is above average because NJ residents want good schools. But it isn’t extremely, wastefully high. That is what you find in NY.

    https://larrylittlefield.wordpress.com/2014/06/01/new-yorks-sky-high-public-school-spending/

    This post, by the way, has spreadsheets with per student spending (and state aid) by category for every school district in NJ — in FY 1992, 2002, and 2012 — although most of what is written in the analysis above is about NY where I live. The U.S. average, all the school districts in NYC, and the Massachusetts average are also included.

    https://larrylittlefield.wordpress.com/2014/05/28/census-of-governments-public-school-finance-data-fy-2012-2002-and-1992/

    How many people arguing about public policy bother to compile, look at and analyze facts like these.

    Reply

  7. Posted by Marcia Fritz on August 6, 2015 at 9:08 pm

    Wow! This is going to be tough for Hillary to explain. She and her husband are in complete control of the foundation and it’s policies. If they can attract and retain good workers with a 401k plan, why can’t the government😯??

    Reply

    • Posted by Tough Love on August 7, 2015 at 12:44 am

      Of course the Gov’t “can”, but they “won’t”, because the “Gov’t” is really our Elected Officials …. and the vast majority are BOUGHT-OFF with Public Sector Union campaign contributions and election support.

      Reply

      • And greedy double and triple dipping beneficiaries themselves. The definition of a NJ politician is lying self-serving scumbag.

        Reply

        • Posted by Greg Lamon on August 19, 2015 at 7:21 pm

          We get what we elect, like it or not. Now’s your chance to lead us all toward a change at the top nationally and in N.J. Go for it.!.

          Reply

          • Posted by Tough Love on August 21, 2015 at 12:36 am

            Great idea …. but as a fallback, NJ’s taxpayers must CONTINUE to starve the grossly excessive promised Public Sector pensions of contributions UNTIL NJ’s pension formulas and provisions are reduced (for the FUTURE Service of all CURRENT workers) to a level EQUAL TO what Private Sector typically get from their employers …… rarely more than 3%-4% of pay into a 401K plus 6.2% of pay as the employers’ Social Security contribution on the workers’ behalf.

            And let’s not forget retiree healthcare. Since Private Sector retirees RARELY get ANY employer-sponsored retiree healthcare benefits any longer, that’s what PUBLIC Sector workers should get in Taxpayers-funded retiree healthcare benefits …. NOTHING.

            EQUAL …… but not better.

            Greg … on board with that ?

            Or are you still greedy and want MORE ?

          • Posted by Greg Lamon on August 21, 2015 at 6:51 pm

            Well, it is obvious you subscribe to a race to the bottom philosophy. If the private sector cuts back on something that the public sector also has, then you want the the public sector to cut back too. Pretty soon we will all be at the pay and benefit level of the Bangladesh sweat shops given the “new world order” if we follow that philosophy. And, the implication that all government retirees get free health care is a myth. Many do not, and many who do pay for a good part of the cost. Plus, many do not get Social Security at all, so their defined benefit pension plan is all they have. When you compare the private sector retiree to the public sector retiree, factor in profit sharing and stock options, company provided on the job perks such as free lunch food, on site child care and work-out centers as well as Social Security. You will find it very difficult to make any kind of valid comparison at all, which is what enables you to make the broad generalizations that you do. In the meantime, you can hope that the starve the beast strategy will work, but you will find out that will backfire when the court rules on the lawsuit against the state by the pension board(s) for under-paying the pension fund(s) all these years. Hang on to your wallet and study up on those Frank Luntz talking points!

          • Posted by Tough Love on August 22, 2015 at 12:42 am

            Quoting ….. “Well, it is obvious you subscribe to a race to the bottom philosophy. If the private sector cuts back on something that the public sector also has, then you want the the public sector to cut back too. ”

            That kind of argument might fly if we were dealing with a comparison of 2 PRIVATE Sector companies. For example, if i work for company “A and you for “B” both starting with equal pay and benefits, and then my company “A” takes away (or reduces ) a benefit, I do NOT feel that Company “B” needs to follow suit ….. because I do not contribute towards the compensation of “B’ workers.

            I sure you see where this is going …..

            But if you and I have identical jobs with yours in the PUBLIC Sector, you are not entitled to a better deal …. if I pay your salary.

            Your logic is clearly flawed because if all PRIVATE Sector pensions and benefits went to zero, under your logic, your (VERY generous) pensions and benefits should continue unchanged with us (the Private Sector) continuing to pay for it. That’s patently absurd.

            I’m confident that if our positions were reversed, you would be strongly advocating for SAME the Public Sector Pension & benefit reductions that I now call for.
            ————————————————————-
            Quoting … “Plus, many do not get Social Security at all, so their defined benefit pension plan is all they have. ”

            Not true in NJ. While I’m not sure if NJ’s Safety workers are in SS, as far as I know, all other NJ workers DO participate ….. well over 90% of all of NJ Public Sector employees.
            ———————————————————-

            Free lunch, on site child care and work-out centers ??? Do you think all Private Sector workers are employed by Google? What an absurd comment.
            ———————————————————–
            Profit sharing and Stock options ?………. Sorry, but that’s mostly for executives. Very little of such trickles down to the Private Sector Middle Class.

            ————————————————————————————–
            Quoting …. “You will find it very difficult to make any kind of valid comparison at all, which is what enables you to make the broad generalizations that you do.”

            Not true. Scholarly studies factor in all the issues you mention, and on a “Total Compensation” basis one of the few that compares and reports Public/Private Sector compensation BY STATE (the AEI Study), concludes that NJ Public Sector workers have a 23%-of-pay “Total Compensation” ADVANTAGE over their Private Sector counterparts.

            Taxpayer demands to ELIMINATE that “advantage” is hardly a “race to the bottom”, it’s simply eliminating an unnecessary, unjust, unfair, and unaffordable “advantage” that WE (the Taxpayers) pay for.

          • Posted by Greg Lamon on August 22, 2015 at 12:07 pm

            Yes, in some states cities, counties and states participate in Social Security, but it is not the case in all states and localities and that really makes comparing wages between them, and between any private sector average, difficult if not to impossible. You will most likely not be surprised that I view AEI as an organization with a pro-business, anti-public sector agenda, so the outcome of their so called research is pre-determined. That study and $1 will buy you a cup of coffee in some places. For an enlightening view of what the other side of the political spectrum has to say about wage equality/inequality, read “Debunking the Myth of the Overcompensated Public Employee” by Jeffrey Keethe, Economic Policy Institute, September 15, 2010, Briefing Paper No. 276.

          • Posted by Tough Love on August 23, 2015 at 4:32 am

            Greg Lamon, You should have chosen someone wiser than Keefe to hang you hat on …….

            Prof. Jeffrey Keefe has been discussed on this Blog before.

            In his Public/Private Sector compensation studies, he counts as the cost (to gov’t) of pensions in a given year what the Gov’t entity CONTRIBUTES into the Plan in that year….. while every other financial expert recognizes that “cost” to be an honest estimate of the VALUE of the pension benefits ACCRUED in that year, and NOT the amount CONTRIBUTED.

            It’s VERY VERY easy to see how ridiculous his methodology is …..

            In NJ (and I’m sure elsewhere), in several years the State contributed NOTHING (not a DIME). Under Keefe’s methodology the pension that NJ’s Public Sector workers accrued in those years had ZERO value. How patently absurd.

            Institutions of higher learning like to give their academic staff a wide birth to express their thought and opinions, but Keefe’s methodology so so bizarre and plain WRONG (by every critical analysis) that he is unworthy of a college-level teaching position.

            I

          • Posted by Tough Love on August 23, 2015 at 5:01 am

            Follow-up to my above response to Greg Lamon ….

            The following article (under the PENSIONS sub-section) VERY clearly lays (MUCH more thoroughly than my brief description above) the enormity of the FLAW in Jeffery Keefe’s assumption that the COST of a Public Sector pension is the amount CONTRIBUTED in the year by the gov’t entity.

            http://www.heritage.org/research/reports/2011/03/public-sector-compensation-correcting-the-economic-policy-institute-again#_ftn1

          • Posted by Greg Lamon on August 23, 2015 at 12:21 pm

            You submit a hit piece by the right wing Heritage Foundation? You have got to be kidding me. When I saw where that link took me I simply closed it. What would you expect from that outfit other than government sucks? Give me a break. .And, sounds to me like you have confused the terms “cost” and “value”. Two much different things – ask a CPA..

          • Posted by Greg Lamon on August 23, 2015 at 7:23 pm

            Tough – maybe this one will be more to your liking – from the book “State and Local Pensions-What Now?” by Lisa H. Munnell, Brookings Institution Press, 2010. Chapter 6 is titled “Are public employees overpaid or underpaid?” and on page 152 the author presents this statement: ” The calculations show that state and local benefits nearly offset the private sector wage premium, so that compensation in the public sector is only slightly less than that in the private sector. Given all the assumptions required, the best way to describe the respective compensation levels is that they are roughly equal.”

          • Posted by Tough Love on August 23, 2015 at 7:28 pm

            Quoting Greg Lamon … “You submit a hit piece by the right wing Heritage Foundation?”

            So what, would you expect a LEFT wing organization (or perhaps even the Public Sector Unions themselves) to criticize even POOR work of someone who SUPPORTS the current structure of grossly excessive Public Sector pensions ?

            Just for the moment, ignore the source and address the problems they identify with Prof. Keefe’s work. How can the annual “COST” of a pension (which for a DB Plan is NOT defined by a “contribution amount”, but by the promise of a benefit amount payable years later) EVER be the amount “Contributed” by the Gov’t Sponsor in the year … especially since they sometimes contribute NOTHING in a year ?

            It’s not …. and unless you’re an idiot, I’d guess you understand how ridiculous Keefe’s position is. Personally, I believe he should be put out to pasture by his employer.

          • Posted by Greg Lamon on August 23, 2015 at 9:01 pm

            You are funny. The cost of something is what you pay for it. Plan sponsors pay part of the total cost, not all of it (unless you are making an offer, which could be tempting). In years when plan sponsors stupidly make no payment into the pension fund their cost that year is zero – that’s why they do it – so they can spend tax money on vote-getting sports stadiums, marinas, convention centers, and other non-necessities, while taxpayers like you let it happen. . What a plan sponsor actually pays into the fund in a year is their annual cost, nothing more.You seriously need to talk to an independent CPA to understand the concept of cost as compared to estimated future liability. . .Where’s Surf Puppy?

          • Posted by Tough Love on August 23, 2015 at 10:13 pm

            Quoting ….. “What a plan sponsor actually pays into the fund in a year is their annual cost, nothing more.”

            Just to make sure I understand you (and let’s skip the play-on-words between Cost and Value).

            Prof. Keefe ….in determining a year’s “Total Compensation” (cash pay + pensions + benefits) …. was including in THAT calculation as the contribution to it from the pension component, what the Gov’t enetity CONTRIBUTED to the Plan in that year, NOT a best-estimate of the value of the deferred pension benefit earned by the employee in that year.

            Do you agree that Professor Keefe’s methodology is reasonable and appropriate for that purpose?

          • Posted by S Moderation Douglas on August 24, 2015 at 12:53 pm

            How on earth did I miss this thread?

            Oh, sure. The weather is great, the pool is sparkling, and I have a backlog of good novels. But that is no excuse.

            Keep up the good work, Greg. And you’ve hit up a good point with the cost/value thing, no matter what TL says.

            Funny how TL slams Keefe (and the two other major studies) as “liberal”, but won’t give a inch on his “23%” obsession.

            I am somewhat hesitant to bring this up, but do you know why Jason Ridgewine is no longer with AEI? There are dozens of articles pro and con on his doctoral thesis, but the one that grabbed my attention was the professor who said there were many logical flaws and obvious bias in the paper, but he was overwhelmed by the statistical work. AEI didn’t throw him out, but they sure didn’t oppose his resignation, either.

            Is there bias (and errors) in the liberal studies, including Keefe? Is the AEI study immune from those kinds of biases and errors?

            Rhetorical question. Another reason I strongly recommend the AEI study, though, is the insights they give on how to select and interpret data. If you read that study through, twice, and don’t come away with the realization that there is a huge margin of error in their final results, you are naive.

    • Posted by S Moderation Douglas on August 24, 2015 at 1:06 pm

      Wow! Insufficient evidence. This article gives only one facet of the total compensation. It is a given that pension and benefits are often given in lieu of higher pay, but wages are never mentioned here.

      Inquiring minds want to know……..The *rest* of the story.

      “You can hear the sound of two hands when they clap together,” said Mokurai. ” Now show me the sound of one hand.”.

      Reply

      • Posted by Tough Love on August 24, 2015 at 3:30 pm

        Yes indeed ….. in NJ (per your favored AEI-Biggs study) the Public sector makes (in total for all workers combined) 4% less in cash pay …. that swings to a 23% Public Sector ADVANTAGE when pensions and benefits are included.

        And 2 things UNDERSTATE that 23% Public Sector Total Compensation” advanage:

        (1) The AEI Study excludes Police Officers, with far higher than “average” wages and FAR FAR FAR greater pensions & benefits. Had they been included, the 23% Public Sector advantage would be considerably higher.

        (2) that 23% increases to 34% in NJ when the much greater value of Public Sector job security is properly factored in … per that AEI study. Sorry, S, Moderation Douglas, but if your praising Bigg’s methodology, you can’t pick & choose … we are really looking at a 34% Public Sector Total Compensation ADVANTAGE in NJ.

        THAT’s why the Taxpayer-paid-for retirement packages of PUBLIC Sector workers are ROUTINELY worth $1, $2, even $3 million, while the retirement packages of comparable Private Sector workers are usually in the $250K-$500K range for COMPARABLE workers.

        ————————————————-

        And lets not forget Retiree healthcare ….. Free (as it is for NJ Police & teachers) or heavily subsidized with an annual cost (for non-Medicare Family coverage) of $25K-$35K annually vs typically NOTHING today (yes NOTHING) in Private Sector employer-sponsored retiree healthcare coverage.
        —————————————————-

        What an enormous and unjustified ripoff of Private Sector Taxpayers forced to pay for such grossly excessive PUBLIC Sector pensions & benefits.

        Reply

        • Posted by S Moderation Douglas on August 24, 2015 at 4:39 pm

          Non responsive.

          Reply

          • Posted by Tough Love on August 24, 2015 at 8:37 pm

            Non-responsive ? Only for those riding the PUBLIC Sector Pension/Benefit gravy train (such as yourself, a retired Public Sector worker). Honesty is tough for you guys to deal with ……. with denial & greed your cup-of-tea.

            My above comment is EXACTLY what’s “relevant” to NJ’s Private Sector Taxpayers who continue to be financially “mugged” by NJ’s grossly excessive pension & benefit “promises” to ALL of it’s Public Sector workers at BOTH the State and Local levels.

            Wake up Taxpayers … ….. demand an END to this thievery.

          • Posted by S Moderation Douglas on August 24, 2015 at 11:07 pm

            Je comprends

            I assumed your post was in response to mine regarding the Clinton compensation/benefit question. Now I see it is just a rerun of your usual screed.

            TL quote: “Sorry, S, Moderation Douglas, but if your (sic) praising Bigg’s methodology, you can’t pick & choose …”

            In what universe? You’ve never read an essay, opinion, or study where one or more concepts were valid, but there were errors in the other parts of the study?

            “23% Public Sector ADVANTAGE” was always a stretch, and, even if it had been close to accurate, it was obsolete by the time the study was released.

            The relative compensation between public and private sector can change dramatically within just a few years.

  8. Posted by Greg Lamon on August 24, 2015 at 8:21 pm

    Just to be clear Tough, I have not nor do I intend to read Keefe’s work. My quarrel is with you and your paragraph muddling the terms cost and contribution – “Just for the moment, ignore the source and address the problems they identify with Prof. Keefe’s work. How can the annual “COST” of a pension (which for a DB Plan is NOT defined by a “contribution amount”, but by the promise of a benefit amount payable years later) EVER be the amount “Contributed” by the Gov’t Sponsor in the year … especially since they sometimes contribute NOTHING in a year ?” But, enough of this trivia – you are just plain wrong on most all of your views of the public sector, except for the malfeasance and corruption that seems to pervade New Jersey politics. . By the way, how’s your 401(K) looking today? How’s it feel to take the kind of hit you wish on public sector employees ?

    Reply

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