New Jersey’s Nutty Cola Case

New Jersey does not want to pay cost-of-living-adjustments (COLAs) to their retirees any longer and their latest brief in Berg v. Christie dreams up some rationalizations that would be laughable to independent observers but, since they only need to persuade judges handpicked by politicians for the NJ Supreme Court, could well prevail.

Most of the meanderings you have heard before but among the more specious:

“(M)ost experts, including the Government Accountability Office,” opine that pension systems should “have at least an 80 percent funding level” in order to remain solvent and sustainable. (page 15)

COLAs started out as, and have always been, discretionary legislative grants that remain within the Legislature’s plenary power to revise. Unlike the base pension itself they are not earned and deferred compensation. (page 21)

Like all statutes, Chapter 78 “represents the considered action” of “popularly elected representatives,” who guard “the liberties and welfare of the people in quite as great a degree as the courts.” (page 27)

The Legislature has not spoken “with clarity” or “used terminology that plainly expressed its intent to create contractual rights” to COLAs. (page 28)

In establishing a “non-forfeitable right to receive benefits,” the Legislature did not define the term “benefits.” See Chapter 113, § S(a); N.J.S.A. 43:3C-9.5(a). Instead, it provided that the vested members of seven State-administered retirement systems and pension funds “shall have a non-forfeitable right to receive benefits as provided under the laws governing the retirement system. or fund.” (page 35)

[A]ny contention that COLAs are earned and deferred compensation must address the fact that the Pension Adjustment Act provides for the possibility of a negative COLA. See N.J.S.A. 43:3B-7. That is to say, if the CPI goes down from one year to the next, the amount of COLA retirees receive from one year to the next will likewise decrease. It is unclear from both a financial and a philosophical standpoint how a retiree could be said to have earned this decrease or how this reduced amount can be deemed compensation. (page 51)

ERISA is not a useful reference guide because it covers private pension plans exclusively and explicitly does not apply to governmental retirement plans. (page 55)

 

 

42 responses to this post.

  1. Posted by Tough Love on October 18, 2015 at 11:06 pm

    It’s too bad that ERISA doesn’t apply to Public Sector pensions ….. thereby reserving the employER’S (meaning the Taxpayer’s) right to reduce (or completely freeze) the rate of future service pensions accruals any time it “wants to” ……… or, as is the situation today, desperately “needs” to..

    Reply

  2. Posted by Anonymous on October 18, 2015 at 11:28 pm

    Nobody is listening to you, have another highball

    Reply

  3. Posted by Anonymous on October 19, 2015 at 8:04 am

    Does anyone really believe the NJSC will rule in favor of reinstating the COLA? Considering their make-up and c.78 ruling, specifically mentioning they would not throw out the law b/c the State did not make ARC as set forth (forget the exact wording).

    The only story here is if they go rogue and reinstate the COLA b/c their unwillingness to get involved in the budget process will become a reality.

    Reply

  4. Posted by Eric on October 19, 2015 at 10:08 am

    Trust funds, and getting involved in the budget process, seem to be separate issues.
    Eric

    Reply

  5. Posted by Richard on October 20, 2015 at 1:58 pm

    Pretty much the same arguments that prevailed in the Colorado Supreme Court in spite of the pension system, the AG, and an earlier SC having earlier taken the opposite position. They all switched sides.

    Reply

  6. Posted by skip3house on October 21, 2015 at 11:04 am

    School property taxes to rise more?
    PENSION PROBLEMS – “Moody’s: Proposed pension reforms could hurt school districts,” by POLITICO New Jersey’s Linh Tat: “The state’s proposed pension reforms for public employees could harm school districts by leading to higher credit risk scores for them, according to a new report by Moody’s Investors Service. New Jersey currently pays all teacher pension and retiree health care costs. But a commission that Gov. Chris Christie formed recommended a new plan that would pass on those costs to school districts.” http://politi.co/1RmJu64

    Reply

    • Posted by Anonymous on October 21, 2015 at 11:43 am

      Regressive, restructure to GIT?

      Reply

    • Posted by MJ on October 21, 2015 at 8:55 pm

      …..and the school districts will either have to pass the costs on to employees or get rid of the employees that are not considered essential unless the overburdened taxpayers want to pick up the tab.

      Reply

  7. Posted by dentss dunnigan on October 21, 2015 at 6:36 pm

    Well 1/2 the people working will not be happy paying taxes to have retirees living the highlife in another state collecting more than they make here …or will they .

    Reply

    • Posted by dentss dunnigan on October 21, 2015 at 6:37 pm

      We just got more evidence that the middle class in America is dying. According to brand new numbers that were just released by the Social Security Administration, 51 percent of all workers in the United States make less than $30,000 a year.

      Reply

      • Posted by MJ on October 21, 2015 at 8:54 pm

        I don’t have a current source but have been reading that the biggest job growth is waitressing, bartending and retail.

        Reply

      • Posted by S Moderation Douglas on October 21, 2015 at 11:01 pm

        In 2012, 53 percent of workers made less than $30,000.

        It’s nothing earth shattering.

        Reply

  8. Posted by MJ on October 21, 2015 at 8:53 pm

    I just don’t understand why these politicians don’t come out and be honest about what’s going on. Many people will not like it nor will they want to hear it but the writing is on the wall. They look more foolish and desperate clinging to this pension and healthcare train wreck that can not and will not ever be funded or it would have already have been done. It is so much more cruel and unethical to keep these public workers clinging to something that is already a foregone conclusion. Reform the system significantly so that publics have more time to plan for retirement if needed

    Reply

  9. Posted by Anonymous on October 21, 2015 at 10:22 pm

    Really and you expect others here to believe you’re part of the dying middle class? And that the reason for the middle class dying is P&B NOT the the 1& filthy rich whose net worth has grown exponentially both in real numbers and as a percent of total wealth? Well then I’ve got a crumbling NJ bridge to sell you! Please (and as MJ stated above I don’t have a source but I’ve heard) the significant majority of public’s ARE NOT part of America’s 1%!

    Reply

    • Posted by Tough Love on October 21, 2015 at 10:44 pm

      Quoting …” And that the reason for the middle class dying is P&B NOT the the 1& filthy rich whose net worth has grown exponentially both in real numbers and as a percent of total wealth? ”
      ———————————————–
      Absolutely.
      ———————————————–

      Reply

      • Posted by Anonymous on October 21, 2015 at 11:04 pm

        And when are you available to share some of your 1% filthy rich wealth and buy that crumbling NJ bridge? Oh I forgot that’s right you’re part of the middle class, just like the significant majority of public’s! Clearly your lack of credibility has reared its ugly head!!!

        Reply

      • Posted by Anonymous on October 21, 2015 at 11:24 pm

        BTW, appreciate your consideration and not demeaning me for the typo (& instead of %).

        Reply

  10. Posted by Anonymous on October 22, 2015 at 7:51 am

    Guess this must be meaningful b/c YOU state it a lot; “still the idiot” or “what a moron”, or ” what is ?, for readily apparent typos”. Meaningful indeed!!!

    Reply

  11. Posted by Anonymous on October 22, 2015 at 11:45 am

    You ALWAYS deflect when the rebuttal exposes your misstatements and slanted sources but keep trying. You’ll end up like Christie’s and yes Walker indeed!!!

    Reply

    • Posted by Tough Love on October 22, 2015 at 12:13 pm

      Anon,

      You have never presented anything but your incessant complaining about the “1%” …. somehow thinking that that justifies the Middle Class PUBLIC ripping-off the Middle Class PRIVATE Sector via their grossly excessive pensions & benefits.

      Sorry, but it doesn’t.

      Reply

      • Posted by Anonymous on October 22, 2015 at 12:23 pm

        Final and best, guess you and yours will be voting for the Dems this November and next so the much need P&B reform gets done.

        Reply

      • Posted by Anonymous on October 22, 2015 at 12:25 pm

        Difference of opinion. The majority of NJs agreed with the millionaires tax and the majority of Americans agree with higher taxes on the wealthy. Separate conversation, same topic, $.

        Reply

      • Posted by Anonymous on October 22, 2015 at 12:34 pm

        Once again it’s all about you and your incessant OPINION on P&B but somehow in you twisted version of reality that’s OK. Bottom line the 1% control this Country, you and yours falsely deny not being part of that group, continue to spread half truths in the name of the middle class – in my opinion that’s not meaningful!!!

        Reply

      • Posted by S Moderation Douglas on October 22, 2015 at 12:47 pm

        Lower Class !!!

        The public workers making more than their private sector peers are the high school graduates. $33,000 a year and less in wages, these are the ones whose benefits are bringing up the compensation averages. Take them out of the equation and your “23% advantage” is gone. History. Histoire.

        ¡¡¡ Liberté, égalité, fraternité  !!!

        Take from the poor and give to the slightly less poor !!!

        Reply

        • Posted by Anonymous on October 22, 2015 at 1:45 pm

          TL’s posse of 1%s don’t care about either including the middle class!!!

          Reply

          • Posted by Tough Love on October 22, 2015 at 2:03 pm

            The 1% screw everyone …BOTH Public and private Sector Middle Class.

            The PRIVATE Sector Middle Class screws nobody.

            The PUBLIC Sector Middle Class screws the PRIVATE Sector Middle Class.
            ———————-

            THAT’S the problem.

          • Posted by Anonymous on October 22, 2015 at 5:50 pm

            Wasn’t it Christie who said he didn’t think his family was wealthy, that’s the PRIVATE (Mary Pat’s the bigger bread winner) sector middle class you expect us to believe you’re not a part of – good luck with that!!!

  12. Posted by S Moderation Douglas on October 22, 2015 at 2:02 pm

    i·ro·ny

    ˈīrənē/

    noun

    the expression of one’s meaning by using language that normally signifies the opposite, typically for humorous or emphatic effect.

    Remember, in the last week, the headlines echoing in the right wing wacko press ?

    “FEDERAL WORKERS EARN 78% MORE THAN PRIVATE SECTOR EMPLOYEES, STUDY SHOWS”

    John Hayward, Breitbart, 8 October 2015

    (Total fallacy, according to S Moderation Douglas, Andrew Biggs, et al.)

    Now,

    Remember “Reinventing Government”, part of which was “privatizing” thousands of lower level public jobs? This is largely responsible for the “78%” in the apples/oranges comparison. Moving lower paid workers from the public to the private sector increased the difference in “average” pay between the two sectors.

    And,

    “A generation later, the federal government employs more than three times as many contract workers as government workers, and state and local governments spend a combined $1.5 trillion on outsourcing. One result, according to Demos, a nonprofit public policy organization, is that the federal government effectively pays $12 or less to nearly two million contract workers – “more than the number of low-wage workers at Walmart and McDonalds combined.”

    http://www.msnbc.com/msnbc/government-privatization-hurts-middle-class

    _______________________________________________

    Is this a good thing? I don’t know. You be the judge. From the MSNBC article:

    “Much of the “efficiency” realized by privatization lies in reducing former middle-class workers to poverty wages.”

    “You get what you pay for,” Bernstein said. Lower wages for public services, he said, translate into “higher turnover and a decline in the quality of work.” 

    “It also means an uptick in welfare expenses. In California, contract school cafeteria workers collect $1,743 annually in public assistance because their private employers underpay them. In effect, the state is putting its own employees on the dole.”
    ___________________________________
    David Osborne, co-author of the 1992 book, “Reinventing Government” :

    “We could subsidize higher wages than the marketplace provides, as we often do in the public sector, and tell ourselves we are all better off. But it would be a lie. ……..”

    “Far better,” Osborne said, “to support things like [the Earned Income Tax Credit] and food stamps and job training to help the working poor than to subsidize millions of public employees.”

    And the Affordable Care Act, I presume. He could be right, who knows? It’s not as simple as it sounds.
    ________________________________________
    Here is the question of the day, from S Moderation, considering the quote above:

    “One result, according to Demos, a nonprofit public policy organization, is that the federal government effectively pays $12 or less to nearly two million contract workers – “more than the number of low-wage workers at Walmart and McDonalds combined.”

    Question: These two million contract workers are “private sector” workers, working for private sector employers. Are they “makers”, productive tax paying workers? Or are they ” takers”, suckling from the proverbial public teat?

    Reply

  13. Posted by S Moderation Douglas on October 22, 2015 at 6:45 pm

    I was surprised I didn’t get busted. I posted in a hurry so I wouldn’t be late for the gym.

    For the record: in the MSNBC article above, two quotes:

    “the federal government employs more than three times as many contract workers as government workers”

    and

    “the federal government effectively pays $12 or less to nearly two million contract workers – “more than the number of low-wage workers at Walmart and McDonalds combined.”

    Should likely be taken with a large dose of internet salt. Although you will probably see those numbers again. (I think I saw some of them in a Bernie Sanders quote.) When you see a phrase like “effectively pays”, that’s a dead giveaway.

    Still, while reading up on this contracting, there …seems… to be a recurring theme, that those low level private sector contract employees working for the federal government make less than similar government employees AND receive fewer, if any benefits.

    While the higher level private sector contract workers earn MORE than equivalent federal workers. What’s up with that?

    I haven’t seen a study on this, but it has been repeated in several articles.

    And, of course, what about the employers of private sector workers doing contract work for government? Good old private sector “taxpaying” companies? Givers or taker? They undoubtedly pay a lot of taxes on their income; with money coming directly from the government.

    Is it cost effective?

    http://www.nytimes.com/2011/09/13/us/13contractor.html?_r=0

    Reply

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