2017 NJ Budget and Pension Propaganda

The New Jersey budget for the 7/1/16 – 6/30/17 year is out and, as it relates to pensions, it is interesting reading for lovers of fictional interpretations.

Governor Christie has made substantial progress addressing the sins of the past.   The fiscal 2017 budget continues that process.  The proposed pension payment is the largest in history, reversing decades of underfunding. (page 2)

By law this payment is only 40% of the actuarially required contribution (understated as that is) so it means another year of increasing the total unfunded liabilities.  It reverses nothing.

Defined Benefit Pension Payment
While the need for real and sustainable long-term reform to contain the ever-increasing cost of pension and health benefits cannot be understated, minimizing the continued compounding of the problem requires a substantial increase in State contributions in the near term. Accordingly, the Governor’s fiscal 2017 budget includes a defined benefit pension payment of $1.862 billion, $555 million more than the fiscal 2016 amount, and 4/10ths of the Actuarially Recommended Contribution (ARC). This will be the largest defined benefit contribution in New Jersey history. Approximately two-thirds of the total contribution, or $1.17 billion, funds pension benefits on behalf of local school districts, municipalities, and county colleges. Through fiscal 2017, the Christie Administration will have contributed $6.275 billion to the State’s underfunded pension system, a commitment to funding that exceeds that of any previous administration. This contribution level is nearly double the total funding from fiscal 1995 through fiscal 2010. (pages 10-11)

Yet that $6.275 billion that Christie brags about contributing over seven years totals less than 2/3rds of what the plans are paying out annually right now.  Of course there are other sources of funds (local governments and employee contributions) but as…

  • real reform are off the table,
  • salaries increase,
  • retirees keep living longer than expected, and
  • if COLAs return…

one can make the argument that the Christie years will have seen the largest dollar increase in unfunded pension liabilities foisted on a populace by any other government in the history of the planet.

Some interesting exhibits from this budget:

44 responses to this post.

  1. Posted by dentss dunnigan on February 18, 2016 at 3:00 pm

    Your argument points out how unrealistic the pension promises really are …..can no one see this ?

    Reply

    • Posted by Anonymous on February 18, 2016 at 3:28 pm

      Stop the bleeding, implement the suggested reforms with a dedicated revenue to pay down the unfunded liability. The State should continue to pay the TPAF unfunded with a corresponding reduction in State Aid equal to the “realistic” calculated health benefits savings. Legislate ALL public (State, Local, and quazi government) health benefits uniformly with (yes, sorry to say) a joint Commission made up of the various stakeholders including taxpayer representation.

      John, can you please confirm that the State administered Horizon plans premiums are claims driven based on actual and projected cost? Even with the platinum coverage do the stated rates seem high?

      Reply

    • Posted by Tough Love on February 18, 2016 at 3:31 pm

      Remember the Quote from Upton Sinclair, Jr. …..

      “It is difficult to get a man to understand something when his salary depends upon his not understanding it.”

      Reply

      • Posted by Anonymous on February 18, 2016 at 4:09 pm

        That why you were dumb enough to vote for Christie , TL.

        Reply

        • Posted by Tough Love on February 18, 2016 at 4:19 pm

          I voted for Christie because he advocates for REAL Public Sector pension reform, which means a VERY materiel reduction in the pension/benefit PROMISES, not just playing games with the timing of the funding (i.e., kicking the can down the road … as did all Governors before him).

          This thread started with …

          “Your argument points out how unrealistic the pension promises really are …..can no one see this ?” ….from dentss dunnigan.

          To which I responded …

          “Remember the Quote from Upton Sinclair, Jr. …..

          “It is difficult to get a man to understand something when his salary depends upon his not understanding it.””

          ——————–

          So how does your comment to me make ANY sense.

          Reply

        • Posted by S Moderation Anonymous on February 19, 2016 at 1:11 am

          “Your argument points out how unrealistic the pension promises really are …..can no one see this ?” ….from dentss dunnigan.”

          Actually this article says nothing one way or the other about “how unrealistic the pension promises really are ….”

          You are reading in your own biases. …..can no one see this ?

          Reply

          • Posted by Tough Love on February 19, 2016 at 2:30 am

            SMD,

            With a working history in road repair, I don’t believe you have the education, knowledge, or experience to judge what is …”irrelevant”, “taken out of context”, “GIGO math” or biased when it comes to financial matters.

            I promise to defer to you when I seek advise on repairing my driveway.

          • Posted by S Moderation Anonymous on February 19, 2016 at 7:15 am

            This particular article discusses past underfunding of the pensions, and Governor Christie’s (misleading*) claims that the decades of underfunding has been “reversed”.

            * “Misleading claim” is a euphemism for “lie”.
            ______________________________________________
            By now, most of us understand that, in your opinion:
            “The ROOT CAUSE is clearly grossly excessive, unnecessary, unfair (to Taxpayers) and unaffordable pension/benefit promises, and the lack of full funding is not the CAUSE of the problem, but the CONSEQUENCE of the real ROOT CAUSE ….. grossly excessive pension/benefit generosity.”

            dentss apparently agrees with you. John perhaps agrees with you also, but that is not discussed in this particular article.

            “…..can no one see this ?”

            This article is about Christie’s lies (sorry, propaganda). Not about excessive pensions. Simple reading comprehension.

            I will defer to you if you ever use common sense.

          • Posted by dentss dunnigan on February 19, 2016 at 10:37 am

            SMD so who will make up for zero interest rate for the past 10 years ,and now asset price colapse does one really expect the taxpayers to backstop all this when he can’t even feed and clothe his family let alone save for his kids education ,pay for mediacal insurance …and put something away for his own retirement …

          • Posted by S Moderation Anonymous on February 19, 2016 at 12:42 pm

            Not New Jersey. Or Illinois, or a few others. Like the old Leo Durocher story:

            “You’ve got third base so screwed up nobody can play it!”

          • Posted by The Resident Nutcase on February 19, 2016 at 1:59 pm

            Dentss-
            So you’re saying that because the state did not properly fund these pensions all the while…. We can simply say oh well? Too bad?
            That is a slippery slope! Where does it end? I can’t afford my car payment because I party like a rock star….. Bail me out. I can’t afford my mortgage because I take 5 vacations per year…. Bail me out.
            Your point makes no sense! There isn’t enough money because the state failed to make the required payments. Instead, the state kept the money in the budget to offset taxes. Too bad if you think the salaries or benefits are too high! That’s opinion. It’s time to pay the piper!!
            You seem to forget that these public workers are also tax payers!!! Income tax, sales tax, property tax all comes out of their paycheck a too.
            The state failing to make the payments is no excuse to now say too bad!!!
            The money is there!! Just find it.

          • Posted by Tough Love on February 19, 2016 at 2:21 pm

            No Nutcase, NOT because …..”the state did not properly fund these pensions” …. but BECAUSE the Public Sector pension “promises” were BOUGHT from NJ’s Elected Officials (with Union campaign contributions and election support) and were never necessary, just, fair, or affordable.

            The pensions need to be reduced by the (AT LEAST 50%) share that would not have been granted in the absence of that Unions/politician collusion.

          • Posted by Tough Love on February 19, 2016 at 2:26 pm

            SMD and his “smoothing” …………..

            still trying to keep readers focused on Christie’s lies (a waste of time and energy), vs pursuing REAL pension reform (eminently needed pension/benefit level reductions).

          • Posted by dentss dunnigan on February 19, 2016 at 6:09 pm

            Resident NC …No I’m not saying too bad ,but what I’m saying these now have become punitive tax to anyone moving into the state or receintly moved here especially the Millennials who are so overburdened with debt .If the state is to move forward an answer must be found ,and quickly .I don’t think we have any politicians with the fortituted to do so .Say what you want but the state need to attract jobs to create a good tax base ,nothing coming out of Trenton has done that ,if they keep looking backward and what should have been done but wasn’t it will accomplish zero .And that takes us back to the pension fund we now live in a ZERO interest rate environment our pension actuaries refuse to adjust their funding to account for this ,I don’t believe we’ll ever see rates above 5% on government debt because that would bankrupt us all .Pensions must be adjusted for this new low rate ..It’s been 10 years it’s starting to show on the returns .

          • Posted by S Moderation Anonymous on February 19, 2016 at 6:18 pm

            Tough Love on February 19, 2016 at 2:26 pm
            SMD and his “smoothing” …………..

            Don’ shoot the messenger, Love. All I said was this …particular… article is not about what YOU consider “REAL problem” it is about Christie s lies.

            Anything else you read into it shows your bias and lack of reading comprehension.

          • Posted by Tough Love on February 19, 2016 at 7:10 pm

            No SMD, I have very good reading comprehensions. Your EXACT works from an earlier comment above…

            “This article is about Christie’s lies (sorry, propaganda). Not about excessive pensions. Simple reading comprehension. ”

            And YES, as I stated above …

            “SMD and his “smoothing” …………..

            still trying to keep readers focused on Christie’s lies (a waste of time and energy), vs pursuing REAL pension reform (eminently needed pension/benefit level reductions).”
            ——————————–

            Your not a “messenger” ……..

            You and your greedy “ilk” are CONTRIBUTING to the problem and fighting all appropriate solutions.

  2. Posted by Tough Love on February 18, 2016 at 3:36 pm

    John, Quoting from above …

    “This will be the largest defined benefit contribution in New Jersey history. Approximately two-thirds of the total contribution, or $1.17 billion, funds pension benefits on behalf of local school districts, municipalities, and county colleges.”

    I was unaware that the “STATE” contributes to “municipal” (i.e., non-teacher LOCAL) Plans.

    Is that true? Which ones ?

    Reply

    • Posted by Anonymous on February 18, 2016 at 3:54 pm

      I’m not the expert but the “Stayr” does appropriate $ for non TPAF pension obligation bonds. Not exactly what you were referring to.

      Reply

    • The School Aid exhibit has $1.124 billion going to TPAF so he’s probably referring to county and local employees who are in the TPAF. Not sure where he got his $1.17 billion but the difference might be noncontributory life insurance costs.

      Reply

  3. Posted by Anonymous on February 18, 2016 at 4:39 pm

    So the bottom line is that things just keep going the same as they have been…status quo? How does this help anyone?

    Reply

  4. Posted by Pauline Walnuts on February 18, 2016 at 5:40 pm

    Make a 40% payment on your credit card bill as it increases each month. Then give yourself a big old pat on the back.

    Reply

    • Posted by Tough Love on February 18, 2016 at 7:36 pm

      It’s more like 40% of the “minimum due” payment.

      Reply

      • Posted by The Resident Nutcase on February 19, 2016 at 2:05 pm

        TL…. Exactly the problem. When you elect to make 40% of the required payment…. You’re left with a problem.
        The Dems have put forth a balanced budget every year…. Including a full pension payment… The administration elects to NOT make the ARC.
        Doing this over many decades has caused this issue to become the problem it is today.
        The state failing to make the payments all along and only now deciding to make this an issue so late in the game is inexcusable.

        Reply

        • Posted by Tough Love on February 19, 2016 at 2:41 pm

          Quoting Nutcase ………..

          “The administration elects to NOT make the ARC. Doing this over many decades has caused this issue to become the problem it is today.”

          Wrong Nutcase, very “generous” Plans are very “costly” (VERY high ARCs), and hence very difficult to fully fund. The lack of full funding is not the CAUSE of the problem, but the CONSEQUENCE or the real ROOT CAUSE…. grossly excessive pension/benefit “generosity”.

          It’s this grossly excessive pension/benefit “generosity” that must AT A MINIMUM be very materially reduced for the FUTURE service of all CURRENT workers ….. the Pension FREEZE recommended by the NJ pension Commission being the best solution.

          And if financial circumstances so necessitate (as they appear they now do), PAST service accruals must also be reduced from the grossly excessive levels resulting from decades of Union/politician collusion.

          Reply

          • Posted by jen on March 1, 2016 at 2:40 pm

            So after you do the work for your boss for 2 weeks, is it ok for him to only pay you half of what he promised you?

  5. Posted by Anonymous on February 18, 2016 at 8:14 pm

    Too much negativity, let’s keep it positive and light hearted. The NJ politicians have a plan, they want to be sure the aliens don’t invade us when they come to earth. Go X-Files!

    Reply

    • Posted by Anonymous on February 19, 2016 at 11:02 am

      2005. Ahhh…..the sky is falling!!!
      2010. Ahhh….the sky is falling!!!!
      2015. Ahhh…..the sky is falling!!!

      Keep investing in gold, java. See where that gets ya when your 65. Lol. If things are that bad, you’ll need a different metal than gold my friend. Lead.

      Reply

      • Posted by dentss dunnigan on February 19, 2016 at 1:09 pm

        Nope the sky isn’t falling or going to fall ..Think back 10 years nobody ever suggested to cut pensions ,and they still won’t but they have cut COLA ,made pesnioneers pay more into their pensions ,made workers pay more for insurance and it won’t stop there .Who would have ever thought we would even have this type of conversation when Corzine was King .So no the sky isn’t falling it’s just going to be a slow bleed from now on in .

        Reply

        • Posted by Tough Love on February 19, 2016 at 2:43 pm

          You are underestimating the magnitude of the financial problem for pensions OR retiree healthcare ALONE …. let alone combined.

          Reply

    • Posted by The Resident Nutcase on February 19, 2016 at 2:01 pm

      Java brings nothing to the table. Just ignore the evil venom.

      Reply

  6. Posted by Ralphie on February 19, 2016 at 11:41 am

    What is the difference between Chris Christie and John Bury?

    One holds elected office and proposes solutions to difficult problems.

    The other elects to exclusively throw mud and play the “blame game”, despite obviously having the intelligence and experience to pose viable alternative solutions

    Reply

    • Posted by Tough Love on February 19, 2016 at 2:52 pm

      Reasonable, just, necessary, and appropriate “solutions” (such as reducing the Future Service pension accrual rate by 1/3 for non-Police and by 1/2 for Police, and raising the Full/unreduced retirement age to 65, 62 for Police, with full actuarial reduction in payout of 5%/year for retiring earlier) are not “viable” when the GREEDY refuse to let go of their current unjust advantage………… and our Elected Officials won’t move in that direction BECAUSE they don’t want to piss-off the Unions and want to CONTINUE getting Union Campaign contributions and election support.

      Reply

  7. Posted by Tough Love on February 21, 2016 at 1:18 pm

    Very interesting …Unions ARE Superpacs:

    http://unionwatch.org/unions-are-super-pacs/

    Reply

  8. Posted by S Moderation Anonymous on February 21, 2016 at 2:18 pm

    ” disclosed money ”

    “Democrats spent much of the 2014 campaign castigating Republican big money, but, it turns out, their side actually finished ahead among the biggest donors of 2014 ……”

    Dot, dot, dot.

    “– at least among those whose contributions were disclosed.”

    And:

    ” The top 100 political donors of 2014 gave roughly $174 million to Democrats and $140 million to Republicans, according to a POLITICO analysis of data from the Federal Election Commission and Internal Revenue Service.”
    ——————————————-
    I suppose Jack Spencer feels comfortable cherry picking info from an article and assuming no one will bother to read the actual article.

    Which says, among other things:

    ” They heavily favored Republicans, with reports showing conservative secret money non-profits outspending liberal ones $127 million to $33 million. ”

    Go ahead, please, read the entire article ( Blue billionaires on top
    POLITICO’s list of Top 100 donors of disclosed money tilts leftward. By KENNETH P. VOGEL 01/11/15)
    ——————————————————–
    Shirley, there are lots of contradicting studies and data about PAC money, hidden money, large donations, etc. But this article seems to support the statement from opensecrets.org that:

    ” The broadest classification of political donors separates them into business, labor, or ideological interests. Whatever slice you look at, business interests dominate, with an overall advantage over organized labor of about 15-to-1.”

    The top ….individual donors…. are labor unions, but the total amount of money spent by the more numerous conservative sources dwarfs the union money.

    “Powerful Public Employee Unions” is an oxymoron.

    Reply

    • Posted by Tough Love on February 21, 2016 at 11:20 pm

      SMD,

      Missed this one ?

      “Seven of the top eleven organizations that spend the most on political campaigns in the U.S. are labor unions, according to the Center for Responsive Politics. The Service Employees International Union, which has contributed over $224 millions during recent campaign cycles, ranks No. 1.”

      ————————————-

      Doesn’t fit your agenda ?

      More “smoothing” ….. i.e., move along folks, nothing to see here …… we’re only ripping you off a little bit ?

      Reply

  9. Posted by S Moderation Anonymous on February 22, 2016 at 12:34 am

    The top

    ….individual donors….

    are labor unions, but the total amount of money spent by the more numerous conservative sources dwarfs the union money.

    15-to-1, according to the Center for Responsive Politics.

    Money talks.

    Reply

    • Posted by Tough Love on February 22, 2016 at 1:09 am

      SMD, Not sure where you are getting that from ….

      From THIS link to the Center for Responsive Politics compilation:

      http://www.opensecrets.org/orgs/list.php

      we have (not just the top 11 organizations), but a Table with the top 100.

      Dropped them into a spreadsheet and totaled them up.

      Total Contribution …………………………………… $3,709,826,527

      To Democrats and Liberals ………………………..$2,357,550,431

      To Republicans and Conservatives …………. $1,275,403,736
      —————–

      Bottom Line …. Democrats got 63.5% and Republicans got 36.5%

      Reply

      • Posted by Tough Love on February 22, 2016 at 1:15 am

        And curiously, exactly WHO/WHAT is the contributing entity in rank #85 noted as:

        “City of New York, NY “

        Reply

  10. Posted by S Moderation Anonymous on February 22, 2016 at 3:01 am

    There’s money, then there’s money.

    The Unionwatch article you cited had this quote:

    ” The top 100 political donors of 2014 gave roughly $174 million to Democrats and $140 million to Republicans, according to a POLITICO analysis. …..”

    And

    ” Seven of the top eleven organizations that spend the most on political campaigns in the U.S. are labor unions, …”

    Pretty much in synch with what you’re saying in the last two posts. Okay so far? Now, follow through to that very article Unionwatch is using for its quotes and you will see they are talking about…

    DISCLOSED contributions. DISCLOSED contributions. Further down:

    ” Of course, that edge doesn’t take into account contributions to deep-pocketed non-profit groups that don’t disclose their donors. They heavily favored Republicans, with reports showing conservative secret money non-profits outspending liberal ones $127 million to $33 million. While that’s just a fraction of the overall undisclosed money spent in 2014, it’s indicative of a dramatic imbalance in a type of big money spending that likely would close the gap between Democratic and Republican top donors, if not put Republicans ahead.”

    http://www.politico.com/story/2015/01/blue-billionaires-on-top-114151#ixzz3zicNMo2L
    __________________________
    The other quote:

    “The broadest classification of political donors separates them into business, labor, or ideological interests. Whatever slice you look at, business interests dominate, with an overall advantage over organized labor of about 15-to-1.”

    https://www.opensecrets.org/overview/blio.php

    Reply

  11. Posted by S Moderation Anonymous on February 22, 2016 at 3:11 am

    It’s common sense. Look at all the union dues in the US. It’s a lot of money. A small portion of which is used for campaign contributions. Now look at the total US GDP. The money businesses have available for campaigning makes union money look like chump change.

    Like Willie Sutton said.

    Reply

    • Posted by Tough Love on February 22, 2016 at 3:34 am

      While the odds are somewhere between .0002% and .0001% I’d love to have ALL campaign contributions outlawed and have the top 2 or 3 FINAL candidates for each elected position “funded” with a VERY modest stipend from Taxpayer-sources.

      That, term limits, ZERO pensions, and zero benefits for Elected Officials would do wonders for AMERICA. It’s hard to fathom Elected Officials giving these grossly excessive and unaffordable pensions & benefits to Public Sector workers if the unions (and their members) could NOT contribute to their campaigns, and if THEY did not also participate in such rich pensions & benefits.

      Being an “Elected Official” as a long-term “career” should end.

      Reply

  12. Why do I get dropped periodically from this Blog. Have not gotten blogs in 2016 yet, that I can recall Today is March 3, 2016

    Regards

    Reply

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