The next few blogs will take up aspects of the oral arguments made (or in this case not made) in Berg v. Christie, the cost-of-living-adjustment (COLA) lawsuit heard yesterday.
In the pension payment case the New Jersey Supreme Court came to a decision in favor of Governor Christie 34 days after oral arguments (5/6/15 – 6/9/15) and I expect something similar here (both as to timeline and outcome) so we have some time to get into details starting with an argument that would seem natural for the plaintiffs to have made but they didn’t – and for obvious reasons that have rarely been enunciated in public.
COLAs were costed for. When actuaries did their reports they presumed that COLAs would be paid as part of a retiree’s benefit until 2011 when they presumed they wouldn’t be (thus resulting in lower liability and contribution amounts for 2011 and later years). Therefore, in theory, through 2011 there was money contributed to pay for those COLAs. What happens to that money? It would seem like a fair question but, for those of who haven’t yet caught on to this three-step tango:
- Public plan actuarial reports are a mechanism designed to generate the lowest contribution possible using any method generally accepted in the public-plan world (translation – any method) which leads to…
- Taxpayers through their politician representatives in cahoots with public employees through their union representatives abiding this farce and funding these lowball amounts (except when legislatures or governors further reduce them) which leads to…
- Arbitrary benefit cuts.
So you see what would seem like a logical argument to make is really an absurd conceit in the world of public-pension funding.