Christie said the mayor can either cooperate “or the inevitable will occur, and the inevitable is they will face bankruptcy, and if they do then the bankruptcy court will control their fate, not the state of New Jersey, if that’s what they prefer it’s their choice”.
For most people who see a future (or are stuck) here that’s no choice at all. Could a bankruptcy judge have done any worse fiscally over the last twenty years in Atlantic City (or New Jersey)?
But the poster boys/girls for Atlantic City’s troubles have been made out to be the lifeguards and they are only in the sense that the pensions they get are a result of a short-sighted system of governance designed to accumulate debt recklessly.
It is not only Atlantic City that has pensions for lifeguards. According to excerpts from the New Jersey Statues Annotated (NJSA) put together for the Sea Isle City Beach Patrol:
43:13-24. Retirement for Service and Age
In all cities of the fourth class (cities bordering on the Atlantic Ocean which are seaside or summer resorts) any member of the life guard force, whether employed as an officer or a guard, who has or shall have served on such force for a period of twenty years, and shall have attained the age of forty-five years, and for a period of ten years preceding his application has been continuously in such service, may, either by the governing body of any such city or upon his own application, be retired upon half pay.
43:13-27. Pension Fund
For the purpose of paying the pensions hereunder, a fund shall be created as follows:
- There shall be deducted from every payment of salary to each member of the life guard force in the city four per cent of the amount thereof.
- The city shall raise by taxation and pay into the fund yearly an amount equal to four percent of the total salaries paid to members of the life guard force.
- Any fines imposed upon a member of the force, money given or donated for the purpose of the fund, money deducted from the salary of a member of the force because of absence or loss of time and half of any reward paid to the force or an member thereof shall be added to the fund.
If at any time there is not sufficient money in the pension fund for the purposes thereof, the governing body shall include in any tax levy a sum in addition to amounts theretofore contributed which shall be sufficient to meet the requirements of the fund. This sum shall be raised by tax levy no longer than is necessary to meet the requirements of the fund. Whenever the fund exceeds an amount which the governing body by resolution from time to time determines to be adequate for the fund, no moneys, except the four per cent of salaries and the fines, donations and rewards specified in this section, shall be paid in to the fund unless and until the fund falls below the amount so determined to be adequate.
What this means is that a lifeguard can work 20 years at an annual salary of $10,000 and $16,000 would be deposited into a fund over that time to pay out $5,000 a year for life to a 45-year-old. The math does not work out for adequate funding and, according to Paul Mulshine’s column today, it’s even worse in practice:
The most lucrative such pension goes to a guy who collects $52,000 a year according to a recent article in the Atlantic City Press. The piece was headlined “Atlantic City may try to rein in lifeguard pensions.”
May try? The city is $400 million in debt. Mayor Don Guardian says non-essential services will have to be curtailed after April 8. Why is the city still paying pensions for jobs that college kids will gladly do for minimum wage?
To get an answer I called Seth Grossman, an attorney who heads up the citizens’ group Liberty and Prosperity. He served on the Atlantic City Council in the 1980s. He recalls being surprised to find out that lifeguards were on the payroll long after the summer ended.
“I’d ask, ‘Why do we have lifeguards on the payroll in October and November?'” Grossman said. “They’d reply, ‘These guys are retiring soon and we need juice up their pensions. We have them painting lifeguard boats.'”
Since pensions are based on the highest salary what happens is that lifeguards game the system to increase their benefits, as most of us do in our own jobs. So is it the lifeguards to blame or the crafters of the system? Or those who ignore what the crafters do until they get the bill and it’s too late?