5 PEW States

The Pew Charitable Trusts’ raw data is taken from the CAFRs of over 230 public pension plans comparing liabilities and assets (in thousands) by state. Five of those states happen to have liability amounts in the $190 billion range but when you look at the assets each has accumulated to pay those benefits a stark trichotomy emerges:

PEW-5New York is making payments but it is costing:

Public pension payments often make up a huge portion of state budgets. At the end of fiscal year 2013, New York State paid $9.5 billion into its pension funds – a little over seven percent of the total state budget. New York City paid $8.06 billion into its pension funds – more than 11 percent of the city’s total budget. For the upcoming fiscal year, New Jersey Governor Chris Christie decided to cut $887 million from the state’s required pension payment. It was a controversial move that was ruled constitutional by a New Jersey Superior Court judge because the governor was “backed into a corner.”

Texas (2063) and Ohio (double-dipping)  don’t see an immediate funding crisis.

Then we come to Illinois which is taking steps (however grudgingly) to come up with more money and New Jersey where we have:



* By bad advice I mean advising your clients to sue in New Jersey without mentioning that judges here are essentially installed and maintained by their opposition. If the lawyers really want to get COLAs back (and keep making money for themselves) they should advise the unions to stop making campaign contributions to people who turn on them and use that money for court fees for hundreds of thousands of federal lawsuits claiming breach of employment contract. It worked for the Scientologists.

22 responses to this post.

  1. Posted by Anonymous on August 28, 2016 at 11:34 am

    Again how did we get here? Are NJ’s P&B and/or salaries that much more generous than NY, OH, or TX? As a follow up to this post is it possible to summarize employer contributions over the past two decades, actual dollars and as a ℅ of the ARC (whatever that means….)? Thanks John!


    • The point of this comparison is that participant count and benefits are likely similar for these 5 states (assuming only minor differences in the level of actuarial fudging going on among them in determining liability values) and it is NJ that has been shirking contributions the most (along with Kentucky probably) which is why those 2 states are at the bottom when it comes to ‘net amortization’, a metric that PEW seems to have come with for this study:

      “Net amortization provides policymakers a clear picture of the effectiveness of a state’s contribution policy in terms of paying down pension debt in the near term. The data show that many states are not contributing enough to their pension funds to reduce unfunded liabilities—including some states that have paid the full ARC. The new net amortization benchmark provides a better assessment of contribution policies than prior measures did. Under the new metric, Kentucky, New Jersey, Illinois, and Pennsylvania experienced the largest negative amortization, when adjusted by covered payroll. Plans in these states face significant challenges and have low funded ratios. And without the strong overall investment returns in 2014, net amortization shows that these states would have lost further ground. All four also fell short of paying what would have been the full ARC in 2014. Pennsylvania, however, has committed to large and steady increases in contributions, and is projected to reach positive amortization by 2018.”


      • Posted by Anonymous on August 28, 2016 at 11:59 am

        John, thanks for the detailed explanation. I’m not trying to make the case one way or the other. But if a summary comparison of P&B (including average salaries) were used in conjunction with employer contributions then the general public would (hopefully) understand the ROOT cause of NJ’s situation. Understanding the past doesn’t solve the problem but at least we can learn from its mistakes (sorry I’m being a little too logical).


        • Posted by Anonymous on August 28, 2016 at 12:04 pm

          I should clarify P&B comparison, maybe service accrual, “full” retirement age, health benefits cost (employee/employer), and average salary used for pension calculation.


        • Posted by S Moderation Douglas on August 29, 2016 at 9:14 pm

          “State Pensions Could Be the Next Big Government Bailout”

          U. S. News, Nov. 5, 2012
          The general reaction to that has been (understatement ahead)… tepid.

          As in, it will be a cold day in hades when the American taxpayers bail out those profligate blue states

          New Jersey, Illinois, California, pay your own damn pensions! What are you wasting all your money on?

          Well, for one thing:

          In 2005, New Jersey sent over $86 billion in taxes to the Federal govt. The state in turn received about $58.6 billion in federal spending. I believe that makes NJ #1 “giver”, at over $3,000 per capita. Or, as TL might say: Taxpayers, what would YOU do with an extra $3,000 a year? ( $27.5 billion for the state as a whole.)

          Illinois and California are givers also, about $19 billion and $47 billion respectively.

          Two caveats…

          1) This is 2005 data, but has been fairly consistent over time. Tax Foundation .com would greatly appreciate donations to fund a newer study.

          2) Tax “taker” states is debatable as far as what is defined as federal spending.

          Still, that’s a big difference. New Jersey gets back about 61cents on the dollar, and for every $1 Alabamians pay in federal taxes today, Uncle Sam will send Alabama back about $2.


      • Posted by MJ on August 29, 2016 at 3:51 pm

        So does the question then become, why has NJ been the worst at shirking contributions? Surely we pay more than enough in all taxes combined not counting tolls, fees, and other erroneous “taxes”


        • Posted by Anonymous on August 29, 2016 at 4:11 pm

          Exactly but somehow, someway, somebody will blame PWs for it!


        • Posted by Anonymous on August 29, 2016 at 4:18 pm

          Just remember there’s always two sides to every coin. Problem with TL’s position is it’s a heads they win tails PWs lose situation and that’s not the total factual picture.


    • Posted by George on August 28, 2016 at 4:10 pm

      NY makes a lot by suing banks.

      One example:

      Taiwan’s Mega Bank fined by New York regulator for compliance lapses



    • The key point is that we got here by a combination of two things: retroactive pension increases scored by public employee unions in deals with the politicians they control, and failure to fund the pensions public employees were promised to begin with when they were hired, which is the equivalent of wage theft.

      In New York City the blame rests entirely with the unions and the politicians they control. In many so-called “Red States” the blame rests entirely with past taxpayers, who elected officials who kept their taxes low by shirking pension contributions.

      Other states are a mix.

      The one reason people like to talk about, low investment returns, are a fraud. Over the long term investment returns are not low. You have bubbles with periods of excessive returns (1982 to 2000) followed by busts with periods of lower returns (1966 to 1982, 2000 into the future).


      The problem is that at the peak of the bubbles either the unionized public employees, tax cutting politicians, or both raided the funds. The problem is — Generation Greed.

      From the inflated stock and bond prices of today, and given today’s low expected inflation rate, a 3-4 percent return over the next decade would be excellent. Of course if asset values were the crash, higher returns might be possible from those lower values. High returns from high values? Fraud, and scapegoat.


  2. Posted by skip3house on August 28, 2016 at 12:45 pm

    Big logic block…why do current/future NJ taxpayers have to want to make up for past services not funded by past Lawbreakers/……..?
    Seems each year stands on its own…..


  3. Posted by George on August 28, 2016 at 4:05 pm

    Chicago teachers strike watch

    Fixing terms for up to 5,000 teachers could avert possible strike

    “phasing out over two years of a 7 percent pension contribution CPS has been making on members’ behalf; and a return to raises for continuing education and experience as soon as the next school year.”



  4. Posted by Anonymous on August 28, 2016 at 5:46 pm

    Evidently we’re really missing the obvious here The hell with the past, why stop there. Generation whine wants it all and now fine. Everything is a la carte, got kids YOU pay for their schooling why should taxpayers without kids pay a school tax, etc. Oops I forgot, the State and/or Feds might have laws and/or constitutional requirements…. Like I’ve said, it’s always a great idea until it negatively impacts you and yours. But let’s keep up the positive devise energy, heck it got us this far – anything is possible for future generations. It’s amazing to me that previous generations got us through two World Wars but we can’t handle stuff like this. Guess we are doomed.


  5. How is Steve Sweeney as culpable for the Pension Crisis as Chris Christie? Sweeney supported suspending COLAs and making active employees pay more. Unlike Christie, Sweeney has also supported tax increases that would enable to state to put more money into pensions.

    How is Christie even as culpable as Robert Wilentz, Christie Whitman, Donald DiFrancesco, Jim McGreevy, and Dick Codey?


  6. Posted by Anonymous on August 29, 2016 at 12:27 pm

    And when Dick Codey was acting Governor the NJ State Employees Deferred Compensation plan was hand-delivered to Prudential with its stable of retail priced mutual funds.

    Governor Christie: HAVE YOU READ TIBBLE VS, EDISON INTERNATIONAL? In a 9-0 decision the US Supreme Court ruled that retail priced funds have no place on a plan’s investment menu.


  7. Posted by TB on August 29, 2016 at 4:09 pm

    More and more people are beginning to realize that Defined Benefit plans like public pensions are not sustainable, including the private sector which has more or less done away with them. Here is my solution to this looming crisis that is only going to get worse without any correction of course:


    Please help spread the word…


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