NJEA Puppets

Mike Lilly through the American Enterprise Institute released a paper this week titled Pensions, Politics, and the New Jersey Education Association (NJEA) which argued that the NJEA has undue influence over policy issues in this state, pointing out:

After Governor James Florio and other Democrats crossed the NJEA in 1990 by shifting responsibility for teacher pensions to local school districts, the NJEA endorsed 46 Republicans and three Democrats and put its full muscle behind flipping the legislature in the ensuing 1991 legislative election. The result: the NJEA was credited (and credited itself) with turning a Republican minority into a veto-proof Republican majority. The pension shift was postponed and ultimately repealed. Neither the Democrats of Republicans forgot.

In the end, the NJEA wanted a system in which it could negotiate ever-increasing teacher salaries at the local level free from the competing demand of funding the pensions that were based on them. Of course, had teacher pensions been the local school districts’ responsibility, increasing pension costs would have crowded out education spending (and teacher salary hikes) or required higher property taxes. That is a situation the NJEA did not want and fought vigorously to prevent…..the NJEA chose for the state to handle teacher pensions, and for many years, state lawmakers gave the NJEA what it wanted without paying for it.

Having used its political might for decades to exploit the system for its own interests, the NJEA wanted to stick New Jersey taxpayers with the $95 billion consequences by enshrining this broken pension system in the state constitution. As he did with the 2010 and 2011 pension reform laws, Sweeney defied the NJEA and stood up for the citizens of the state. So the NJEA vowed revenge on Sweeney and announced it would become heavily involved in the 2017 Democratic gubernatorial primary to elect “better leaders” than Sweeney. After exiting the race, Sweeney is now an ex-gubernatorial hopeful.  The NJEA is now free to help elect a politician who will do its bidding and pass the amendment, perfectly encapsulating the root cause of New Jersey’s pension crisis.

The Whitman pension gambit of 1997 calling for the sale of Pension Obligation Bonds that would eliminate contribution requirements came at a price of having benefits protected as a contractual right. As it turned out those protections were illusory.

So it will be with a constitutional amendment that forces governments to make contributions when those governments…

  1. do not have the money, and
  2. maintain control of the political/actuarial process that comes up with the contribution numbers.

The NJEA might be able to pick its puppets but until they locate one who can make money magically appear those pensions they thought they bought will disappear.

17 responses to this post.

  1. Posted by Anonymous on October 20, 2016 at 12:55 pm

    This should be required reading before anyone moves into or thinks about buying a home here .95 billion is still low although ever growing with a too high expected rate of return of %6.625 (I believe) .Sweeney knew the gas tax would enrage the votes and this pension referendum would never pass ,he believes the voters have a short memory and it might pass next year ,which I doubt .

    Reply

    • Posted by George on October 20, 2016 at 9:46 pm

      Is a constitutional amendment that violates the legislatures obligation to vote on spending constitutional? If the legislature refuses to comply the courts in alliance with the state police seize control of the machinery of government, do I have this right? I guess the ruling Triumvirate will then be the chief justice of the supreme court, the head of the state police and the head of the NJEA. How will the amendment be enforced?

      California promised public employees generous retirements. Will the courts give government a way out?

      A case before the state Supreme Court could clear the way for reductions in public retiree benefits, which have become hugely expensive. But the outcome is “hard to predict.”

      http://www.latimes.com/projects/la-me-pension-legal/

      Reply

  2. Posted by boscoe on October 20, 2016 at 1:38 pm

    “The NJEA is now free to help elect a politician who will do its bidding and pass the amendment, perfectly encapsulating the root cause of New Jersey’s pension crisis.”

    The NJEA may help elect a politician who will do its bidding. But doing Part 2, passing the [constitutional] amendment, requires approval in a public referendum. As the previous poster noted, that is unlikely in this climate.

    Also, see today’s LA Times: http://www.latimes.com/projects/la-me-pension-legal/#nt=oft01a-1li2

    Reply

  3. Posted by Anonymous on October 20, 2016 at 2:13 pm

    It’s The Donald’s way, say enough and by osmosis it’s true!

    https://www.google.com/amp/s/amp.businessinsider.com/us-government-7-trillion-pension-shortfall-2016-4?client=ms-android-huawei

    Anonymous on October 12, 2016 at 10:34 am

    DCP for ALL – Local, State, & Federal – civilian, law enforcement & military. If it doesn’t work for some then it doesn’t work for ALL. Or are you one of those exceptions folk? BTW, it has nothing to do with the Feds ability to print money!

    dentss dunnigan on October 12, 2016 at 12:48 pm

    the fed ability to print money notwithstanding ,the fed can borrow at the lowest interest rate possibly .01%( presently)where as states NJ must pay quite a premium presently at about 6.75% …but for comparison sake what job would you compair to a marine fighting in the middle east to a cop in Newark ..? inquiring minds want to know …but the bottom line is the gov can and will print money look at our debt it’s doubled in the last 8 years …

    Anonymous on October 12, 2016 at 1:39 pm

    Ok but what ℅ of military is front line combat versus support staff here and abroad. In some cases military is in more harms way but in alot of ways their in less harms way then, in your example, the cop in Newark. So now what?

    Anonymous on October 12, 2016 at 1:41 pm

    And DD, I’m assuming your quick defense of the military means you and/or yours have a vested interest. Like I said, change is good so long as it doesn’t negatively impact who?

    dentss dunnigan on October 12, 2016 at 4:11 pm

    I have great respect for our men in Arms ,but I do find your jeliously of their benefits offensive …I will not comment on this subject further

    Anonymous on October 12, 2016 at 8:33 pm

    I as well respect our military and first responders but if it’s about jealousy, as you put it, then who’s jealousy of who? I always thought it was about the numbers so don’t make it appear so personal and untouchable. Self interest is a double edge sword!

    Anonymous on October 13, 2016 at 3:34 pm

    Just remember whether it’s Washington or Trenton, military, first responders, or civilians – individuals chose to accept employment based on the salary and benefits being offered. The fact that one level of government can “print money” (which we all know has negative economic consequences) and another can’t shouldn’t preclude the moral and, if not for CC’s NJSC, legal obligation to fulfill their commitments.

    Anonymous on October 15, 2016 at 10:49 am

    History will repeat itself, if allowed! Memories are short but think back to Christie v Corzine, the now Gov’s “promise” to teachers and first responders – your P&B are “safe” with me. Well fast forward and need I say more. IF Federal including Military workers think for one second some how what happens at the State and Local level won’t impact them eventually? Well then it’s like I said, history will repeat itself. BTW, the ability to print money won’t be the issue but time will tell.

    Reply

    Anonymous on October 15, 2016 at 7:38 pm

    Wonder why Fed pensions aren’t discussed, State & Local already a big nut to crack OR can’t think of going after the “Untouchables”. What a great show, don’t mess with Ness!

    Reply

    Reply

    • Posted by dentss dunnigan on October 20, 2016 at 3:56 pm

      To quote yourself …”Another one who’s into vinyl, broken record….” you try to ignore the the answer ,for some reason you believe their should be another one ,but it’s the only one …..the government ability to recklessly print money .

      Reply

      • Posted by Anonymous on October 20, 2016 at 5:57 pm

        As T Rump would say, no I never said that & this is a disaster (you’d probably at least agree with the latter). But we’re all playing vinyl just different songs!

        Reply

        • Posted by dentss dunnigan on October 20, 2016 at 6:57 pm

          I doubt I would agree with anything Trump said or did although he did say he wants to end the fed which I’ve been saying for years …I knew he had no chance besides being highly unquilified he stuck his finger in the establishments eye ,and perhaps brought to the forefront just how much power the banks have on us all .

          Reply

          • Posted by Anonymous on October 20, 2016 at 8:23 pm

            DD how can you honestly separate Trump from the “establishment”? Like he was really going to change a “system” that helped make him a multi billionaire? He’s just as guilty as any politician who’s pockets he was greasing.

  4. If anyone is interested, this is a history of the events of Florio’s administration and how the NJEA stifled his attempt to do something that might have slowed pension cost growth. This post also extensively discusses the NJ state aid surge (which was mostly Abbott) and how it coincided with the abandonment of pension contributions.

    http://njeducationaid.blogspot.com/2015/08/the-role-of-abbott-funding-in-njs.html

    Reply

  5. Posted by Anonymous on October 20, 2016 at 10:36 pm

    The NJEA can’t be that blind to the reality and severity of this situation? They’re looking for someone other than Christie and Sweeney (although as Senate President he’ll have to be reckoned with) to do a deal with. No State has cut retiree’s “base allowance” benefits (ie excluding COLA’s). Future accruals for active members and retiree healthcare – yes, and NJ will be no exception. Whatever deal is cut, according to the numbers mentioned here, won’t be a cure all but it will stop the hemoraging. The pensions will go from critical to serious but stable. A constitutional amendment with all conditions specifically outlined will be something a majority of NJ’s will support.

    Reply

    • Posted by dentss dunnigan on October 21, 2016 at 9:26 am

      And the funding will come from where ? and the required payment will be ? as we just learned that 35Billion short fall jumped to 95Billion and that still assuming a 6.625% rate of return which is too optimistic with interest rates where that are .are we talking about 4 billion a year ,5 billion a year voters must be told the truth about what their voting on .

      Reply

      • Posted by Anonymous on October 21, 2016 at 10:28 am

        DD that’s about the cost of retiree health care??

        Reply

        • Posted by dentss dunnigan on October 21, 2016 at 10:46 am

          They say it’s not included in the figures …..I’m sure that would bring that total figure up to 170Billion ,if not more .it’s like the new gas tax our politicians will never tell the truth ..”A provision in the new law to raise the state’s gasoline tax gives the state treasurer the ability to change the rate from year to year if the state doesn’t hit its gasoline revenue targets. without any vote required .

          Reply

          • Posted by Anonymous on October 21, 2016 at 11:02 am

            Yes interesting, revenue (dedication) not subject to voters just appropriations?

            But on the health care my point was IF the State sheds it’s retiree health care cost the savings can be used for the pensions, whatever the number of the day is.

          • Posted by dentss dunnigan on October 21, 2016 at 11:30 am

            Yes I believe they tried to sell that idea to the towns in exchange for them paying into the pensions direct ,they said it was a wash and would likly save towns money …which tells me towns would be on the losing end of the deal …

      • Posted by Anonymous on October 21, 2016 at 10:45 am

        The $ in question also assumes current DBP accrual rates.

        Reply

      • Posted by Anonymous on October 21, 2016 at 11:09 am

        Maybe some special interest group should take the tax increase dedication to the NJ courts but I doubt the AC would overturn CC!

        Reply

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