Now that politicians in New Jersey have run out of their own stupid ideas to (not) deal with the massively underfunded state pension system, according to njspotlight, they have turned to soliciting other people’s stupid ideas*. This time, according to a Request for Proposals sent out on December 9, 2016, from investment bankers.
Based upon a review of the response to this RFP, the State will select one or a number of firms to serve as an investment bank (“Investment Banker”) to the State in connection with the State’s pension plans, other post-employment benefit obligations, and/or its existing bonds including but not limited to the N.J. Economic Development Authority’s (“EDA”) Pension Obligation Bonds 1997 Series A & B (the “EDA Pension Bonds”). The Investment Banker(s) will assist the State in the development and implementation of financial concepts, structures and/or transactions that will have the effect of reducing the budgetary burden on the State caused by its responsibility to satisfy the obligations mentioned above. Please note that the State does not intend to issue new money Pension Obligation Bonds or any other indebtedness to fund its Pension Plans or Other Post-Employment Benefit Obligations.
To keep out the riffraff:
The Investment Bank(s) will be expected to have a thorough understanding of the State’s statutes, rules and regulations, covenants and contracts pertaining to the State’s Pension Plans, Other Post-Employment Benefit Obligations, and the EDA Pension Bonds. The Investment Bank(s) must also have a thorough understanding of the State’s accounting and budgetary practices.
Though anyone with a “thorough understanding of the state’s accounting and budgetary practices” (i.e. we pay what we want when we want if we want) is unlikely to bid and per njspotlight:
It’s unclear how many firms have responded to the request for proposals, and when the state is planning to move forward. Responses were due by December 21, and Treasury has yet to issue a formal selection notice.
* As those are the only ones likely to be accepted as making honest contributions or cutting benefits substantially are off the table.