Dumping Sweeney: Job Number One For NJEA


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There is also a report that provides some history of the New Jersey Education Association (NJEA), politics, and the pension system. Below are excerpts along with a look at whether the NJEA will succeed based on past election results in Sweeney’s district.


New Jersey citizens and taxpayers must wake up to what has happened in our state and why we are where we are. In the end, the best description of what has occurred is “legal corruption.” Our political system has been thoroughly corrupted—so much so that the corruption itself has been made legal. (page 2)

New Jersey provided its first pension for teachers in  1896. Presaging the current crisis, that pension plan collapsed due to inadequate funding, which led to the TPAF’s creation in 1919. (page 9)

In 1971, the calculation of pensionable earnings was changed to be based on the average of a teacher’s highest three years of earnings, which Gov. William Cahill claimed would increase retirement benefits by 10 to 20 percent. (page 10)

The NJEA scored a huge political success in 1987 when it gained fully paid health benefits for retired teachers, which was “achieved through years of NJEA lobbying. (page 10)

When Florio and other Democrats enacted the pension shift and subsequently cut state education aid, 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The pension shift was post poned and ultimately repealed. (page 11)

In 1992, the NJEA-friendly legislature granted the NJEA its “top legislative priority”: the long-sought expansion of fully paid retiree health care to education support personnel, which passed by an overwhelming majority. (page 11)

Police and firefighters got pension enhancements in 1999, and the NJEA was “moving quietly behind the scenes to improve retirement benefits for teachers and to muster the legislative support to make them a reality.” (page 12)

Faced with legislative elections in 2001, lawmakers fell over themselves to please the NJEA, granting both existing and prospective retirees a 9 percent pension increase. Further, the law was passed in conjunction with statutory provisions excusing non-funding of both the newly enhanced and preexisting benefits for several years. As a final sop to the NJEA, the law temporarily reduced employee contributions from 4.5 percent to 2.5 percent. In a particularly underhanded move aimed at creating “surplus” assets to fund the enhancement, the legislature reached back to June 30, 1999, to value pension assets when they were $5.3 billion higher than under the then-current valuation method—even though by 2001 the dot-com bust had in reality reduced the value of those pension assets by billions of dollars. (page 12)

As for health care, the NJEA was able to shape the bills resulting from the [2006] Special Session to its liking. As openly stated in the official statement made by the bill’s legislative sponsor, “reflecting discussions with the New Jersey Education Association,” the legislation guaranteed premium-free retirement health benefits and created a new educator-only School Employees Health Benefit Plan in which the NJEA had “greater representation and more control over what happens to members’ benefits than under the old SHBP [State Health Benefits Plan].” (page 14)

In 2010, Christie teamed up with Democratic Senate President Steve Sweeney to enact a number of the proposals from the 2006 Special Session that had been successfully blocked. Applying only to new hires, these reforms required that employees work full time to earn pension benefits, reversed out the 2001 pension increase, repealed the nonforfeitable right to pensions, and set a maximum pensionable salary. On the health care side, the bill mandated that all employees had to pay 1.5 percent of their salaries for their “Cadillac” health plans. In return, the state committed to reaching full pension funding incrementally over seven years…..No legislator who voted for the reforms was endorsed in the 2011 legislative elections. (page 15)

Consequently, the NJEA developed an audacious new plan to secure pension funding by amending the state constitution. To do so, the legislature had to approve putting the amendment on a ballot by votes in two consecutive sessions. The NJEA succeeded in getting the 2015 legislature to pass the amendment and pushed for the 2016 legislature to do the same in time to secure a position on the November 2016 election ballot….When Sweeney stood up to the NJEA and did not allow a vote, the amendment died. The NJEA vowed revenge.(page 16)

The only thing the NJEA did not achieve was full funding. Politicians, keenly focused on self-preservation and presented with the choice of pleasing the NJEA or keeping state taxes down, didnboth—they gave the NJEA what it wanted on retiree benefits but did not spend the money to fund them. (page 17)

The facts reveal that the NJEA—the most powerful political force in the state—had a direct and substantial role in creating New Jersey’s pension and benefits crisis. They show that the NJEA consistently pushed for enhanced benefits while depleting the assets that supported them. And they show that the NJEA was well aware of the importance of funding pensions and yet participated in schemes that persistently under-funded them. Now the NJEA wants to deflect the blame onto the state and stick New Jersey citizens with the ruinous bill. (page 17)

Will the NJEA get Sweeney?

Known as the “2-4-4” cycle, Senators in New Jersey serve four-year terms, except in the first term of a new decade, which only lasts for two years. The 3rd legislative district election results for Senate involving Sweeney over the years:

It looks like it will take a shift of about 3,000 votes to get Sweeney out. Presuming that this is the first year NJEA has challenged Sweeney and based on the 1991 experience, that seems likely.

48 responses to this post.

  1. Posted by Tough Love on November 4, 2017 at 3:41 pm

    SMH = SMD = SMA = Anonymous = Earth =Stephen Douglas,

    I’m sure the readers would loveto know your thoughts on the appropriateness of the NJEA’s actions…… and whether they are “reasonable” ?, “fair to taxpayers” ?, “piggy” ?

    Care to provide them ?

    Reply

  2. Mike Lilley’s series on the NJEA’s role in NJ’s tax and pension crises is incredibly informative.

    I’ve studied the origins of NJ’s pension crisis too, with a focus on the role of the Abbott decisions, but something I didn’t know is that post-retirement healthcare only dates from 1987.

    That fact puts the state’s disastrous mistakes in the 1990s in a different context for me, since the state now had a significant new expense it didn’t have under Kean for most of the 1980s.

    The legislative Republicans and Whitman actually left income taxes substantially higher than they were pre-Florio (the top bracket was 6.37% after 1996 versus 3.5% pre-Florio) and left the sales tax at its same pre-Florio level (6 cents). Due to the booming economy, the state’s income taxes still rose every year, despite the falling brackets.

    And yet, the state was still unable to honestly meet its obligations.

    I’ve argued that a lot of the crisis was due to Abbott, but post-retirement healthcare must have had a role as well.

    Lilley’s report is also informative because of how it documents the politicization of every branch of the NJEA, including PRIDE and UniServ. This is something to have in mind when consider the unions’ claim that agency-fees only go to non-political functions.

    Reply

  3. Posted by skip3house on November 4, 2017 at 4:33 pm

    Promise NJEA anything and try to sound sincere. I lost a NJ State race about 2001, but pointed out the late Dunstan McNichol (Star Ledger Award winning reporter) wrote the Pension/Medical promises were way underfunded. I added this to my NJEA interview, but was cut short by the ‘Math’ teacher in charge that NJEA had ‘a promise that was lots better than nothing’.
    Seems Sweeney is following McNichol’s logic, not that math teacher’s?

    Reply

  4. Posted by Tough Love on November 5, 2017 at 12:48 am

    While the Teacher’s Union is far larger, lets not ignore the material impact on Local Property taxes of the pensions (AND benefits) granted NJ’s Local Police. They can retire after 25 years of service (typically at age 55 …. or younger) with an unreduced (for retiring and beginning to collect a pension at such a young age) pension of 65% of their final wages. That 65% translates into a per-year-of-service “formula factor” of 0.65/25 = 0.026 or 2.6% per-year-of-service.

    Let’s compare the “VALUE upon retirement” (expressed both as the annual annuity payment and as a Lump Sum, or the amount of money necessary to BUY that pension in one up-front payment on the date of retirement) of the Local Police Officer’s pension if retiring under that scenario (i.e., 25 years of service and age 55), with the VALUE of a typical DB pension granted one of the lucky few in the Corporate Private Sector world that still gets such a pension, and also retiring at age 55 with 25 years of service. Lets also assume that the Police Officer and the Private Sector worker have the SAME final wages, and solely for the purpose of seeing actual #s, lets assume that their final annual salary is $150,000 (certainly NOT atypical for a recently retired NJ Police Officer, most of whom would be retiring at a rank of Sargent or higher) ……….

    The Private Sector worker would likely have a pension with a formula-factor in the range of 1.25% to 1.50% per year of service, and a downward early retirement adjustment factor of between 4% and 6% PER YEAR OF AGE that the retire chooses to begin collecting his/her pension before the Plan’s Normal Retirement Age (NRA) (typically age 65 but sometime age 62 if you have 30+ years of service), noting that Social Security uses a 6% per-year-of-age reduction in their early retirement calculations.

    Using the above, the formula calculation of the Private Sector worker’s pension would be (even if we use the HIGHER formula factor of 1.5%) 25 x 1.5% x 150,000 = $56.250 annually. But because payments will BEGIN at age 55 (not the Plan’s NRA of 65), there will be an early retirement adjustment that will (using a 5% per-year-of-age early-retirement adjustment factor ….. the midpoint of the 4% to 6% range noted above) reduce the otherwise calculated $56,250 annual pension to $56,250 x (0.05 x (65-55)) = $28,125. We should also note that it is extraordinarily rare for Private Sector Plans to include COLA increases.

    Now lets calculate the NJ Police Officer’s pension ………….

    Using NJ’s ACTUAL 2.6% formula-factor applicable to an Officer retiring after 25 years, we have 25 x 2.6% x $150,000 = $97,500. There is no reduction for the Officer being able to begin collecting his/her pension at age 55, and while COLA increases are now suspended in NJ, they may at some point be reinstated, noting that the INCREMENTAL benefit of NJ’s (now-suspended) COLA increases (for an Officer retiring at age 55) WOULD increase the otherwise-calculated pension’s value by about 25%..And if the proposal now under consideration to turn over management of NJ’s Local Police Officer pensions to their Union is enacted, be assured that finding a way (legitimate or not) to get their COLAs reinstated will be priority #1.

    So where are we in the NJ Police Officer vs NJ Private Sector worker pension comparison?

    The Private Sector worker will receive $28,125 annually, and the Police Officer will receive $97,500 annually or 3.47 TIMES that of the Private Sector worker who retires at the SAME age, with the SAME wages, and the SAME years of service. And for the sake of completeness, that multiple would likely be about 5% HIGHER, because while the Officer’s pensionable compensation is that from his/her final year of employment, the Private Sector worker’s pensionable compensation would assuredly be based on the average of his/her last 3 or 5 years of employment…… bringing that 3.47 TIMES to about 3.65 TIMES.

    Give that 3.65 TIMES multiple some though from the standpoint of fairness to NJ’s taxpayers who are now responsible for all but the 10% to 20% of Total Pension Plan costs actually paid for by the Officer’s own pension contributions (INCLUDING all the investment earnings thereon). I would be willing to wager that simply due to the nature of the job (being a Police Officer), MOST NJ residents (including myself) would agreed that Police officers “deserve” SOMEWHAT greater pensions (all other things being equal). But if asked to choose the percentage by which the Officer’s pension should exceed the pension of a comparably situated (in wages, age at retirement, and years of service) Private Sector worker, I believe that some would say 10%, some would say 25%, some might even say 50%, but absolutely NOBODY (except another Police Officer of course) would suggest that it should be anywhere even remotely near 3.65 TIMES that of the comparably situated Private Sector worker.

    To best understand the extraordinary richness of NJ’s Police Officer pension (and because most Private Sector workers think of THEIR retirement security in terms of their 401K balances), it helps to express it in term of it’s Lump Sum value, again, that being the amount of money necessary to BUY that pension in one up-front payment on the date of retirement.

    By looking at an annuity mortality table used for retirement Plan purposes, the present value of a single life annuity of $1 per year beginning at age 55 has a lump Sum value of about $17. Hence it would COST approximately 17 x $28,125 = $478,125 to buy the Private Sector worker’s pension and about 17 x $97,500 = $1.657,500 to buy the Police Officer’s pension.

    **********************************************
    And let’s not forget that while employer-sponsored retiree healthcare is all but gone in the Corporate Private Sector world, the Police Officer will receive free or heavily subsidized retiree healthcare, likely under “family” coverage, and costing Taxpayers about $30K annually (beginning at the ripe old age of 55), likely costing taxpayers an additional $500+K………….. making the total value of the Police Officer pension and retiree healthcare benefits between $2.1 and $2.2 Million.
    *********************************************

    Does any of this extraordinary “generosity” sound necessary, fair to Taxpayers, or affordable ?

    Reply

    • Posted by Pat W on November 5, 2017 at 12:01 pm

      Very will said. You made a convert out of me!

      Reply

    • Posted by S Moderation Whatever on November 5, 2017 at 8:07 pm

      3.65 TIMES!!!!!

      Quoting Mr. Love…

      ” MOST NJ residents (including myself) would agreed [sic] that Police officers “deserve” SOMEWHAT greater pensions (all other things being equal).”

      Sacré bleu!

      How very PC of you! I thought you had written many times that police and fire deserve no pension a tall, because they were so overpaid in salary alone. Be that as it may, and stop me if you’ve heard this before. You cannot compare pensions outside the context of total compensation.

      Even in your simple and misguided example *(more about that later.) You have a private sector retiree with an annuity worth $478,125, and a police officer with an annuity worth $1,657,500. 3.47 times. That is jawdropping, Brietbart style, comparing ONLY their pensions.

      Look at their lifetime income; before retiring they each worked 25 years at $150,000, for total wages of $3750000.

      For the private sector worker, that is a lifetime “income” of $4,228,125.

      For the police officer, total lifetime earnings of $5,407,500. (salary plus pension)

      For lifetime wages plus pension, the policeman earns 1.28 times. Not quite the shock value of “3.65 TIMES”!

      They each work 25 years… They each retire at 55… and the cop earns a total of 28% more. Mr. Love… “I believe that some would say 10%, some would say 25%, some might even say 50%,” 28% is within that range, as if the comparison were valid at all.

      If you recall, I mentioned (much more than once) that another advantage Biggs 2014 paper was the very detailed description of methodology, (data sources, assumptions by the researcher, etc.
      ……………………….
      *(more about that later.) Your 3.65, 3.47, point whatever, will vary considerably if using assumptions other than those given. Moreover, even in this questionable example, can we assume the policeman contributed about 7% of salary to pension, and the private sector guy contributed 6.2% (up to the $127,000 limit), so the take home pay of the taxpayer was higher than for the cop? And that in addition to his annuity worth $478,125, the private sector worker would also draw maximum Social Security for the final 15 to 20 years of his life?

      Even in this worthless, misleading “example” that would bring LIFETIME earnings within 10-15% (For working the SAME number of years, earning the SAME salary, and retiring at the SAME age.)

      Incredible! (As in, not credible.)

      SMH, or whatever.

      Reply

      • Posted by Tough Love on November 5, 2017 at 11:21 pm

        Quotes from SMH = SMD = SMA = Anonymous = Earth =Stephen Douglas = Internet Moderator (adjunct) ………….

        (1) “I thought you had written many times that police and fire deserve no pension a tall, because they were so overpaid in salary alone. ”

        If you cannot provide a link to such a statement from me, consider yourself a liar.

        (2) “You cannot compare pensions outside the context of total compensation.”

        Clearly, Police pensions & benefits are MUCH greater, so are you asserting that NJ Police Officer “wages” (once beyond the first 5 year grade-in period to full wages) where BASE PAY for the lowest rank is now often $135K annually, are not only lower than those of Private Sector worker with reasonably comparable experience, education, skill, and knowledge, but lower by an amount to offset their HUGE advantage in pension & benefits ? Really* ? If so, provide evidence to support that, as I (and I believe most residents of NJ) would strongly guess that the opposite relationship is true.

        * what planet are you living on?

        (3) “Even in your simple and misguided example *(more about that later.) You have a private sector retiree with an annuity worth $478,125, and a police officer with an annuity worth $1,657,500. 3.47 times. That is jawdropping, Brietbart style, comparing ONLY their pensions.”

        Exactly, because that is exactly what I was comparing in my example …… PENSIONS, And, I just addressed the issue of a comparison of “Total Compensation” in # (2) above.

        (4) “Look at their lifetime income; before retiring they each worked 25 years at $150,000, for total wages of $3750000.

        For the private sector worker, that is a lifetime “income” of $4,228,125.

        For the police officer, total lifetime earnings of $5,407,500. (salary plus pension)

        For lifetime wages plus pension, the policeman earns 1.28 times. Not quite the shock value of “3.65 TIMES”!”

        Wow, clearly you have limited skills with numbers. A few issues:

        (a) I made no assumption (because it would be ridiculous) that each worker’s wages was $150K in each of the 25 years of their employment, only that it was their wages in their FINAL year of employment for use as the “pensionable compensation” in the pension calculations. Specifically, I stated in my original comment…..”lets assume that their final annual salary is $150,000 “.

        (b) (even though you are using wrong #s anyway … see (a) above) you are ADDING the sum of a periodic stream of payments to a Present Value figure in coming up with your figures $4.228,125 and $5,407,500. No, you can’t do that. (did you really get a Bachelors degree in Economics?)

        (c) “For lifetime wages plus pension, the policeman earns 1.28 times. Not quite the shock value of “3.65 TIMES”!””

        This too is incorrect …. see (a) above.

        (5) “They each work 25 years… They each retire at 55… and the cop earns a total of 28% more. Mr. Love… “I believe that some would say 10%, some would say 25%, some might even say 50%,” 28% is within that range, as if the comparison were valid at all.”

        (a) Another statement that’s wrong because the 28% is wrong (see (3) above). Besides, there is no reason why computing the ratio of the Police Officer’s PENSION to the Private Sector worker’s PENSION is not an appropriate “statistic” to calculate and consider. And clearly, adding the same constant amount to both the numerator and denominator of that ratio would produce a smaller ratio…… that’s just the way math works. You appear to be pushing to only look at the ratio of their expected LIFETIME INCOMES because you know that do so would produce a lower ratio.

        (b) You are also trying to hoodwink the readers with that statement, because even IF your 28% were a valid ratio (which it IS NOT for the reasons noted above) it would be a multiple of LIFETIME INCOMES, and you cannot say that that (the 28%) is within my 10% to 25% to 50% range, when my “ranges” are not those of LIFETIME INCOMES, but of PENSIONS alone. Completely apples-to-oranges …… but nice try.

        (6) “Your 3.65, 3.47, point whatever, will vary considerably if using assumptions other than those given. ”

        Of course they would. DB pension calculations REQUIRE the use of assumptions and are confusing to many……….. something the Union/Politician cabal take grant advantage of (and DEPEND ON) in the granting of such ludicrously excessive pensions with few of NJ’s citizens realizing the financial damage they are doing to the State.

        But addressing your SPECIFIC claim……….

        The 3.47 is from ….. (25×0.026x$150,000) / [25×0.015x$150,000x(0.05x(65-55)]

        Given that the 25 and the $150,000 appear in BOTH the numerator AND the denominator, they cancel out and we really have 0.026 / [(0.015x(0.05x(65-55)].

        ONLY the numbers shown the last formula about contribute to the 3.47.

        The 0.026 is not a “assumption” and unquestionably correct as the NJ Police Pension per-year-of-service “formula-factor” (and coming from the 65%/25 years in my original comment above) for an officer retiring after 25 years of service.

        The 0.015 was my assumption that the Private Sector pension had a 1.5% per-year-of-service “formula-factor”. I based this choice on my knowledge of such Plans. I know that you have (in past commentary) asked for a published source to justify such choices that I have used in past comments. I have looked, and although some internet publications (particularly those from the consulting firms such as Mercer) peripherally discuss such Private Sector Plan formulas, I cannot locate a published source showing typical Private Sector Plan formulas.. Therefore, I will leave it for Mr. Bury (this Blog-owner and a NJ Actuary certainly familiar with Private Sector Plan formulas) to respond as to whether my 1.5% is appropriate …. should he choose to do so.

        The ONLY other “assumption”, is my use of a 5% per-year-of-age reduction for retiring and beginning to COLLECT one’s pension before the Plan’s NRA. As above, that was chosen as the midpoint of the 4% to 6% range of reduction factors that I have seen applied in Private Sector Plans. Given that Social Security uses a HIGHER reduction (6%) it’s difficult to conclude that it is not reasonable. But again, Mr. Bury’s input is welcome.

        (7) “Moreover, even in this questionable example, can we assume the policeman contributed about 7% of salary to pension, and the private sector guy contributed 6.2% (up to the $127,000 limit), so the take home pay of the taxpayer was higher than for the cop? And that in addition to his annuity worth $478,125, the private sector worker would also draw maximum Social Security for the final 15 to 20 years of his life?”

        Let’s address the last sentence first……….

        NJ Police Officer’s do not participate in SS. They neither pay FICA taxes nor receive SS benefits. Our Private Sector worker does (now paying 6.2% of wages up to the maximum wage base). SS is completely irrelevant to the comparison because one side PAYS FOR something THEY GET and the other side DOES NOT PAY for something THEY DO NOT GET.. That being said, with Police Officer wages far greater than average, and and with the SS income-replacement-ratio (Google SS “bend points”) decreasing as income rises, SS provides a VERY lousy “return-on-investment” for higher-income wage-earners and it should be considered an ADVANTAGE to the Police Officer that he/she does NOT have to contribute 6.2% of his wages to SS and can instead invest it on his own, very likely with a better financial outcome.

        Now lets address the first part of you above quote………

        Here, you are short-changing your argument. The correct comparison is that the Police Officer contributes towards their pension while (in MOST cases), participants in Corporate-sponsored single-employer Final-Average-Salary DB Plans do not. I have mentioned that in prior commentary on this subject, and in my original comment above I stated …………. “NJ’s taxpayers who are now responsible for all but the 10% to 20% of Total Pension Plan costs actually paid for by the Officer’s own pension contributions (INCLUDING all the investment earnings thereon). ”

        The 10% to 20% appropriately adjusts for the “time value of money” in terms of the share of the Officer’s total Plan costs actually paid for by his/her own contributions. If we use 15% (the midpoint of the range) and subtract the share of pension benefits associated with his/her own contributions we can calculate another ratio which in words would be……..

        (Taxpayer-funded share of NJ Police Officer pension) / (Employer paid-for share of Private Sector pensions)

        Since the 15 % is a straight (multiplicative) adjustment, the 3.65 becomes 3.65 x (1-0.15) = 3.10 or with full details………..

        (17x25x0.026x150000x0.85)/(17x25x0.015x150000x0.95x(0.05x(65-55)))

        For completeness, we should ALSO calculate another ratio……

        (Taxpayer-funded share of NJ Police Officer pension & benefits) / (Employer paid-for share of Private Sector pension and benefits)

        In my original comment I estimated that the arithmetic sum of the annual cost of the Taxpayer-subsidy towards the Police Officer’s retiree healthcare would be $500k. If I use $350K as an estimate the present value of that cost, the above formula can be modified to determine this new ratio…

        (17x25x0.026x150000x0.85+350000)/(17x25x0.015x150000x0.95x(0.05x(65-55))) = 3.87

        That’s it, 3.87 times………… with all in the pot ……… a comparison of BOTH the pension and subsidized retiree healthcare, including a reduction for the Police Officer’s contribution towards his/her own pension.

        ++++++++++++++++++++++++++++++++++++++++++++++++

        So to repeat what I stated at the end of my original comment:

        “Does any of this extraordinary “generosity” sound necessary, fair to Taxpayers, or affordable ?”

        Reply

        • Posted by S Moderation on November 6, 2017 at 1:04 am

          “And clearly, adding the same constant amount to both the numerator and denominator of that ratio would produce a smaller ratio…… that’s just the way math works. You appear to be pushing to only look at the ratio of their expected LIFETIME INCOMES because you know that do so would produce a lower ratio.”

          Precisely. And you knew that, when you constantly promoted your 3 point whatever MULTIPLE, the opposite is true. Eliminating wages earned increased the ratio. You cannot consider pensions outside the context of total compensation.

          In your example, however, you state that in 25 years, the cop earned a MUCH higher pension, which is true. But in that same 25 years, the private and public workers did not “just” earn their pensions. They earned wages plus pensions, which were not nearly as divergent as your pensions only example. The math is pretty simple…
          Each worked 25 years. In that 25 years, the cop earned a total of $5,407,500. In that same 25 years, the private worker earned $4,228,125.
          That’s $216,300 a year for the cop, and $169,125 for the private sector.

          A 28% difference in average annual “income”

          Sorry, “pensions” in multiple of 3.47, 3.65, or ,5.6 is not a valid comparison of total earnings.

          And even 28% is valid only for this one limited cherry-picked “assumption”.

          “Pensions MULTIPLES higher than the private sector?

          Reply

          • Posted by Tough Love on November 6, 2017 at 1:44 am

            Quoting……………. “Each worked 25 years. In that 25 years, the cop earned a total of $5,407,500. In that same 25 years, the private worker earned $4,228,125.”

            Your 5,407,500 = (25 x $150,000) + my $1,657,500, and

            Your $4,228,125 = (25 x $150,000) + my $478,125

            THEREFORE, you are arriving at your $5,407,500 for the Police Officer and the $4,228,125 for the Private Sector worker by assuming that each had cash wages of $150,000 (NOT just in the FINAL year of employment), but in every one of their 25 years of service. Who earns the same $ wages for 25 years.?

            Boob, idiot, moron, thick-as-shit ? Take your pick.

  5. Posted by Anonymous on November 5, 2017 at 1:58 pm

    Can you recalculate that with both working 35 years and retiring at 55?

    Reply

    • Posted by Anonymous on November 5, 2017 at 5:41 pm

      ¿Qué?

      Reply

    • Posted by Tough Love on November 5, 2017 at 6:29 pm

      Police now retiring in NJ do not receive service credit beyond 30 years, so it makes very little (financial) sense to work beyond 30 years ….unless you expect a VERY large increase in wages (as such wages increases would still act to increase your annual pension).

      Reply

      • Posted by S Moderation Whatever on November 5, 2017 at 7:45 pm

        Can you recalculate that with both working 30 years and retiring at 55?

        (And perhaps provide a source for the average career length of NJ?

        Reply

      • Posted by S Moderation on November 6, 2017 at 9:01 am

        Tough Love…
        “Police now retiring in NJ do not receive service credit beyond 30 years, so it makes very little (financial) sense to work beyond 30 years ….”

        If a policeman retires after 30 years he will get 70 percent of final salary. If he is still fit enough to work, he will get 100 percent… plus overtime, which is often substantial for safety workers. With OT, his take home pay could be twice as much as his pension. That’s financial incentive.

        Reply

        • Posted by Tough Love on November 6, 2017 at 1:18 pm

          Quoting SM-whetever…………

          “With OT, his take home pay could be twice as much as his pension. ”

          True, and while MANY (no, MOST) Private Sector workers in positions that pay the same as Police wages (often $135+K annually) also work overtime, very very very few get anything overtime-pay for doing so.

          Reply

  6. Posted by S Moderation Honestly on November 5, 2017 at 9:50 pm

    Mr. Love…
    Question, since these posts over a year ago, has anyone, ever, come forward to “defend your math”?

    Posted by Tough Love on April 17, 2016 at 1:57 pm

    SMD (and John ,,, see request at the bottom) ……..

    (Yadda, yadda, yadda, assumptions and BS…

    “The non-Safety worker’s pension… is: … 1.50 x 1.25 x 1.33 = 2.49 TIMES greater in value, etc., etc., etc……..

    Safety worker’s pension …  is: 2.00 x 1.30 x 2.00 = 5.2 TIMES greater in value at retirement… etc.)

    “John … as the actuary-expert as well as host/moderator, how about chiming in. If you think I’m wrong please say so, but if you agree that the value-differences I’ve stated above is essentially correct … please state so as well.”

    ………………………………………….
    Posted by PatB on April 17, 2016 at 11:50 pm

    Of the actuaries and accountants who must read this blog, I can remember no one defending your math. Maybe this is the time for them to come to your rescue, for the sake of truth, which there seems to be so little of in public pensions.

    ……………………………………..
    As a side note, if you determined a public sector safety worker advantage in 2016 of 5.2 times and an advantage today of “about 3.65 TIMES” is there really any point in carrying the calculation to two decimal places?

    Biggs… “My point is not that 2 percent is “wrong” and 14 percent is “right,” but rather that there is a range of reasonable answers found in studies of federal salaries…”

    SMH

    Reply

  7. Posted by Tough Love on November 5, 2017 at 11:28 pm

    Wow, 3 MORE comments in a row from Stephen Douglas and his many other handles….

    You seem really pissed off. You should be, because be you haven’t been very convincing ……….. other than to your other handles.

    ****************************

    By the way, I responded to the FIRST (your earlier longer one) of your above comments. I suggest you brush up on basic math concepts.

    Reply

    • Posted by S Moderation on November 6, 2017 at 2:13 am

      It’s just math.
      Any 5th grader can do it.

      Mr. S and Mr. T work for the same boss.

      Mr. S makes $1,200 a week (building maintenance).

      Mr. T makes $1,000 a week (janitor).

      On Friday, boss says, “Sorry, I’m short. I’ll pay you each $900 today and the rest on Monday.

      Monday, Mr. S gets $300. Mr. T gets $100. (Deferred compensation.)

      Mr. T says, indignantly, “Hey! He got 3 times as much as I did!

      Boss says, (patiently) “No, he got 20% more than you.

      1. Learn to change a lightbulb.

      2. Learn 5th grade math.

      C. Stop being so damn rude.

      Reply

      • Posted by Tough Love on November 6, 2017 at 2:33 am

        SM -whatever………..

        Nothing will change the facts nor the math …………especially the angry ranting and raving you are now resorting to because I won’t let you bully me (or the readers) with your financially irrelevant (and often ridiculous) nonsense.

        Reply

        • Posted by S Moderation on November 6, 2017 at 3:47 am

          What “bully”? What “angry”?

          You said it yourself. ..

          ” And clearly, adding the same constant amount to both the numerator and denominator of that ratio would produce a smaller ratio…… that’s just the way math works. You appear to be pushing to only look at the ratio of their expected LIFETIME INCOMES because you know that do so would produce a lower ratio.”

          You’ve been doing it for years. Comparing only the pensions, to exaggerate the difference by increasing the ratio. Sadly, I think you did it inadvertently, then got caught up in your own delusion.

          Yes, sir. I am pushing to look at the ratio of their expected LIFETIME INCOMES.

          Repeat after me… You cannot compare pensions outside the context of total compensation.

          Maybe Rex the Wonder Dog can explain it to you.

          Reply

          • Posted by Tough Love on November 6, 2017 at 1:09 pm

            SM-whatever………..

            Try to “think” for a moment ………..

            Two people with COMPARABLE experience, educational, knowledge, and skills, (A) the Police Officer and (B) a comparably situated Private Sector worker BOTH make the SAME wages over a 25 year career and will retire at age 55.

            Using the figures developed in the above calculations………

            (B) gets an annual pension of $28,125 (fully paid for by his/her employer) and (A) gets an annual pension of $97,500 (15% of which is paid paid for by the Officer’s own pension contributions), with 0.85 x $97,500 = $82,875 the responsibility of NJ’s Local Taxpayers.

            In addition, (A) gets a Local Taxpayer subsidy towards his/her retirees healthcare premiums/costs, which if under family coverage, costs Taxpayers about $30,000 annually, while (B) gets nothing from his/her employer ….. the overwhelmingly typical situation in the Private Sector.

            The ratio of what the Police offer annually receives in retirement from the taxpayers, to what the Private Sector worker annually receives from his employer in retirement is ($82,875 + $30,000) / $28,125 = 4..01
            *********************************
            I don’t think that’s OK by a long-shot. The difference is grossly excessive, unnecessary, enormously unfair to Local Taxpayers, and clearly unaffordable.

            You (likely becasue you ARE a retired Public Sector worker), are arguing that that’s just fine and apparently appropriate……… and try to partially explain away the Officer’s 4+ times greater retirement pension & benefits by saying that not a valid statistic to look at.

            Why not ……….. perhaps because it exposes the decades-long financial rape being perpetrated upon Private Sector Taxpayer by the insatiably greedy Public Sector Unions and our Union-BOUGHT Elected Officials that have colluded with the Unions to enable it?

          • Posted by Tough Love on November 6, 2017 at 2:25 pm

            SM-whatever,

            Lets entertain your also-absurd position that calculating and looking at the ratio of Police Officer to Private Sector worker LIFETIME INCOMES makes a meaningful difference.

            Because wages rise over a worker’s career, to simplify the calculation, lets “assume” that each of the workers, again (A) the Police Officer, and (B) the comparably situated Private Sector worker earn 2/3 of their final wages (of $150,000) in each of their 25 years, totaling to 25 x (2/3 x $150,000) = $2,500,000.

            If we assume that each of the workers lives 30 years to age 85 (consistent with current mortality experience and mortality improvements trends), the taxpayer/employer paid-for lifetime payments would be:

            For (A) the Police Officer: $2,500,000 + 30 x ($82,875 + $30,000) = $5,866,250

            For (B) the Private Sector worker: $2,500,000 + 30 x $28,125 = $3,343,750

            Since that’s what you feel is meaningful, the ratio for (A) over (B) is 1.76.

            So what do we see………..

            For 2 workers, a NJ Police Officer and a Comparably situated Private Sector worker with equal experience, education, skills and knowledge, the PRIVATE Sector worker would (receive from his employer) only $1 for each $1.76* that is paid the Police Officer from TAXPAYER funds.

            So there you have it (what YOU wanted to see …. but more correctly calculated).

            The DIFFERENCE in the multiples (4.01 form my above comment and the 1.76 here) is not relevant, being completely unrelated statistics (although I’m sure that you will continue to argue otherwise), and my conclusion in my above comment does not change…….

            “I don’t think that’s OK by a long-shot. The difference is grossly excessive, unnecessary, enormously unfair to Local Taxpayers, and clearly unaffordable.”

            **************************************

            * the 1.76 is UNDERSTATED because while the $82,875 annual taxpayer paid-for share of the Police Officers pension will remain the same in each year (unless COLAs are reinstated), the CURRENT $30K annual premium/cost estimate for the Police Officer’s Retiree Healthcare Coverage will assuredly rise annually.

          • Posted by S Moderation on November 6, 2017 at 2:26 pm

            No sir. That’s not how it works. You are still just comparing pensions* to come up with with your exaggerated comparison of FOUR TIMES, or whatever you’ve mathed up now.

            They each worked 25 years to earn their lifetime income. The lifetime income of one is 28% higher (in your assumed example). What could be simpler,

            Mr. S, give me 25 years, and I will give you $5,407,500… total.

            Mr. T, give me 25 years, and I will give you $4,228,125… total.

            That’s 28% more, not “multiples” of 3,4, or more.

            In this case, with your assumptions, which have nothing to do with actual empirical data, the public sector pension (plus benefits, now) ONLY may well be 4.01 times the private sector P&B. That is what is known as “ignoratio elenchi”. In plain English, as I have tried to tell you numerous times…

            True, but irrelevant.

            If you recall, I never argued with your math. I have always said, your logic is faulty, therefore your math is irrelevant.

            GIGO

            Keep bringing it up, I will keep shooting it down. Which brings up my second question, regarding a post by PatB (BuryPensions, April 17, 2016)

            “Of the actuaries and accountants who must read this blog, I can remember no one defending your math. Maybe this is the time for them to come to your rescue, for the sake of truth, which there seems to be so little of in public pensions.”

            Has anyone, or have they not?

            “Try to “think” for a moment ………..”

          • Posted by Tough Love on November 6, 2017 at 2:40 pm

            SM-whatever,

            It looks like your comment above time-stamped November 6, 2017 at 2:26 pm was in response to my comment time-stamped November 6, 2017 at 1:09 pm, and before I posted my follow-up comment time-stamped November 6, 2017 at 2:25 pm.

            You should read my follow-up comment ……..if for no other reason than that your 1.28 times is incorrectly calculated (my 1.76 being MUCH closer to the actual figures that might emerge).

            It also show the calculation (and comparison) that YOU wanted to see, LIFETIME INCOMES.

            Again………….. “think”.

          • Posted by Tough Love on November 6, 2017 at 2:52 pm

            SM-whaterver.

            The above said ……………Again………….. “think” ……………… I don’t expect to EVER get through to you ………. after 30+ years as a now-retired (CA) Public Sector worker, with decades of greed and entitlement drummed into you by your Unions, you’re clearly hopeless.

            What I am trying to do present facts and demonstrations (SHOWING my calculations so that readers can evaluate for themselves the appropriateness of those calculations) for those willing to read things (without a going-in bias) and looking to better understand the drivers and ROOT CAUSE of the pension/benefit mess now infecting NJ.

            And VERY clearly, it’s grossly excessive Public Sector pension & benefit “promises”.

        • Posted by S Moderation on November 6, 2017 at 4:02 am

          There are a lot of problems with pensions today. Public, private, and global. Your sleight of hand math is distracting from considering real solutions.

          And your attitude. Chill. You are your own worst enemy.

          So sayeth Earth… and his ilk.

          AFK

          Reply

        • Posted by S Moderation Whatever (not whaterver) on November 6, 2017 at 3:21 pm

          A word of caution, if anyone is still following this thread; for “lifetime income”, we keep calculating a 28% advantage*, more or less, for the public employee. That is for this example only, which is entirely hypothetical numbers.

          In real life, most economic studies agree that for “total compensation” (wages plus benefits)…

          The lowest educated, unskilled public workers earn more than they would in the private sector. Wages are nearly equal, but benefits for the public worker are much higher.

          At the highest educated, professional level, public worker wages are lower on average than those in the private sector. They do have generally higher pensions (maybe even the “4 TIMES higher to which Mr. Love refers), but those higher pensions and benefits are, on average, not enough to offset the lower salaries.

          Somewhere in the middle, by definition, is a large cohort of public workers whose total compensation is “roughly equal”.

          I have never seen any serious disagreement with that general spread of wage/benefit comparisons.

          If a large number of public workers earn the same or less in total compensation, their pensions and benefits are, by definition, not excessive.

          There are, as Mr. Love stated, thousands, or tens of thousands, of public workers who literally have pensions three or four times higher than equivalent private sector workers, but their total compensation is lower, or equal.

          Not excessive, not “ludicrous”.

          * now a 76 percent advantage, I guess. TL is till refining the math on the hypothetical numbers.

          Reply

  8. Posted by Earth on November 6, 2017 at 2:27 am

    Earth to Tough Love:

    Eventually, even Surfpuppy/The Wonder Dog figured out that 3%@50 is not 50% more than 2%@50. As I recall, it took him a year or two to finally understand, though I tried to ‘splain it to him many times.

    Given enough time, he will probably figure that 3 times the pension is not 3 times the pay and, is a misleading comparison.

    Hope springs eternal.

    Reply

  9. Posted by skip3house on November 6, 2017 at 9:32 am

    Why & How did we ever get into all this ‘power control’ over everyone’s pensions?
    Social Security is simple. Start there, let each save for retirement at their own ‘pace'(401K,….), and add fair amount to pay in lieu of all this political malarkey.
    For those in this present ‘NJ non-system’, use a formula for present value share of already funded total pensions and set aside in interest account for individual retirements…along with new 401K, SS……
    NJ pay s/b acceptable to public workers who accept it as part of employment agreement over any private offers.
    Work medical same agreement, plus back to private regular Medicare,….at required age. Retirement gap to Medicare individual’s responsibility…supposedly handled by
    above ‘fair amount added in lieu….. .

    Reply

    • Posted by S Moderation on November 7, 2017 at 11:55 am

      “Work medical same agreement, plus back to private regular Medicare,”

      What’s up with New Jersey medical? I’ve seen related articles on John’s blog before. Up the page, TL mentioned $30,000 annual family health care for seniors. In CalPERS, as far as I know, when they say “group insurance”, they spread costs over the whole group, so seniors pay no more than the younger employees. And the costs for younger CA employees are still lower than the young employees NJ.

      If NJ cuts back on healthcare costs, who will be hurt more, public workers, or insurance company’s ?

      Reply

      • Posted by skip3house on November 7, 2017 at 12:28 pm

        I suppose early retired public worker could pay into public medical for ‘awhile’, but up to early retiree to decide what future holds…in my above comment….until aged to pay Medicare premium(plus that 20% AARP/..for costs beyond Medicare

        Reply

      • Posted by Tough Love on November 7, 2017 at 1:03 pm

        Quoting …..

        “If NJ cuts back on healthcare costs, who will be hurt more, public workers, or insurance company’s ?”

        NJ’s PUBLIC Sector Retirees now get (what has been described as) “Platinum+” healthcare, while NJ’s Corporate Private Sector retirees rarely get ANY employer-sponsored retiree healthcare benefits.

        That being the case, should a reduction in that “Platinum+” coverage be looked as the Public Sector retirees “getting hurt”, or more accurately that the financial rape of taxpayers by being forced to pay for benefits (that they do not get) being a bit less?
        **************************************************************

        And FWIW, 2 items in your comment are not accurately/fully described:

        (1) Yes, some gov’t entities include “actives” and “retirees” in one pot and charge the same group insurance premium rate regardless of whether active or retired. That’s a POLICY CHOICE and does NOT reflect (per-participant, separately for each group) the expected level of claims. Insurance companies get a census of ALL participants (including age, sex, etc,) and determine the premium based on that census as well as overall health-cost trends, economic factors, political influences, and past claims experience.

        Essentially, THEY are indeed factoring in the age of each individual because healthcare claim costs rise with age, and the total premium for 2 groups of equal size, will certainly differ if one group has a larger population of retirees.

        When a gov’t entity does NOT charge it’s retirees a HIGHER premium than it’s active workers, it is essential charging too much for the actives and too little for the retirees. As such, if CA groups the actives and retirees together for Premium purposes while NJ does not while proving a similar level of benefits, that would explain why CA”s retiree healthcare premiums look so much lower than those charged NJ’s Public Sector retirees.

        (2) Lots of people/groups (especially Unions) like to bash Insurance Companies as being the “bad guy”. In your above quote, you too did that. If the level of benefits were cut back (say for next year), the insurance company would go through it’s normal process of determining premiums but reflecting a lower expected level of claims. There is nothing sinister going on. It’s no different than a automobile manufacture charging less for an otherwise identical car but with fewer options.

        That being said, some suspect the actions of insurance BROKERS (which are not the insurance COMPANIES) are unsavory, and unnecessarily costing taxpayers more than what’s necessary.

        Reply

        • Posted by S Moderation on November 7, 2017 at 5:17 pm

          “Lots of people/groups (especially Unions) like to bash Insurance Companies as being the “bad guy”. In your above quote, you too did that.”

          Did not.

          Reply

          • Posted by Tough Love on November 7, 2017 at 5:22 pm

            Any “substantive” response?

          • Posted by S Moderation on November 7, 2017 at 6:33 pm

            “In your above quote, you too did that.” (bash Insurance Companies)

            response…

            Did

            not.

          • Posted by Tough Love on November 7, 2017 at 6:37 pm

            SM-Whatever,

            No I was inquiring about all the things that you comment about …… as thought you are knowledgeably on the subject ……. but clearly areOT.

          • Posted by S Moderation areOT on November 7, 2017 at 8:50 pm

            “areOT”

            hmmmm…

            I like it!!!

            thanks.

          • Posted by Tough Love on November 7, 2017 at 10:21 pm

            I saw that after I posted the comment, but I thought that only an idiot wouldn’t know that “OT” was supposed to be ” NOT”, .so I didn’t correct it.

            Not surprisingly, you proved me right.

          • Posted by S Moderation areOT on November 7, 2017 at 11:37 pm

            Ah knowed what this meant, too…

            ” as thought you are knowledgeably on the subject ”

            Still…

  10. Posted by Anonymous on November 6, 2017 at 4:48 pm

    Off topic?

    If this isn’t out of Crispy Creme playbook bit I doubt law enforcement (and teachers) will fall for this crap again?

    And she wants to ELIMINATE ALL double dipping! Isn’t thank what she’s been doing good 8 years or more IF she gets elected Governess?

    http://www.nj.com/politics/index.ssf/2017/11/guadagno_rips_murphy_in_open_letter_as_bad_for_fir.html#incart_river_mobileshort_index

    Reply

  11. Posted by MJ on November 7, 2017 at 3:45 pm

    John can you confirm that teachers in NJ will be paying more for their health care benefits. I thought I read that somewhere or teachers that I know posted it on FB???
    Thanks

    Reply

    • NJ budget chief made a point of bringing up the higher premiums because the NJEA would not fall in line with lesser benefits for teachers:
      http://www.nj.com/politics/index.ssf/2017/10/christie_officials_blame_union_for_13_percent_insu.html

      Seems like a Christie ploy to undermine the NJEA and help his friend Sweeney get reelected.

      Reply

      • Posted by Tough Love on November 7, 2017 at 5:18 pm

        Your linked article twice refers to a NJEA rep pointing out the ….”13 percent more for health coverage next year.”

        To put this in context, if teachers now pay 8% of their wages for health coverage, an increase from 8% to 9% of wages would constitute a 13% increase. They certainly make it sound a lot more substantial, don’t they. It’s ALWAYS a good idea to decipher the words of a Union spokesperson very carefully.

        I’m not sure what teachers now contribute towards the cost of their healthcare and exactly what are the specifics of the proposed increase, but I’d bet dollars-to-donuts that whatever the Taxpayers contribute (on average) to the cost of a Public Sector worker’s healthcare, the average Private Sector employer’s contribution towards their workers healthcare costs is far LESS. Anyone willing to wage otherwise ?

        By looking at it THAT WAY, taxpayers avoid falling into another trap……. specifically, even IF the average Public Sector WORKER contribution was EQUAL to the average Private Sector WORKER contribution, if the Public Sector healthcare benefits are more generous (and they unquestionably ARE) then it remains UNFAIR because per-worker, the Taxpayers are contributing more than what they get from their employers.

        *******************************************************************************

        EQUAL, but not more…… on the Taxpayers’ dime !

        Reply

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