Breaking News: Murphy Acts on S5

It is now up on the New Jersey legislature website* with nj.com reporting:

Conditional veto:

Gov. Phil Murphy said Thursday he’s ready to hand over control of police and firefighters’ pensions — but only if lawmakers agree to some minor changes to the controversial spinoff.

The governor conditionally vetoed the bill (S5) on Thursday, calling for “technical changes” to protect the pension fund and New Jersey taxpayers.

……

Among Murphy’s recommendations are one that would keep the fund’s $26 billion in assets with the Department of Treasury, rather than requiring the state to immediately divest and deposit those funds with the board of trustees.

Under another proposed change, Murphy wants the fund to use the same assumed rate of return for investments as the rest of the pension system. The bill would have allowed the board to set its own rate.

So the problem of physically transferring assets (thus requiring an honest accounting) goes away as does the worry that PFRS actuaries will start using honest actuarial assumptions and demand funding based thereon.

So what does this bill actually do?

.

.

.

*

S5 ScaSa (2R) Transfers management of PFRS to Board of Trustees of PFRS.
Passed both Houses

 

Identical Bill Number: A3671
Last Session Bill Number: S3040   (1R) A99

Sweeney, Stephen M.   as Primary Sponsor
Kean, Thomas H., Jr.   as Primary Sponsor
Johnson, Gordon M.   as Primary Sponsor
Dancer, Ronald S.   as Primary Sponsor
Bucco, Anthony R.   as Co-Sponsor
Oroho, Steven V.   as Co-Sponsor
Murphy, Carol A.   as Co-Sponsor


1/9/2018 Introduced in the Senate, Referred to Senate State Government, Wagering, Tourism & Historic Preservation Committee
2/1/2018 Reported from Senate Committee with Amendments, 2nd Reading
2/1/2018 Referred to Senate Budget and Appropriations Committee
2/5/2018 Reported from Senate Committee, 2nd Reading
3/26/2018 Senate Amendment (33-1) (Sweeney)
3/26/2018 Emergency Resolution (34-2) (Kean)
3/26/2018 Passed by the Senate (34-2)
3/26/2018 Received in the Assembly without Reference, 2nd Reading
3/26/2018 Substituted for A3671
3/26/2018 Motion To Aa (Thomson)
3/26/2018 Motion To Table (Sumter) (50-21-0)
3/26/2018 Passed Assembly (Passed Both Houses) (67-2-7)

Introduced – – 51 pages PDF Format    HTML Format
Statement – SSG 2/1/18 – 4 pages PDF Format    HTML Format
Statement – SBA 2/5/18 1R – 3 pages PDF Format    HTML Format
Fiscal Estimate – 2/22/18; 1R – 5 pages PDF Format    HTML Format
Reprint – – 50 pages PDF Format    HTML Format
Reprint – – 58 pages PDF Format    HTML Format
Floor Statement – Senate 3/26/18 1R – 1 pages PDF Format    HTML Format
Veto – Conditional veto – 15 pages PDF Format    HTML Format


Committee Voting:
SSG  2/1/2018  –  r/Sca  –  Yes {5}  No {0}  Not Voting {0}  Abstains {0}  –  Roll Call
SBA  2/5/2018  –  r/favorably  –  Yes {11}  No {1}  Not Voting {1}  Abstains {0}  –  Roll Call

Session Voting:
Sen.    3/26/2018  –  2ND READING   –  Yes {0}  No {0}  Not Voting {40}    –  Voice Vote Passed
Sen.    3/26/2018  –  AMEND   –  Yes {33}  No {1}  Not Voting {6}    –  Roll Call
Sen.    3/26/2018  –  EMERGENCY   –  Yes {34}  No {2}  Not Voting {4}    –  Roll Call
Sen.    3/26/2018  –  3RDG FINAL PASSAGE   –  Yes {34}  No {2}  Not Voting {4}    –  Roll Call
Asm.  3/26/2018  –  SUB FOR A3671   –  Yes {0}  No {0}  Not Voting {79}  Abstains {0}  –  Voice Vote Passed
Asm.  3/26/2018  –  MOTION TAB MOTION   –  Yes {50}  No {21}  Not Voting {8}  Abstains {0}  –  Roll Call
Asm.  3/26/2018  –  3RDG FINAL PASSAGE   –  Yes {67}  No {2}  Not Voting {3}  Abstains {7}  –  Roll Call

 

 

21 responses to this post.

  1. Posted by Tough Love on May 10, 2018 at 1:41 pm

    Funny ………… the PFRS billed the whole thing as being able to do better investing the Plan’s assets …….. but of course we all know that that was clearly secondary, and what they really wanted was control over benefit and employee contribution levels (NEVER trust a Public Sector Union.. How does that go …. if their mouth is moving, they’re lying !).

    Good call on Murphy’s part to insist on using the same rate are the other Plans…… limits the game-playing BS.

    Reply

  2. Posted by boscoe on May 10, 2018 at 1:50 pm

  3. Posted by Tough Love on May 10, 2018 at 1:52 pm

    Quoting Mr. Bury…………..

    “So the problem of physically transferring assets (thus requiring an honest accounting) goes away as does the worry that PFRS actuaries will start using honest actuarial assumptions and demand funding based thereon.”

    While you may look at it as a positive thing if the PFRS were to start using say 6% (or perhaps even 5%) …………. and while I would certainly agree that such lower rates are more appropriate than the 7% to 7.5% now in play ………….. I wouldn’t agree that it’s a “positive thing”, because it’s another step in the direction of forcing NJ’s Taxpayers to fully fund an UNJUSTIFIABLY GENEROUS pension, 4 TIMES greater in value upon retirement than those of similarly situated (in wages, age at retirement, and years of service) Private Sector workers.

    There is simply no valid justification for this.

    What NJ Taxpayers should instead seek out every possible avenue to VERY materially REDUCE that ludicrous generosity ……. and for all CURRENT workers.

    Reply

  4. Posted by boscoe on May 10, 2018 at 2:30 pm

    My first thought was that there would be a good chance of a Legislative override of this veto, given the overwhelming vote in both houses for the final bill and Sen. Sweeney’s testy relationship with Murphy. But then I saw that the PBA has already bought into Murphy’s changes, so maybe all is temporarily OK. But Murphy’s amendments really do change the bill in a significant way. And they will make it clumsy to administer if the assets remain in the state’s possession while the investment decisions are vested in the PFRS Board of Trustees. Not to mention that the role of the PFRS actuary in setting assumptions is now bound to the State Treasurer’s ongoing role in setting the discount rate for all systems.

    One other thing worth noting: in respect to the ability of the PFRS Board having the power to change benefit levels, the Governor’s language now states that

    “An actuarial certification must be provided by the actuary prior to any enhancement or reduction of a member benefit, including the activation of
    the application of the “Pension Adjustment Act,” P.L.1958, c.143 (C.43:3B et. seq.), showing that such change will not result in an increased employer
    contribution in the current year **and that such change will not impact the long term viability of the fund.”** (my emphasis)

    How do you show that?

    Reply

    • Posted by El gaupo on May 10, 2018 at 3:49 pm

      As a PBA member, I actually give Murphy a lot of credit here. When I first heard of the veto I thought it was some kind of war with Sweeney or him going back on his word. But….. The fact that everything was tight lipped on all sides for the full 45 days is astounding. You did not see any updates on the PBA website or the NJ LOM website since he first days of April. Or from the legislature. It was as if the bill had disappeared. Meanwhile, he was working on these technical changes. And on the day he conditionally vetoes the bill, the PBA and the NJ LOM both applaud him on their websites. I expect Sweeney (due to the support from the PBA) to repost the bill. I believe Murphy and Sweeney talked at length about this at least through their staff and with Colligan. Murphy changes will probably prevent benifits from being enacted unless they are revenue neutral. The real goal from day one for the Pfrs members was/is to get the COLA back. I beleive the retirement age needs to be increased to make that happen and I think that is what you will see. Chapter 78 made 65 the age of everyone else. I would like to see the effect on the system of reinstating cola and requiring members to stay or not collect until 55 or 57. If making those changes does not make the system worse off, there is no reason it won’t pass. After all, Murphy will appoint that 8th board member Long before he is up for re election. For the league of municipalities to commend Murphy, is surprising and a feather in his cap.

      Reply

      • Posted by Tough Love on May 10, 2018 at 5:10 pm

        Quoting …………….. ” I would like to see the effect on the system of reinstating cola and requiring members to stay or not collect until 55 or 57. If making those changes does not make the system worse off, there is no reason it won’t pass. ”

        We discussed this before (but now your suggesting 55 or 57, when earlier you were suggesting 57. Have things implied ???) I did a rough calc the last time we discussed this, and if I recall correctly, it would require moving back the current AVERAGE retirement age by 6 years (WITHOUT larger pensions resulting from that pushback in age).

        Clearly your suggestion isn’t financially “neutral” because (a) 55 or even 57 is certainly NOT 6 years older than the current average retirement age, and (b) I’m sure you intended for the Officers’ pensions to continue accruing additional benefit during those additional years.

        Anything other than financially “neutral” means the system would be “worse off”
        Bottom line, your suggestion isn’t even remotely close to NOT making the system “worse off”

        Reply

        • Posted by El gaupo on May 10, 2018 at 5:45 pm

          Your opinion. I would prefer the actuary actually assigned to the PFRS board to do the study and not trust someone who hides behind a keyboard and doesn’t even say what she does for a living. You simply claim to “know a lot about pensions”. Sorry, based upon the whole of your comments (see below) excuse me if I don’t take your word for it. IF it six years then we make it six years.
          I noticed your super quick to point out when a cop fucks up—like the conv store out west and make snarky comments but as I said before you are totally MIA when a good story comes out. Roselle Park mooche…I mean cops pull man from burning car. Or tragic ones. Deputy shot and killed responding to domestic call about cat. You honestly fail miserably at trying to be even in that regard. You let your jealousy (I honestly don’t know what other word to use)over my pension benifits affect how you view people performing the job. To just make snarky comments when one cop fucks up(like you or other private sector champions of all that is good never ever do) and not comment the other way says an awful lot about you as a person. I honestly beleive you suffer from the dunning-Kruger effect.
          If you are so concerned about my benifits why the fuck don’t you run for political office? Or maybe you should’ve joined me on the force?
          Either way, it is going to take years if not another decade or so for anything major to change against pfrs. I’ll be retiring in 2-7. With $26B in there and no sign the towns will stop funding, we both know I’ll be just fine thank you. I have cut back my commenting on here because quite frankly, it is the same back and forth and it gets tedious and boring and will not change any of your positions even a little to hear a contrasting voice. Hate on me if you feel like it, I see no point in continuing to regularly converse with folks who just ridicule me.

          Reply

          • Posted by Tough Love on May 10, 2018 at 8:07 pm

            El gaupo,

            Quoting ………….. “I noticed your super quick to point out when a cop fucks up”

            I’m also quick to praise them, as I did for the way they handled that A-hole PA Commissioner on the Palisades Parkway (or 9W ?).

            And speaking of … “quick to point out when a cop fucks up”

            Here’s an LA Police Officer who I hope goes to jail and loses a LARGE portion of his pension (phony Disability):

            https://www.nbclosangeles.com/news/local/Retired-LAPD-Officer-Pleads-Not-Guilty-Insurance-Fraud-482113361.html
            ————————————–

            Quoting …………. ” IF it six years then we make it six years.”

            Oh how NICE of you, considering that even IF 6 years would be cost-neutral, if you’re already retired (or grandfathered so the additional 6 years wouldn’t apply to you …….. as is likely given how close you are to retirement) you won’t get the downside (having to delay collecting to an older age) but would get the upside (the COLA).

            And please …………. Public Sector workers NEVER want cost “neutral”. They want stuff with a value far above what it costs them (sticking the Taxpayers with the bill for the balance).
            ———————————-
            Quoting ………… “If you are so concerned about my benefits why the fuck don’t you run for political office? ”

            I’d never win because I would be calling for a pension freeze (or material reduction for future service accruals) and benefit reductions (e.g., retiree healthcare). You see, MY reference point would be ……. what do comparably experience educated, skilled, and knowledgeable PRIVATE Sector Taxpayers typically get in wages, pensions, and benefits ……. NOT, what do the surrounding towns (who ALSO overcompensate their Police Officers) grant in wages, pensions, and benefits. It gets back to …”Got a problem with EQUAL?”

            The Unions would pull out all stops to make sure I wasn’t elected. Here’s an interesting story I was told by someone running for the first time for a Town Council position. Like everyone else running for Office, he was looking for support wherever he could find it. The local PBA want to meet and discuss issues of concern to them. Here’s how it went down. Once only he and the Local Police Union guys were alone, they SPECIFICALLY STATED …. let’s cut to the chase, are you with us or against us. No “issues” needed to be “discussed”, only FOR or AGAINST, period. NOTHING else (like ISSUES important to the town) mattered. My fiend told me he was quite surprised at how blatant they were.
            —————————————————————————–
            Quoting ……. “Roselle Park mooche…I mean cops pull man from burning car. ”

            YUP (jJust saw it. on TV), that was something ……. bravo for the 2 Officers. Too many people are called “heroes” for doing things that aren’t really heroic*. Those Officers certainly were hero’s because that car could have exploded at any moment.

            * here’s a good example. Sully Sullivan wasn’t a hero for landing that plane in the Hudson River. That part was just great skill, good decision-making, not freaking out (and of course saving his own life). But I my eyes, he became a hero because he was last out of the plane after twice checking to make certain it was empty ……… as it could have sunk with him in it.
            —————————————-

            Quoting ……….. “With $26B in there and no sign the towns will stop funding, we both know I’ll be just fine thank you.”

            I’d agree that it’s more likely than not, but it’s $26B in assets vs about $55B-$60B in liabilities if PROPERLY valued, and Mr. Bury seems to believe a significant share of those assets are in illiquid “alternatives” that are way over-valued. Personally, I think you’ll be OK as long as the market doesn’t tank. If it does (and with an 8-year Bull-market, a major correction wouldn’t be a big surprise), you’re Plan is toast. Remember, the actives are going to want their contributions back rather than it all going to pay those already retired.
            ————————-

            And don’t be ridiculous. I don’t hate you or any other Public Sector workers ……… although it should be easier to fire the incompetent & lazy (and more aggressively pursued). What I DO advocate against is what I believe to be significant over-compensation of NJ’s Public Sector workers (primarily via ludicrously excessive pensions and retiree healthcare benefits)………. and with that over-compensation being the MOST egregious for NJ’s Police.

          • Posted by Tough Love on May 11, 2018 at 2:25 pm

            Good decision ………… Newark LOE DENIED a ridiculous attempt to get a Disability pension….

            http://nj1015.com/nj-cop-tried-to-get-disability-pension-after-using-gun-in-road-rage/

    • Posted by Tough Love on May 10, 2018 at 5:18 pm

      Quoting Boscoe …………

      “not result in an increased employer contribution in the current year **”

      Current year ONLY ? It should be 5 years. It’s WAY too easy to massage the numbers so as to not have to increase contributions for 1 year. It would be a heck of a lot harder to do so for 5 years.
      ————————————–
      Quoting Boscoe …………

      “and that such change will not impact the long term viability of the fund.”

      That’s a completely undefined set of words……… meaning the politicians could (and WOULD) interpret it in a way that support their desired goal.

      Reply

  5. The public workers pension system needs to switch to a 401K – just like the federal government did. Public workers already receive salary and benefits way in excess of the privat sector . The unions should also not be allowed to give any money to any politician.

    Reply

    • Posted by El gaupo on May 10, 2018 at 11:08 pm

      What would you do to keep your mid level police officers from leaving and taking their 401k with them after you paid good coin to train them? The average private sector person has how many different employers in their career?

      Reply

    • Posted by Tough Love on May 10, 2018 at 11:48 pm

      Barbie Jenkins,

      The current Retirement Plan for Federal employee includes a DB Plan (with a 1% formula-factor for Non-Safety and I believe 1.7% for Safety). It also includes a very modest DC Plan. The above applies to all Federal employees hired since 1987, and is MUCH LESS generous than almost all State & Local Public Sector Plans.

      Public Sector “wages” are (on average) somewhat below those of comparable Private Sector workers ……….. specifically, by 4% in NJ per the AEI Compensation Study.

      However, when Public/Private Sector Total Compensation (wages + pensions + benefits) is compared, the advantage shifts to the Public Sector, and often by a VERY large amount. In NJ, the Public Sector Total Compensation ADVANTGAE (for all workers taken together) is 23% of pay, increasing to 33% of pay if the value of the greater Public Sector job security in included …. also per the AEI Study. Also noteworthy is that the 23% and 33% would assuredly be even higher had Public Sector Safety workers (with MUCH greater than average wages, and with the richest pensions & benefits) NOT been excluded from the AEI Study.

      Lastly, I wholeheartedly AGREE with you that Public Sector Unions “should also not be allowed to give any money to any politician.” Clearly, a LARGE part of the reason politicians do the Union’s bidding, is due to the Union BRIBES disguised as campaign contributions.
      ——————————–

      And responding to El gaupo,

      What would we do? Try to figure out how much we could LOWER Taxes or fund WORTHWHILE projects now that we would be freed form the Public Sector DB pension NOOSE now around the taxpayers’ necks.

      Reply

    • Posted by Stephen Douglas on May 11, 2018 at 12:23 am

      Ironically, even though federal pensions are “MUCH LESS generous than almost all State & Local Public Sector Plans”, their total compensation is MUCH higher. Funny how that works. It’s almost as though it would be invalid to compare pensions outside the context of total compensation.

      According to Biggs and Richwine, “Compared to similar private sector workers, we estimate that federal workers receive a salary premium of 14 percent, a benefits premium of 63 percent, and extra job security worth 17 percent of pay. Together, these generate an overall federal compensation premium of approximately 61 percent.”

      Makes that 33 percent advantage look like a rounding error.

      Reply

      • Posted by Tough Love on May 11, 2018 at 12:59 am

        I am far less familiar with Federal worker compensation, and while it may indeed be excessive, it seems farther removed as it doesn’t show up in my Property tax bill nor does it get rubbed in my face almost daily, as it DOES by seeing Local Police on their cells phone while directing very minimal traffic at constructions site ………….. for $125/hr (with a 4 hour minimum).

        And ………………. didn’t your mama tell you that 2 wrongs DON’T make one right?

        If Federal compensation is excessive, it should be addressed…….. as MUST the the excessive compensation of State & Local Public Sector workers.

        Reply

      • Mom, Dad, the whole village… but that’s irrelevant. I don’t even know how your train of thought took you there.
        The salient point, clearly, was that, even though Federal _pensions_ are lower than most state and local plans, this is another clear example showing that, stop me if you’ve heard this before…

        It is invalid to compare pensions outside the context of total compensation.

        Don’t be invalid.

        Reply

        • Posted by Tough Love on May 11, 2018 at 2:42 am

          I agree with you that Total Compensation (wages + pensions + benefits) is the correct Unit for comparison, and most of if my recent posts (many with NJ Police Officer El gaupo) are about NJ Police pensions, and with NJ Police WAGES (alone) being GREATER than comparably educated, experienced, skilled, and knowledgeable Private Sector workers, comparing only pensions (or pensions + benefits) UNDERESTIMATES the extent of the NJ Police Office Total Compensation advantage.

          Think about that for a few moments and perhaps a light bulb will go on.

          (Pun intended).

          Reply

  6. Posted by Earth on May 11, 2018 at 12:27 am

    Earth to Douglas:

    ¡Wow! déjà vu?

    Reply

  7. […] only video reaction so far to the conditional veto of S5 is a minute from John Reitmeyer of njspotlight.com: . . The problem […]

    Reply

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