Adding Up All NJ Governments

Garden State Initiative released the “first in a five-part series focusing on the true size of New Jersey’s expansive government, how much is being spent in specific categories and, most importantly, identifying opportunities where it can be made more efficient.”

Their first installment reviews the finances of 1,522 governments (1 state + 21 counties + 565 municipalities + 590 school districts + 88 charter schools+ 257 authorities, boards, and commissions) and comes out with some interesting results.

In general, there’s no over-arching strategy behind how our state takes in $121 billion or spends $117 billion (a surplus overall largely thanks to pension fund investments). In fact, the organic evolution of our government is the product of an iterative, well-intentioned effort by public officials to serve over the course of decades and even centuries. Often these policies, out of inertia, can remain unchanged—even if it is well-past time to. (page 3)

Authorities can issue their own bonds without voter approval and so are often used to finance major projects. (page 7)

The core reason property taxes are so high, irrespective of the cost of government, is that they are really the only major tool municipalities have to raise revenue. Many states provide municipalities additional ways to raise significant revenues, but only Newark currently has a second major tax revenue source, a payroll tax, allowing for a broader tax base in the city. Expanding the tax base across the state could provide a more distributed tax burden, but make it easier for local governments to spend more without corresponding controls. (page 8)

Additionally, the pension systems maintained by the Treasury’s Division of Pensions & Benefits represent a significant portion of transfers, revenues and expenditures in the state when included. The pension system’s revenues (as opposed to transfers into the fund to meet actuarial funding requirements) primarily come from investment earnings. Indeed, the proceeds from pension investment earnings is one of the single biggest revenue lines in the state—and one that is dedicated exclusively to maintaining retiree pension benefits. (page 9)

The 2016-17 audited financial statements of the Division of Pension and Benefits showed the funds to have collectively earned approximately $9.4 billion from investment earnings, fueling the system’s positive $4.5 billion increase in net position. Indeed, the net difference in our headline sources and uses figures are almost exclusively attributable to the pension system’s significant increase in net position for the 2016-17 fiscal year thanks to a strong market. (page 10)

Retiree benefits here not only include retiree pension benefits but also retiree medical benefits. Based on analysis of the New Jersey Pension and Health Benefit Study Commission (to allocate retiree medical benefits as a portion of total medical benefits from municipal and county budgets) and analysis of the state budget’s Appropriations Hand book, an estimate of $1.9 billion in state, $747 million in municipal and county, and $681 million in state authorities appropriations fund post-retirement medical benefit commitments. Retiree benefits are the fourth largest expenditure in the state and are greater than the benefits given to active employees. (page 14)

29 responses to this post.

  1. Posted by Tough Love on January 30, 2019 at 10:31 am

    Wow (quoting) ………….

    “Retiree benefits are the fourth largest expenditure in the state and are greater than the benefits given to active employees .”

    NOTE: If your the TYPICAL Private Sector workers with a 401K Plan and no employer subsidy towards retiree healthcare expenses, once retired, do you know what your former PRIVATE Sector employer’s “retiree expenses” are?

    Answer ……….. ZERO !

    What make PUBLIC Sector workers so “special” that they deserve a better deal ……… on the Taxpayers’ dime ?


  2. TL…it sounds like the current retirees are getting the better deal……..I’m wondering how more is spent on the retirees than the actual publics still working? Does that mean more going out than coming in from current public workers whose contributions are paying for the current retirees?? which begs the question how will current workers be compensated in retirement?

    In glancing at the list of expenditures it appears retiree benefits are 3rd largest expenditure…what am I missing?


    • Posted by NJ2AZ on January 30, 2019 at 11:42 am

      current workers are absolutely paying for current retirees.

      if i were a current PW in NJ i would sue to get out of mandatory pension participation ala Janus and the unions


      • Posted by Tough Love on January 30, 2019 at 11:58 am

        The pension contributions of CURRENT NJ workers go almost entirely toward enabling CURRENT retirees to continue to get the full amount of their (ludicrously excessive) promised pensions even though the pensions of those already retired are VERY VERY materially underfunded. Little to nothing of CURRENT worker contributions is being saved and invested for THEIR retirement.

        Clearly THEY are now being treated as “suckers”-in- the-room …… as have been Taxpayers for many many years.

        The mooching, lying, cheating, stealing, and denying will continue to grow and fester ……. until one day it will simply blow-up, with promises and payments likely halved (and that’s if they’re lucky).


        • Posted by NJ2AZ on January 30, 2019 at 12:00 pm

          Good article that illustrates just how much current teachers are paying for current retirees, albeit in Nevada


        • Posted by Tough Love on January 30, 2019 at 12:24 pm

          THERE are NO “solutions” to NJ’s pension mess (absolutely NONE) that do not include ……as just the 1-st of many needed actions…….. a VERY material reduction in the value* of FUTURE service pension accruals for all CURRENT workers.


          * reduction in “value” via smaller per-year-of-service formula-factor reductions, a significant increase in the youngest age at which one can retire and begin collecting an actuarially-unreduced pension, implementation of actuarially CORRECT early retirement adjustment factors (for those who elect to retire at younger ages), AND of course ………. NEVER allowing COLAs to return.


          • Posted by PS Drone on January 30, 2019 at 4:19 pm

            Now you clearly see that CURRENT RETIREES must have their (mostly) outrageous benefits cut. First, have them pay back the benefits paid to them before age 66 and then reduce the repetitive burden going forward.


    • Posted by El Gaupo on January 30, 2019 at 12:22 pm

      I think you are missing the fact that John points out that retiree benefits include pension and health care benifit expenditures. Active employees are not receiving pension payments and are paying 35% of medical premiums where many retirees are still getting free medical coverages. Many agencies no longer offer medical after retirement to new hires at all. We don’t. And they are not eligible for benefits through chapter 330 in that case. That is a state run pool set up 20 years ago to offer retirement medical benifit s to folks whose municipalities don’t offer it. That option is NOT available for any member of any agency whose employer offered the benifit as of that date. Late 90s I believe. Therefore, if you are not a chapter 330 town now you can not become one.


      • Posted by Tough Love on January 30, 2019 at 12:28 pm

        Quoting ………….

        “Many agencies no longer offer medical after retirement to new hires at all. ”

        The operative word being “new”.
        We DON’T have the money/time to ONLY apply that change to “new” workers.


        • Posted by El Gaupo on January 30, 2019 at 12:55 pm

          Since 2011, everyone except cops must stay until 65. Cops need to stay 30 now. But with no medical after retirement, the de facto retirement age for police/fire will in fact be pretty damn close to 65. At which point Medicare becomes the primary. Many departments still offer it for 35% of premium paid for by the employee . Many though have given it up In The last few years. Some of those (like my agency) has made a deal with current folks to get it done.
          Longevity is also gone for younger employees. Sick time bank etc limited for 2011 and newer. Crap raises. Etc.
          Only time will tell how it all works out. Is jersey city an indicator of the future?? Paterson seemed to find the $$$$ to keep from laying off the cops. Didn’t work out to well the last time. Did it.


          • Posted by Tough Love on January 30, 2019 at 8:09 pm

            You are very coy about WHO those lower pensions and retiree medical benefits that you mention apply to.

            Why not be very clear about it …….. and say that they impacted NOBODY hired before the 2011 …. yourself included.

            Given the very poor financial condition that NJ was in in 2011, they desperately NEEDED TO and SHOULD HAVE applied to the FUTURE Service of everyone …….. including those CURRENTLY employed at the time of implementation.

            And NJ is in FAR worse shape today.


          • Posted by Tough Love on January 31, 2019 at 10:18 am

            El gaupo,

            I just came across an article about how even Republican Congressman are annoyed with Pres. Trump’s bashing of America’s Spy Chiefs. In that article it described Trump as follows:

            “His habit of fashioning a truth that fits his personal prejudices and goals over an objective version of reality ……….”

            I laughed, noting how that sounds A GREAT DEAL how America’s entitlement-minded Public Sector workers twist the truth about their ludicrously excessive pension & benefits.


          • Posted by El Gaupo on January 31, 2019 at 12:24 pm

            🤮🤮🤮 Trump.
            Yuck. I’d venture to say that almost 100% of the “moochers” as you like to call us, have more integrity than that man!!!
            And frankly, you do the same as the “moochers”. You advocate strongly for your position. I don’t think either of us are lying. We just differ on solutions. lol.
            That man tells so many lies, it seems to be his default position.


          • Posted by Tough Love on January 31, 2019 at 2:16 pm

            Quoting El gaupo ……………

            “Yuck. I’d venture to say that almost 100% of the “moochers” as you like to call us, have more integrity than that man !!!”

            I agree with that statement …………….. but NOT because you’re not “moochers”, but because Trump is far worse (sewer-rat comes to mind)

            And yes, “I advocate for my position” …………. but I don’t try to disguise or omit pertinent facts, and twist the truth as is commonplace with entitlement-minded Public Sector “moochers”.

            And “we” don’t just differ on “solutions” (to the pension crisis). Public Sector workers NEVER offer “solutions” that rightfully/financially/materially impact THEM (only the Taxpayers).


        • Posted by El Gaupo on January 31, 2019 at 10:31 am

          Funny how a city “finds” money for the police force (jersey city, now Paterson) when push comes to shove. During Christie’s day, lots of these depts did lay-off. Mostly with serious increases in crime. Eventually the staffing levels were increased. You also had the Camden County PD form and become a training ground. They have been around 6 years now and no other agency is even remotely interested in joining them. But Dana Redd had a law changed on your pal Christie’s last week of service to allow her to collect a MUCH better pension. Right before she started her new $200,000 + job of course.
          Where you err, TL, is assuming that if most or all other PDs took a dramatic hard line approach with their forces that you would continue to have qualified applicants apply for these positions. One only has to look at the education field to find that that is not the case.
          It is quite easy to say “teachers are glorified babysitters”. It is quite another to obtain a masters in the field and become an educater that can make a difference in some kids lives. We saw it happen in red states this past year where they finally had had enough and you see it in NJ where you just don’t have the number of education majors that you did a decade ago. How much of that is a result of Christie hating on teachers? I don’t know. But there is no question he made the average Joe think much less of them as a whole.
          The average person changes careers a few times in their life and usually has a dozen or so different jobs/employers. I don’t think it is folks best interests to have that be the case with teachers or cops.
          Look, I am in the law enforcement business. I hear every damn day (and think myself) from officers how they can’t wait to retire, counting down the months etc.
          If you answer nothing else, please answer how you keep folks in the profession with just a 457 plan and no pension if the salaries are not increased. What would keep the most talented officers in the profession when it make no difference if they left the force with 10 years on or 25/30 years on?? You do realize it literally take YEARS of experience to perform the job at a high level and be in a position where you supervise others.
          That’s why I think TPAF will not be included in pension reform right now. As it is lots of teachers leave the profession. That will only make it worse.


          • Posted by Tough Love on January 31, 2019 at 10:44 am

            Quoting ………..

            “It is quite easy to say “teachers are glorified babysitters”. It is quite another to obtain a masters in the field ”

            Oh please, it’s VERY well known that getting a Masters in “Education” (as MOST teachers do) instead of getting a Masters in a specific subject-field (e.g., Math, Chemistry, Physics, etc) is VERY VERY VERY easy, and essentially a NOTHING but an easy path to a raise.
            Quoting …………

            “Look, I am in the law enforcement business. I hear every damn day (and think myself) from officers how they can’t wait to retire”.

            lol …………… Why wouldn’t they considering how the Taxpayers are responsible for about 90% of the total cost of their ludicrously excessive pensions and FREE retiree healthcare ….. all starting in their early 50s ?


          • Posted by El Gaupo on January 31, 2019 at 11:41 am

            Deflection and NOT an answer to my question. Look. Most times in my job, I already know the answer to questions I am asking people just to see if they are being truthful. Let me be more specific and break it down for you.
            Question 1). In terms of return on investment, we both agree that a masters in education will NOT produce the level of income that others will. How do you propose to curtail the decade long drop in college students choosing to enter the field of teaching and make it a more worthwhile career choice? Especially in light of potential pension reform coming to the TPAF.
            Question 2) you have advocated a hard pension freeze for active and future PFRS members. In light of a decade or so of skimpy (well under 2%) raises with no end in sight to that. How would you curtail an exodus from the profession(which we have seen in certain departments) and still present a law enforcement career as a viable one where someone would want to work for 25-35 years? Remember, it is very easy to change careers in 21 st century America and with no pension, there is nothing keeping someone to “protect and serve”.
            And please, TL, don’t make an total fool out of yourself by suggesting we should all exercise a 2A rights and man a lost. Lol. Like other have done. You seem much smarter than that. Not nicer, but smarter. Lol.


          • Posted by El Gaupo on January 31, 2019 at 11:43 am

            *man a post. Not lost. Haha.


          • Posted by stanley on January 31, 2019 at 2:20 pm

            @El Guapo Uno Birth rates are quite low and the demand for teachers will probably decline. And, your don’t really need years of specialized training to baby sit kids. And a great many engineers like to take time off from their profession and teach school. I’ve had courses from some of them. And, there has always been turnover in the teaching profession. Next to PE and these so-called “studies” programs, it’s the easiest curriculum at college. And, the prospect of summers off is quite appealing to young people.

            It’s a real fool who thinks he can over charge for his services and get away with it longer term. Sometimes they join unions and really press their luck.


          • Posted by Tough Love on January 31, 2019 at 2:52 pm

            El gaupo, addressing your above questions………….

            (1) Primarily because Elected Officials and Unions can’t be trusted, we need to pay for EVERYTHING “earned” in a calendar year IN THE YEAR EARNED … that NOTHING is deferred and grows unfunded for a later generation (that did not benefit from the services provided) to pay for. That means paying ALL Public Sector workers a “fair wage” but VERY little in the way of deferred compensation. And by a “fair wage” I mean one that is comparable to that paid in a Private Sector job requiring reasonably comparable risks, education, experience, skills, and knowledge …… even if in a different field.

            Got a problem with that ? If so, what is it?

            (2) What I “advocate for” is well described in my above response to your question #1….. which addresses WHY the ludicrous level of deferred compensation reflected in PFRS pension & benefits should end. As to “wages” MOST police with 10+ years of service (and high on the longevity “scale”) are paid more in wages ALONE than Comparably situated Private Sector workers who rarely get deferred compensation with even 1/4 of the “value” now TYPICALLY granted Police. That alone justifies my call to hard-freeze their DB pensions and replace them for FUTURE service with a DC Plan with a Taxpayer %-of-pay “match” comparable to what Private Sector workers typically get from their employers (about 3% of pay). Nothing personal, but I doubt that what 15+ year Police bring to the table (education, experience, skills, and knowledge) would enable them to find a job that pays anywhere near their current “wages” ($150K for you) ALONE (and again with VERY little in deferred comp). Commensurate with ENDING the DB Plans, “wages” should be structured as I described in my response the #1 above…. which likely means wage-increases for Officers hire in the last 5 years (after all, you older/long-service Officers are now screwing THEM to keep YOUR ludicrously excessive pension & benefits).

            If over time ALL Police Departments move the VERY FAIR compensation-structure I described in my answer to #1 above, which would include annual raises comparable to those in the Private Sector, I don’t see a hiring or retention problem. Those drawn to Police work would STILL seek employment in the profession ….. and the now ludicrous pension/benefit gravy train would slowly be recognized for NEVER having been necessary, just, fair to Taxpayers, or affordable.

            Got a problem with that ? If so, what is it?


          • Posted by El Gaupo on January 31, 2019 at 6:43 pm

            First off, I’m sorry Stanley, the birth rate etc. really not a valid answer to the problem. Also, how does a college kid charge more for his “services” when he hasn’t even chosen a major yet and is considering teaching? I’m not comparing it to other majors. I’m just saying the marked decline in students majoring in education is in fact real.
            Now on to TL.
            1). It appears that teachers may not be getting a “fair wage” based on the FACT that many fewer students are pursuing the profession. Invariably based on supply and demand that should raise the salaries alone. Plus you NEVER even told
            Me what you deem to be a “fair” salary. Which leads me to believe you have no idea what that number should be.
            2) you are correct that most cops could not walk right into another $150K job. Even the handsome one will have trouble making that from an insurance company. You are forgetting that many of us with specialized training could get $100k or more at least though. Most crash inv guys and DRug recognition guys do quite well. $200 and hour and up. Far up for courtroom testimony. If you are deemed an expert in something you can really clean up in the courtroom. Youre most talented investigators would probably have shorter police careers and honk to the private sector.
            But that’s not even my argument. Without longevity I would be at $130k or so. I’m talking about those following in my footsteps. Those folks including those not yet hired will be hampered by very small raises in the future. Many smart younger officers have already taken on a second job. Not career but job. In my small dept we have a real estate agent(who has the gift of gab and does real well) a landscape company owner and a bouncy house owner(kids parties etc) and one who does wiring for trucks/cars on the side. What makes you think that guys won’t go to school for another career while being a cop when they see that they will be 40 years old before they even hit $100k? The wages are better for us than teachers. But if like you advocate the pension is not extended to new hires. What would you think is a fair salary to allow an officer the opportunity to provide for a family in an area where simple 3 bedroom homes go for $500,000 and up?


          • Posted by stanley on February 1, 2019 at 6:07 am

            ” I’m just saying the marked decline in students majoring in education is in fact real.”

            So? Newly minted teachers are not the only source of teachers. There are probably hundreds of thousands of former teachers who with the right incentive can return to teaching. What happens when a great many public employee pensions fail or treat retirees to haircuts? Don’t you think that some will find it necessary to take up paid work again? All won’t become door greeters at Walmart.

            Arbitrary prices including wage and benefit rates are a cancer on the economy. A healthy economy needs the discovery process of the interaction of buyer and seller.


          • Posted by El Gaupo on February 1, 2019 at 10:29 am

            But Stanley. What is that “right incentive” to draw folks out of the private sector, where we should assume that they are rather successful otherwise we really wouldn’t want them teaching our kids, and does that incentive include a pension on a go forward basis to either “transfers from the private sector” or future hires?


          • Posted by Tough Love on February 1, 2019 at 11:48 am

            Responding to El gaupo’s new question ……………

            No, I don’t know (no can I offer) the exact amount that would constitute a “fair wage”. But is it not sufficient to describe it as I did in my earlier response to your questions 1 & 2 ….btime-stamped above at January 31, 2019 at 2:52 pm.

            And after doing so, how about answering MY question following each response?

            Specifically …………… “Got a problem with that ? If so, what is it?”


          • Posted by stanley on February 2, 2019 at 6:27 pm

            “But Stanley. What is that “right incentive” to draw folks out of the private sector,”

            The private sector most likely to give up old teachers is the retirement sector. Surely, this boom will come to an end. Financial values will deflate and business active will decline. Jobless rolls will be the new boom and it will become apparent to all that millions and millions of retirees is beyond this countries’ means. Former retirees will see that teaching is much easier than panhandling on a street corner. And will probably pay better.

            Anyway, education needs to be totally privatized so that some real, effective innovation can lead to better education at drastically reduced costs. American students rank pathetically low compared to the students in other developed countries. But, they rank highest in thinking they are the best students.


          • Posted by El Gaupo on February 2, 2019 at 10:16 pm

            Privatize or better yet move to a blue state like mine where folks give a damn about funding education.


  3. Posted by geo8rge on January 31, 2019 at 11:24 am

    Is Your City Safe From Pension Debt?

    You are safe if your city is Washington DC, or a few other places. Notable for NJ readers is one safe place is Charlotte NC, Honeywell recently announced its HQ moving from NJ to Charlotte. I don’t know if she included state,ect debt in her calculation.


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