Reducing the Curve for NJ Pensions

At last night’s town hall meeting State Senate President Steve Sweeney explained how he sees selling state assets to the retirement system as “reducing the curve” (which sounds better than “shorting the system”):
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Full Q&A on the subject:

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So if this financial advisor values all state assets at $200 billion and they are all put in the name of the retirement system then does that make the plans fully funded thus reducing that curve to $0?

Anyone who trusts these guys doesn’t deserve a pension.

52 responses to this post.

  1. Posted by skip3house on February 14, 2019 at 9:10 am

    When will a real solution…..? Trivial knowledge a measure of achievement?

    Reply

  2. Posted by Tough Love on February 14, 2019 at 12:31 pm

    Sweeney is a confusing guy.

    For someone who has a few GOOD proposals (i.e., reducing the generosity-level of healthcare benefits, and switching new/non-vested employees into a less-generous/cheaper Pension Plan), this fiscal slight-of-hand via including State assets in with Plan assets is ridiculous.

    And it’s amazing that nobody in the audience calls-him-out on it.

    Reply

    • Posted by boscoe on February 14, 2019 at 12:49 pm

      Someone did call him on it. See around 1:00 in the second segment where a woman asks how would the turnpike help the unfunded liability of the pension funds if it can’t be sold. Good question. Bogus answer. (See my comment below.)

      Reply

    • Posted by geo8rge on February 15, 2019 at 5:04 am

      NJ could probably squeeze more profit from monopolies like the Water system and the toll roads. Using Uber-style ‘surge’ pricing on the toll roads could be pure profit. In the UK the city of London instituted something called congestion pricing, which did reduce traffic and created income from local roads. Congestion pricing works kind of like EZ PASS with license plate cameras. The water system is easier, as the experts suggested, just raise the price of water.

      One question, why does EZ PASS still uses those ‘transponder’ things when all they need is cameras?

      As to putting the assets in the pension scheme, I think that is a poisoned gift. My conspiracy theory is currently the state of NJ could just default on the pension scheme in hopes Fed gov would not intervene. If the asset is technically part of the pension scheme the pension could demand increases in tolls and water rates, or just allow maintenance to fall behind as they ‘strip the assets’.

      US Trust vs NJ implies to me that certain contract terms with a state will not be considered an appropriation and be enforced by Fed Gov. If the assets are placed in the pension scheme Fed Gov might also be forced to protect a property right, the income stream from the toll roads or water system. There are many regulated utilities in the US, gas and electric not to mention ports ect, so NJ would not be allowed to set a president by expropriating assets.

      In United States Trust Co. v. New Jersey,[23] the Supreme Court held that a higher level of scrutiny was needed for situations where laws modified the government’s own contractual obligations. In this case, New Jersey had issued bonds to finance the World Trade Center and had contractually promised the bondholders that the collateral would not be used to finance money-losing rail operations. Later, New Jersey attempted to modify law to allow financing of railway operations, and the bondholders successfully sued to prevent this from happening.[23]

      https://en.wikipedia.org/wiki/Contract_Clause#Modification_of_government_contracts

      Reply

  3. Posted by boscoe on February 14, 2019 at 12:43 pm

    What am I missing here? This is either insanity or a crooked sleight-of-hand. An asset deposited in or dedicated to the pension fund is only as good as (1) the asset spins off cash or cash equivalence, or (2) the asset itself is liquid and can be sold for cash or cash equivalence. Dedicating non-cash flow or illiquid assets to the pension fund does nothing to help any future retiree, unless they are talking about paying them with chunks of pavement or building bricks or naming rights. All it does is artificially pump up the apparent holdings of the system and artificially reduce future employer contribution requirements. In other words, making things worse. And Sweeney is either clueless or deliberately misleading to compare this to the lottery dedication. The lottery at least spins off $1billion per year to the fund for 30 years, so its “present value” calculation of $13 billion is somewhat defensible, if ultimately disingenuous.

    The only way a toll road helps the pension system is if (1) it is sold or leased to a private entity who pays for the ownership or operating rights, or (2) if it spins off large amounts of cash in excess of its capital, operating and debt service requirements. The toll road bond covenants require that sinking funds be maintained as a backstop against tolls being insufficient to pay off principal and interest to bond holders. To the best of my knowledge, there are no huge pots of “undedicated” revenue sitting around in the toll roads.

    The situation is even weirder with non-cash generating assets such as state buildings or state parks. They are “worth” what someone will pay to own or operate them. In the absence of that, they do nothing for the financial health of the retirement funds if you can’t invest them and you can’t pay retirees with them. It’s all about the liquidity!

    Somebody please help me out here.

    Reply

    • It’s fraud and if they were to consider the $13 billion value of the NJ Lottery as an asset of the pension in any bond prospectus they might get a letter from the SEC.

      Reply

    • Posted by Tough Love on February 14, 2019 at 1:18 pm

      Quoting boscoe ………….

      ” The lottery at least spins off $1billion per year to the fund for 30 years, so its “present value” calculation of $13 billion is somewhat defensible, if ultimately disingenuous.”

      While the lottery DOES generate about $1 Billion/yr., and that $1 Billion DOES go into Plan assets…………. did you realize that (because that $1 Billion annually was actually paying for needed state expenses that aren’t going away) as part of the total structure of the Lottery transfer, going forward, the state is REDUCING it’s otherwise-calculated pension contribution by the estimated amount of the annual lottery proceeds (leaving enough NEW state money available to pay for what the Lottery proceeds paid for in previous years).

      Bottom line ……… total revenue going into the pension Plans is no greater AFTER the Lottery deal than BEFORE it.

      Reply

      • I would also question if that $1 billion lottery money is really guaranteed with what NJ governments are allowed to do on diverting money.

        Reply

        • Posted by geo8rge on February 15, 2019 at 7:47 am

          I don’t think it is a scam or a charade, the teacher’s pension really does own the lottery. If the lottery is now the property of the teacher’s pension why wouldn’t all profits go to the teacher’s pension for as long as it is owned by the teachers pension? I bet if the state tried to remove the lottery from the pension the NJEA would sue to prevent that and win. Why is the dividend paid by the lottery different than any other corporate dividend from the pension investment? Wouldn’t diverting the profits of property owned by the pension outside the pension be theft? Wouldn’t a state bureaucrat that diverted pension funds, for any reason, be guilty of theft?

          But they will just reduce the payments from the general budget to the pension by the amount of dividend from the lottery so it doesn’t change anything. Maybe. But based on the video of the path to progress tour a consequence of moving monopoly assets, like water and sewer, into the pension scheme is any shortfalls in pension payments can be made up with rate and toll increases. Keeping the assets in the pension scheme means they can also use those assets as political patronage. If the Turnpike were a private company owned by the pension appointing people to various jobs would be much more difficult.

          Reply

          • Posted by boscoe on February 15, 2019 at 4:39 pm

            @geo8rge: For what it’s worth, the Teachers Pension and Annuity Fund does not “own” the lottery. The State Treasury owns the lottery and the Division of Investment in Treasury oversees the investment of Common Pension Fund “L”, the repository of net lottery proceeds devoted to pension financing for 30 years. The assets of Common Pension Fund “L” are dedicated 78.78% to TPAF, 21.02% to PERS (for employees of state institutions), and 1.20% to Police and Fire (again, for employees of state institutions). Whether this turns out to be a scam or charade remains to be seen. My point was only that there is a statutory dedication of net lottery proceeds (after payouts and expenses) for 30 years which represents a known liquid asset stream, barring a collapse in lottery receipts. As opposed to, say, placing Liberty State Park in the pension system and pretending it has a known value to offset accrued pension liabilities.

      • Posted by Anonymous on February 14, 2019 at 1:39 pm

        https://www.nydailynews.com/news/national/ny-news-denver-teacher-strike-ends-20190214-story.html?outputType=amp

        I called it on day 1 of the strike. 3 days and they won by ANY reasonable metric. Wouldn’t have had to come to that if the were paid properly.

        Reply

        • Posted by Tough Love on February 14, 2019 at 2:03 pm

          El gaupo,

          I have no idea if Denver teachers are under or over paid …. or paid appropriately.

          What we DO know is that you your “wages” alone (near $150K annually) for a NJ bedroom community PO are clearly excessive, and when we add to that your absurdly generous pension (anticipating full retirement at age 49) & free retiree healthcare, you are w/o doubt VASTLY over-compensated.

          Hopefully NJ’s Taxpayers will find a way to renege on paying at least 50% of that fat pension & rich benefits.

          Reply

          • Posted by Anonymous on February 14, 2019 at 3:07 pm

            I don’t think you are qualified to determine what my compensation should be. That is between me and my employer. Not you!! Since you neither are a council person in my town or a state elected official, you don’t have any say whatsoever on what my compensation should be. Whether you like it or not. The salaries are obviously not going to be cut, at least before I retire. The PFRS system is relatively safe from any foreseeable cuts for quite some time. The only place you may have a crack is my retiree healthcare, hard though as we negotiated it away for new employees in order to achieve the deal we had. Remember we had it free until Christie, so we had made a deal with the town at their request!!!!
            What kills you the most is that I’ll have all these benefits while you whine like a baby. Sorry, should’ve joined the force. Then you could’ve had all these things too. Just like I should’ve practiced my curve more and maybe I could’ve pitched for the Yankees. Lol. Be happy with what you have TL. Don’t worry about my finances. Thank you very much. Btw—can’t wait to cash in my sick time. Gonna retire early and stay on the books. You know, so I will accrue more pension time. Lol.
            You are sooooooo jealous. Especially of the fat pension. 🤣🤣🤣

          • Posted by Tough Love on February 14, 2019 at 5:48 pm

            El gaupo,

            “Moochers” are a breed-apart, a breed I do not desire to be associated with.

        • Posted by Anonymous on February 14, 2019 at 8:00 pm

          But did you read the part where they are laying off over a 150 people in administration and eliminating bonuses for those remaining and that’s where most of the money will come from……IDK if teachers are under paid in Denver but is sounds like they were relying on bonuses as opposed to raises to retain them in poorer districts, most likely those bonuses will be rescinded after they are “studied” by the “experts”

          I will admit that 1500-3000 a year bonus to work in not the best schools…….no thanks

          Reply

          • Posted by Anonymous on February 14, 2019 at 8:57 pm

            Bottom line is they got the raise they wanted simply because they are so underpaid that there were no qualified teachers available to replace the striking ones. These are important positions. Much more so than whatever TL does for a living. These folks are shaping tomorrow’s minds. She is a bitter jealous fool. Her loss.

          • Posted by Tough Love on February 14, 2019 at 9:40 pm

            El gaupo,

            Do you realize that you have “anger management” issues ……… a very bad trait for a PO ?

          • Posted by Anonymous on February 14, 2019 at 10:36 pm

            “Anger management” issues…I thought you were in finance. Now you’re a psychologist?? Lol. The anger seems to originate from you!! I’ve done a great job on here especially with the language. Wouldn’t you say? All I said was you have no control, nor should you, as to what my compensation package is. Run for office Tough Love. Give it your best shot!!! Reform those pensions. Cut those benefits. Freeze those salaries. Lay off those cops. Lol. You’ve been at non stop for a decade. What a waste of time.

          • Posted by Tough Love on February 14, 2019 at 10:51 pm

            El gaupo,

            From economist Herbert Stein…………

            “If something cannot go on forever, it will stop.”

            ———————

            The overcompensating Police Officers WILL end. For the sake of the betrayed and beleaguered Taxpayers, hopefully that will occur soon.

          • Posted by Anonymous on February 15, 2019 at 7:11 am

            Hey. We agree!!!!!!! It is just the timing is different. We don’t agree at what point. I’ve argued for some time that the next gen of Nj Leo already will be less compensated. Probably to the point where it becomes an issue like Jersey City. Reduced pensions and the end of post retirement health care in lots of towns will help. But the coup de gras will be the 2% cap on salaries annually. It will take time and I’ll be long gone,for the profession will take a hit because of it. In reality the raises will be awful and once the tipping point comes cops will leave. When the can’t afford to raise a family. That is the ultimate indicator of whether one is “overcompensated”. No one except the most ardent anti cop/anti tax fools, like yourself will consider these new kids taking the job now, overcompensated. Perhaps you feel undercompensated as do most folks. Otherwise, outside of mental illness, I honestly can’t see why for any other reason than jealously, the you would be into this topic for well over a decade as simply a commentator on someone else’s thoughts and ideas. Regurgitating the same talking points. Go grab a second job, or travel a bit. There is a wonderful world out there just waiting for you. Volunteer at a hospital or animal shelter. Make your mark there TL. You’ll be a better woman because if it, instead of criticizing folks wearing the badge. One way street. You always have been. Sad.

          • Posted by Tough Love on February 15, 2019 at 12:29 pm

            El gaupo,

            What’s REALLY “sad” is how NJ’s Taxpayers have been financially raped by the Union/Elected-Official cabal, the gross-overcompensation of Public Sector workers being the result.

            And what’s amazing is your sense of entitlement to a compensation level normally reserved for those with FAR greater education, skills and knowledge.
            ———————————————–
            Works for you …………. wearing blinders to the truth/facts and only associating with those of a similar mindset.

          • Posted by skip3house on February 15, 2019 at 12:42 pm

            TL Do you suppose the ‘overcompensation’ is deliberate? Wealthy, who can well afford the tax rates much more, use the critical remarks by the many less privileged to assure ‘Public Workers’ give any ‘benefit of doubt/doubt benefits’ to those wealthy over average taxpayers? Sheriff of Nottingham come to mind…….?

          • Posted by Anonymous on February 15, 2019 at 1:20 pm

            Skiphouse. I delivered flowers for many years early in my career. My experience, and ask any waiter/Tour guide etc., the wealthy on a whole, of course there are exceptions, are more stingy with their dough. I always found I got better tips in southern Bergen county where incomes are not as high than I did in towns like Alpine, saddle river, Allen dale etc.

    • Posted by NJ2AZ on February 14, 2019 at 3:20 pm

      you’re not missing anything, they are just relying on the reality that 95% of people don’t have the smarts to see through the scam.

      Reply

      • Posted by skip3house on February 14, 2019 at 3:26 pm

        Why waste more time beating this dead horse?

        Reply

        • Posted by boscoe on February 14, 2019 at 11:25 pm

          Because this horse is not dead by a long shot. If the Governor is looking into this and the State Treasurer is issuing an RFQ for financial consultants and the Senate President is doing a dog and pony road show touting it, and the public most likely will not get a chance to vote on it, who’s doing the autopsy?

          Reply

          • Posted by Tough Love on February 14, 2019 at 11:35 pm

            At least Sweeney takes questions from an audience.

            I attended one of Gov Murphy’s dog-and-pony shows where the audience had to write down & submit their questions, and Murphy would pick which ones to answer. WAY too scripted for damage-prevention, and what a joke …….. he assuredly would never have answered ANYTHING that I would have asked.

          • Posted by Anonymous on February 15, 2019 at 1:28 pm

            And you would have been to much of a wimp to ask. See the language is so much better.
            Why don’t you admit that you’re just jealous. We all know it. And you don’t like me and my ilk particularly because we can retire early. Well?? Too damn bad.
            You are the epitome of greed…..I hope you get taxed out of your home. Lol.
            Seeing as how you wish bad on me. Maybe you should take up yoga or meditation. It will help you deal with the anger and jealousy issues that you are feeling. Meantime I’m looking forward to blue skies ahead and wish everyone in the best(except you TL, you get what you give)
            You don’t like me and you never have. Even in the beginning when all I did was comment. You came after me personally on here, because you are green with envy. Maybe you got caught speeding? I don’t know.

          • Posted by Tough Love on February 15, 2019 at 2:11 pm

            El gaupo,

            Wow ………. your “anger management” issues are showing again ……….. take a Xanex (but stay off the roads please).
            ————————-

            P.S. ……… and stay off those “nasty” pills or whatever it is that’s feeding that anger …………… and might that be having trouble dealing with the fact that I’m right and that you are unnecessarily/unjustly & vastly overcompensated for the services that you provide.

  4. El Gaupo, you stated that the bottom line is that the Denver teachers got the raises that they wanted but they are eliminating 150 district adm jobs and cutting out bonuses that the remaining staff used to receive

    So you are okay with others losing their jobs and benefits so that teachers can have more?

    I’m not saying the teachers didn’t deserve a raise but at the expense of others?

    Reply

    • Posted by Anonymous on February 15, 2019 at 7:52 am

      Schools have way too much staff that should be drastically pared from Dept of Ed on down. A great many people in this country should be redeployed to serve paying customers. The trough needs to shrink before it sinks us all.

      Reply

      • Posted by Tough Love on February 15, 2019 at 12:35 pm

        Boy does it ever………..

        Watch the 5 man crew needed to fill a pothole in NJ, often 3 watching/supervising and 2 actually doing some work.

        Reply

        • Posted by Anonymous on February 15, 2019 at 1:31 pm

          Yesterday a psychologist. Today a road construction supervisor. Haha. Where did you see this? Did you take video? Or are you just complaining like you always do? Typical windbag!!! Least you’re ripping on someone other than cops for a change.

          Reply

      • Posted by Anonymous on February 15, 2019 at 1:32 pm

        What do you mean redeployed? Are we going to put TL in a position that actually serves the greater good?

        Reply

    • Posted by Anonymous on February 15, 2019 at 8:53 am

      No. I’m not ok w that. But those folks should not bear the brunt of this either. The old boss who takes 7 slices of a pizza pie, turns to the adm folks in this case and says look the teachers are eating your pizza. The answer seems to be that taxes are not at a level to retain qualified teachers. The reality is that the salaries sucked. Those teachers be any metric were not greedy pigs looking for a huge payday. You saw the salaries they make. I don’t begrudge ANYONE for making as much $$$ as they can. That is just the city finding a scapegoat to make the teachers look bad!!! If those spots are essential, they won’t be laid off or they will be hired back. Just like all the cops here were after the crime rates went though the roof in some of our urban areas. That is a tried and true management tactic. Jeez. You strong armed us and now we have to lay off. Total nonsense. You get what you pay for. Every one of these strikes was a direct result of being underpaid. Nothing else. And you should be happy that they can strike. As opposed to HUGE turnover. Not good in a profession that is supposed to be a career decision. Not I’ll duck in and teach for a few years. Experience is very important in any profession. I work in law enforcement. It is paramount to have qualified supervisors and administrators. I can not stress that enough. As opposed to a revolving door. The agencies that have those problems usually have lots of problems with their personnel.
      Others like TL don’t get that. She complains that we are GED heroes and then also complains that the standards are too high thereby justifying high salaries. Huh? Talk about having it both ways. I think the standards should be high as well as the compensation. I also think that bad cops need to be fired and am disgusted by those whose abuse disabilities etc. that would be minimumized with higher standards. I take. Y job seriously and place an importance on dealing fairly with people. I think this job should provide one with a very solid middle class living. Which is what I have. No one would consider me rich. Especially not in NJ. Some fools just are haters. Many have no idea what the job involves or have no idea how much it costs to raise a family in Bergen county. When 3 bedroom split levels are going for half a mil, no, the cops are not overpaid at $120, 000 area for top pay patrolman.

      Reply

      • Posted by Tough Love on February 15, 2019 at 12:50 pm

        El gaupo,

        (1) that GED stuff comes from “Rex”, not me

        (2) I have NOT complained that the standards (for POs) are too high, only that there is a phony police-created shortage of qualified applicants to try to justify the excessive compensation.

        (3) Quoting ………. ” I think this job should provide one with a very solid middle class living”

        Your current total compensation (wages current benefits plus the plus the value of pension & retiree benefit accruals) is +/- $250K/yr. No, you do NOT “deserve” such compensation …..no matter how may times that you claim that you do, or that you “need it” to support your family.

        Reply

        • Posted by Anonymous on February 15, 2019 at 1:37 pm

          To each her own. Whether you think I deserve it or not that’s the package that’s offered to me.
          Does Jason DeGrom deserve his millions, especially since he was entertaining the idea of not giving his best? Of course not. But that’s not for me to decide now is it. That’s between him and his employer. The ONLY ones who get to decide my pay is the elected officials in the town I work for. It really doesn’t matter what anyone thinks I deserve except those folks.

          Reply

          • Posted by Tough Love on February 15, 2019 at 2:17 pm

            Quoting ……………..

            ” The ONLY ones who get to decide my pay is the elected officials in the town I work for.”

            Indeed ………….. the Elected Officials whose favorable votes on your compensation were BOUGHT by your Union with veiled threats and BRIBES disguised as campaign contributions and re-election support.

  5. Posted by boscoe on February 15, 2019 at 3:44 pm

    HOW IS IT that no matter what the original blog subject is, it ends up as an off-topic insult-fest between El Guapo and Tough Love? They highjack damn near every post and they can’t leave put-down unanswered. I can’t speak for the moderator, but as far as I’m concerned it is rude and pointless. This particular subject (asset monetization for the pension system) is important and while it is complex, it is a hell of a lot more consequential than Guapo’s individual circumstances and TL’s one-note horn. Give it a rest you guys, unless this is the posted topic. Please?

    Reply

    • Posted by Anonymous on February 15, 2019 at 4:58 pm

      Bosco- I have rarely come on here,but TL has been posting the same thing for at least 15 years. It’s not unique,it’s word for word the same copy and paste. He’s quite honest a cancer to any blog,but John Bury tolerates because of the low number of followers on his blog.

      Reply

      • Posted by Tough Love on February 15, 2019 at 5:34 pm

        No El gaupo, it’s Public Sector Unions that are clearly a CANCER inflicted upon civilized society.

        And the Elected Officials that sell their votes for campaign contributions (YES, call it what it really is) should be prosecuted for accepting bribes.

        Reply

      • Posted by Tough Love on February 15, 2019 at 5:39 pm

        No, maybe John accepts my comments because I’m knowledgeable on the subject of Public Sector pensions, I add “value” to the discussions, and he understands that the BS coming from Public Sector commentators shouldn’t be left unaddressed.

        Reply

        • Posted by El Gaupo on February 15, 2019 at 6:18 pm

          TL. That comment was not mine. You’re first clue should’ve been when you were called a man. I’ve never done that. (Admittedly, I have called you worse. )As have you….so I offer an olive branch. I will really try to offer you the respect that you deserve as a commentator. And hope you will do the same for me. Perhaps we can sound like the decent people we both are. Truce.
          Boscoe is right. We are hijacking this comment section.

          Reply

          • Posted by Coco on February 16, 2019 at 11:56 am

            Guapo- No response to the olive branch ? Let me give you some advice from one LE to another. Don’t socialize with civilians unless absolutely necessary. You’re superior,a warrior civilians aren’t. End of story.

          • Posted by Tough Love on February 16, 2019 at 12:41 pm

            Yikes Coco, you’ve got an ….”I’m better” mindset.

            Scary.

  6. Posted by Coco on February 15, 2019 at 4:35 pm

    It must be a stellar plan if the regulars on here don’t like it. Full speed ahead !

    Reply

    • Posted by Anonymous on February 16, 2019 at 3:00 pm

      TL- It’s hard not feel superior when I accomplished more than 99% of the population when I was 17 years of age. Don’t be upset,look around the country is filled with lazy,pathetic,weak,obese meatballs who call themselves civilians.

      Reply

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