Job Number One

The Sunlight Policy Center released another report yesterday blasting the New Jersey Education Association (NJEA), this time for their complicity in the bankruptcy of the retirement system that included a helpful history though I disagreed on a couple of points.

Unsurprisingly,the NJEA blames it all on the state: “The state’s failure to fund its share of pension costs is the only reason for [the] pension crisis faced by the state.” (page 6)

That wold be true if the state and localities were (a) provided with honest contribution amounts to fund the benefits being promised, and (b) had to put in the money. There would absolutely be no crisis if the state and localities were to put in annual contributions of $15 billion (to start).

Unions don’t object to the underfunding because they know the law protects their pensions no matter how bad the situation gets.

COLAs too?

The NJEA Flips the Legislature. In one of the more remarkable feats of political power in modern New Jersey history, the NJEA showed its enormous political clout when newly elected Gov. James Florio revived the idea of shifting responsibility for teacher pensions to school districts. After a New Jersey Supreme Court ruling mandated increased state aid to poor districts, Florio sought to raise taxes and devise a new school funding formula while relieving the state of the teacher pension burden as part of the 1990 Quality Education Act. NJEA President Betty Kraemer highlighted why the NJEA feared such a shift: “In a few scant years, increasing pension costs will eat into the dollars available for programs in schools. Local property taxes will have to rise to sup-port programs.” When Florio and other Democrats enacted the pension shift and subsequently moved tax dollars from state education aid to property tax relief, 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.As noted in a national news report, “Most observers said the NJEA played the biggest role in turning Democratic majorities in the Assembly and Senate into veto-proof Republican majorities.” The pension shift was postponed and ultimately repealed. (pages 15-16)

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 19)

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, did both—they gave the NJEA what it wanted on retiree benefits but did not spend the money to fund them. Sure, the NJEA made some noise at rallies and in the press and filed a few lawsuits, but until 2015, it never directly punished lawmakers for underfunding the way it punished them for trying to shift pensions to local districts, cutting state education aid, or reducing benefits. Instead, during the time that pensions were being shortchanged, both incumbents and NJEA-endorsed candidates were elected at extremely high rates. (pages 26-27)

33 responses to this post.

  1. Posted by Anonymous on June 18, 2019 at 10:36 am

    Which one of these is not like the other?🎶🎶

    Sunlight Policy Center of New Jersey
    California Policy Center
    Nevada Policy Research Institute

    None. They’re all the same.

    But…
    The irony…

    “Exactly why the group is working to stir public opinion was revealed in a 2015 lawsuit: Transparent California was started by a Las Vegas-based political think tank, called the Nevada Policy Research Institute, and the Tustin-based California Policy Center. The two groups had a falling out over money in 2015, resulting in litigation. In court documents, the organizations were candid about each other’s shared goals. ”

    “NPRI was described as a group undertaking “efforts to persuade public sector union members to leave their union.” CPC was described as being out to “diminish the power of moneyed interests, especially public sector unions, which use their political power in California to implement policies that are counterproductive to prosperity.” 
    ( https://www.eastbayexpress.com/oakland/not-transparent/Content?oid=8366147 )

    Who ya gonna call? UNION BUSTERS!

    Not that there’s anything wrong with that.

    Except, when CPC was described as being out to “diminish the power of moneyed interests, especially public sector unions, they meant “those other” moneyed interests.

    Reply

  2. Posted by Tough Love on June 18, 2019 at 10:58 am

    Not surprisingly, Stephen Douglas (a Retired CA Public Sector worker – posting as Anonymous) doesn’t miss a beat to pan the Report simply by not agreeing with the group publishing it …… but NOT by challenging even one fact presented, or the Report’s conclusion.

    Isn’t THAT what’s important…………. the accurate reporting of information materially impacting NJ’s Taxpayers?
    ————————————————

    I read the entire Report, and portions of 3 others from the Sunlight Policy Center that can be found here:

    https://sunlightpolicynj.org/policy-issues-category/the-taxpayer-funded-njea-political-machine/

    The most effective way for NJ Taxpayers to short-circuit such underhanded NJEA actions, is for to the State to end dues-collection from NJEA members. The State of NJ should not make it so easy for the NJEA to use Taxpayer-sourced money AGAINST the best (or even reasonable) interests of NJ Taxpayers.

    Reply

    • Posted by E on June 18, 2019 at 12:46 pm

      Hmm….. isn’t all of the teachers income taxpayer sourced money?? Should they check you before buying a house or car so you can give approval?
      Lol. A joke. Once the check clears, the money is no longer the taxpayers money. Just like the car dealership for sells the town the police cars and Dpw trucks. That’s no longer your money once the check clears. And the dealer can choose to spend it however he sees fit. He can even use that money to lobby for car dealerships, and interests that may not align with you!!

      Reply

  3. Posted by Anonymous on June 18, 2019 at 11:15 am

    Yes, of course, the unions were “complicit”. Sometimes shockingly so. (in Connecticut, unions also blamed the state for underfunding, but it turns out Conn. has a law that the state could not underfund without explicit (signed) approval from the union.)

    Don’t entirely blame the unions, though. The state was absolutely negligent. For decades. In many states, the big problem was mainly rosy projections. In NJ, IL, KY, they didn’t even fund the minimum. Union or not, that is unacceptable.

    I’m sure most of what was in the Sunlight Policy report was near-true. But what they didn’t cover… Unions were “greedy” (that’s their job, and the question is, today, are teachers pay and benefits excessive?) If so, is that the “reason” NJ is sooooo underfunded today.

    Or is much of the underfunding due to pension plan losses in the Greatest Recession, reduced revenues from same, and the lowest interest rate environment in our lifetimes. Because the NJEA did not cause that. Look up “global pension crisis”. NJEA did not cause that. Better governance could have abated it.

    Pension reform is a real thing. We need it. Most of us know what needs to be done. What should have been done twenty years ago, with 20/20 hindsight. And yes, especially for NJ, it will involve pension reduction. It’s simple, but not easy.

    Beware believing too much in “Sunlight”. They have an agenda. Their backers were for busting unions before union busting was even cool. The “pension crisis” is a convenient tool. LOOK WHAT THOSE UNIONS DID TO YOU!!!

    Never let a good crisis go to waste.

    Reply

    • Posted by Tough Love on June 18, 2019 at 11:58 am

      Quoting …………

      “I’m sure most of what was in the Sunlight Policy report was near-true. But what they didn’t cover… Unions were “greedy” (that’s their job, and the question is, today, are teachers pay and benefits excessive?) If so, is that the “reason” NJ is sooooo underfunded today.”

      (1) “near-true” ??? As you would say …. data please. “Near-true” suggests that ou believe it’s NOT really true. State exactly why ……. IF you can.

      (2) Yes GREED is a VERY major contributor to the underfunded status of NJ’s pension Plans because it was that GREED that let to Plans that were simply TOO GENEROUS to be affordable, and thereby fully funded. If NJ’s pension Plans were EQUAL in generosity to that of Plans commonly granted Private Sector workers (meaning 1/3 to 1/6 as generous as Public Sector Plans when taking into account not only the “formula benefit” but ALSO the MUCH more generous Public Sector Plan “provisions” such as VERY young retirement ages), ACTUAL Public Sector Plans contributions may have been sufficient to FULLY fund them. Bottom Line….. Public Sector Union/worker GREED is indeed a MAJOR contributing factor.

      Reply

  4. Posted by Anonymous on June 18, 2019 at 11:24 am

    Stein’s Law, “If something cannot go on forever, it will stop.” … 

    A truly “unsustainable” pension plan cannot go on forever with a negative cash flow. That’s math.

    Teachers (firemen, truck drivers, even El Gaupo) will stay on the job even if their pensions are reduced. Up to a point. Stein said so.

    Reply

  5. Posted by stanley on June 18, 2019 at 11:25 am

    “Unions don’t object to the underfunding because they know the law protects their pensions no matter how bad the situation gets.”

    I agree with the first part, unions don’t object to underfunding. I doubt if anything is important to union officials other than continuing to collect dues and take home their high salaries and benefits. That was the case (IMO) with the MEP funding over the years. Surely union officials were aware that pension promises were not getting the necessary funding to insure long term performance.

    Reply

    • Posted by Anonymous on June 18, 2019 at 11:59 am

      Marginally aware. It’s complicated.

      https://www.forbes.com/sites/ebauer/2018/12/03/understanding-the-central-states-pension-plans-tale-of-woe/#7880edb26c10

      There were a number of factors, some evident, some unforeseen… and unstoppable.

      “How did you go bankrupt?” Bill asked.

      “Two ways,” Mike said. “Gradually and then suddenly.”

      Ernest Hemingway, The Sun Also Rises.

      Reply

      • Posted by stanley on June 18, 2019 at 7:50 pm

        When someone says that “it’s complicated” it just means that evasion is on the way. The unions would have been disadvantaged if pensions were fully funded. It would have meant less money available for staff and reduced union dues and smaller union staffs.

        Late life pension and health care benefits have been seriously over promised. I believe that future historians will laugh and shake their heads at the absurd promises. Meanwhile, there will be some very long faces as the troubles surface. Imagine, in a couple of years TWELVE THOUSAND boomers a day will be hitting the retirement bricks and heading off into the sunset counting on those very generous union negotiated late life benefits. Good luck on that one.

        Reply

        • Posted by Tough Love on June 18, 2019 at 8:34 pm

          Quoting ……………..

          “When someone says that “it’s complicated” it just means that evasion is on the way. The unions would have been disadvantaged if pensions were fully funded. It would have meant less money available for staff and reduced union dues and smaller union staffs.”

          (1) lol………….. When the words “it’s complicated”…. come from Stephen Douglas, it’s usually MORE than just “evasion”. Pick from the menu ….. distraction, distortion of facts, omission of material facts, and outright lying.

          (2) I don’t believe FULLY FUNDING Public Sector pensions at the current generosity level was EVER possible. The Taxpayers would have never stood for the taxation never to do so. Hence the promised pensions would have HAD TO BE much LESS generous IF “fully funded”. The Unions realized that, which is why they agreed/ allowed/encouraged the short-funding.

          Of course that left them with the conundrum of … if we under-fund them, then how do we make sure we still get the high benefits promised. That was step 2 in their deceit …. press their BOUGHT Elected Officials to pass Regulations, Laws, and Constitution Amendments to “protect” those excessive promises from reduction.

          Reply

  6. Posted by NJ2AZ on June 18, 2019 at 1:27 pm

    Open ended long term obligations that are extremely difficult to value PLUS parties on all sides with no vested interested in actually valuing them correctly anyway PLUS the assumption that the .gov money spigot has no upper bound. what could go wrong!

    needing someone to blame is pointless. the whole unsustainable scheme is going to have to deal with a reckoning, likely in the next decade.

    To add to the quotes: “Deserves got nothing to do with it”

    Reply

    • Posted by Tough Love on June 18, 2019 at 11:24 pm

      Quoting …………..

      “the whole unsustainable scheme is going to have to deal with a reckoning, likely in the next decade. ”

      The smarter among the Public Sector Union members realize that, but are counting on those 10 years to add to the pot of their PAST service accruals, which will always be a great deal harder to reduce than FUTURE service accruals.

      In addition to shifting all new workers into a DC Plan, what NJ needs to do AT A MINIMUM is an immediate 50+% reduction in the value of FUTURE service accruals for ALL CURRENT workers.

      Sweeney’s proposals (while better than doing nothing) are woefully inadequate to address the HUGE financial mess NJ is CURRENTLY in.

      Reply

  7. Posted by Anonymous on June 19, 2019 at 10:18 am

    “needing someone to blame is pointless.”

    True

    But knowing what went wrong is vital.

    If you think overly generous pensions are the problem, the solution is simple. But there are thousands of pensions which are demonstrably not “generous” at all.

    “Deserves got nothing to do with it”

    True again.

    There is a market. If New Jersey needs pickup trucks, they will pay the market price, or go home empty handed. Same thing with engineers, doctors, truck drivers, CPAs, MBAs, and PhDs.

    Teachers

    Firefighters

    Police

    Actuaries?

    Reply

  8. Posted by Anonymous on June 19, 2019 at 2:57 pm

    Shoot the messenger?

    Damb Unions!

    “The incontrovertible facts show that the NJEA—the most powerful political force in the
    state—had a direct and leading role in creating New Jersey’s pension and benefits crisis.”

    “facts show that the NJEA—the most powerful …single… political force in the
    state”

    (…single…): my opinion

    Sunlight Policy Center

    We know who the NJEA is, and where they get their money. But who is Sunlight Policy Center? And the obvious follow-up question.

    THE SUNLIGHT POLICY CENTER OF NEW JERSEY (SPCNJ) IS A NON-PARTISAN, NON-PROFIT 501(C)(3) RESEARCH CENTER.

    “SPCNJ does not endorse or oppose either directly or indirectly any candidate for public office, contribute to political campaigns, engage in political fundraising, solicit contributions to any candidate’s campaign for office or engage in any activity that may favor or oppose a specific candidate for office.”

    See unbiased in there? Opensecrets.org.: “The broadest classification of political donors separates them into business, labor, or ideological interests. Whatever slice you look at, business interests dominate, with an overall advantage over organized labor of about 16-to-1.”

    SPCNJ is one of many conservative think tanks with the expressed purpose of educating us. Mainly with conservative/libertarian ideals, as in, the right to work.

    Some of the same people who supplied financing and political support for the Janus decision. If you think that was out of some altruistic belief in Janus’ “freedom of speech” or “paycheck protection”, I respectfully disagree. When the unions lose; power, influence, funds, etc. “business interests” win.

    At least temporarily.

    Reply

    • Posted by Tough Love on June 19, 2019 at 4:23 pm

      Quoting Stephen DOuglas ……………..

      “business interests dominate, with an overall advantage over organized labor of about 16-to-1.””

      As YOU always say …………….. Data Please (and NOT from a Pro-Union source).

      And as to the SPCNJ’s conservative bent (if true) …………. SOMEONE has to fight the Public Sector Unions, they being nothing buy a CNACER inflicted upon civilized Society.

      Reply

    • Posted by Anonymous on June 19, 2019 at 6:39 pm

      “Today, the biggest companies have upwards of 100 lobbyists representing them, allowing them to be everywhere, all the time. For every dollar spent on lobbying by labor unions and public-interest groups together, large corporations and their associations now spend $34. Of the 100 organizations that spend the most on lobbying, 95 consistently represent business.”

      The Atlantic, Apr. 15, 2015
      ————————————–
      https://www.brookings.edu/wp-content/uploads/2017/01/vitalstats_ch3_tbl10.pdf
      ————————————
      “Finally, labor organizations like the AFL-CIO, NEA, State Employees Association, and the police and firefighters unions spent a combined $247,660 on lobbying state government in 2014. At 2.4% of total lobbying expenditures, labor unions were outspent by business by a factor of 36 to one.”

      https://www.opendemocracynh.org/odi_lobbying_government
      ——————————————
      “The broadest classification of political donors separates them into business, labor, or ideological interests. Whatever slice you look at, business interests dominate, with an overall advantage over organized labor of about 16-to-1. Even among PACs – the favored means of delivering funds by labor unions – business has a close to 7-to-1 fundraising advantage.”

      https://www.opensecrets.org/overview/blio.php
      ——————————————-
      It’s only logical, like Willie Sutton said, That’s where the money is.

      And, a lot of the money unions do spend, is fighting back against corporate attempts to neuter the unions. As the man said: playing defense, and not very well.

      Reply

      • Posted by Tough Love on June 19, 2019 at 7:48 pm

        Quoting Stephen …………….

        “Finally, labor organizations like the AFL-CIO, NEA, State Employees Association, and the police and firefighters unions spent a combined $247,660 on lobbying state government in 2014.”

        Stop for a moment and give that figure of $247,660 for those GIANT Union organizations.

        Does it make ANY sense whatsoever? Perhaps it supposed to be $247 Million (which might make a great deal MORE sense).

        And It’s hilarious that you didn’t even “blink” and re-posted such a ridiculously low figure. But then again ………. your job responsibilities included changing light bulbs ……. so I guess we shouldn’t be too surprised.
        ———————————-

        Somewhere in that 30 page SPCNJ study, I recall reading that the NJEA ACTUALLY spends 10 times what they report, so comparisons of Union/Corporate spending are likely WAY off.

        Reply

    • Posted by stanley on June 19, 2019 at 6:57 pm

      “When the unions lose; power, influence, funds, etc. “business interests” win.”

      The state of your knowledge is quite primitive. You have time on your hands. Do yourself a favor and at least learn the basics of the productive process and also the failure of socialism. There is both theory and practical examples galore.

      I don’t think you want to know. You want to support your mistaken ideas. The irony of your post is that unions harm their own members as well as others. Unions aren’t the only infection but they are a major one.

      If the government were out of health care and education, we would see some great advances in both fields.

      Reply

      • Posted by Anonymous on June 19, 2019 at 9:54 pm

        yay?

        Free advice! I will give it all the consideration it deserves. Someone asked me once where I got the nerve to disagree with a PhD. (Andrew Biggs, in that case, and not just your run of the mill PhD, it’s safe to say he is one of the most recognized pension experts in the world.)

        It is true my official education stopped at Bachelor’s degree. The nerve!

        As it happens though, there are other equally educated, well respected experts who also disagree with Mr. Biggs, so I feel justified in siding with those that seem more logical to me. The irony of your post is you don’t seem to even consider that perhaps it is your ideas that are mistaken.

        For the record, I am not a socialist. Nor a laissez-faire capitalist. Absolute power corrupts absolutely. From either side. Vive dialectic.

        Reply

        • Posted by stanley on June 20, 2019 at 8:16 am

          Logic, the art of non-contradictory identification: I can’t see much of it in your reply. I do see appeal to authority and misuse of the mean. And maybe the appeal to the popular. Epistemology?

          Forget what I wrote about understanding business and the economy.

          Reply

  9. Posted by Anonymous on June 19, 2019 at 9:20 pm

    “Stop for a moment.” That was not contributions, it was lobbying.

    Stop for a moment. Shirley you know that both lobbying and contributions are difficult to track (intentionally so), but numbers like 34 to 1, 16 to 1, 36 to 1, are nothing to sneeze at. Public workers in NJ are, what? 15 percent of the workforce? Only 34 percent of those even unionized, and at most, their dues are one percent of salary, much of that going for union operations. The biggest …single… contributor, but where do you think they can come up with enough dough to compete with aggregate business contributions and lobbying?

    Stop for a moment. Or more. Powerful Public Unions is an oxymoron. Your “opinion” is that overly-generous public pensions are the result of the Union CNACER, and the cause of pension crisis, an unfair burden to taxpayers.

    As yet, you haven’t even convincingly substantiated that opinion. As “I” always say …………….. Data Please (and if you can find an entirely unbiased source, I’ll kiss your but on the steps of the Bergen County Courthouse, and give you half an hour to gather a crowd.

    And don’t call me Shirley.

    Reply

  10. Posted by Anonymous on June 20, 2019 at 12:19 pm

    “Unions don’t object to the underfunding because they know the law protects their pensions no matter how bad the situation gets.”

    Anyone staying current on the crisis should know that is past tense.

    Stein’s law.  “If something cannot go on forever, it will stop.” 

    Good news/bad news. Loyalton CA, instead of a 60 percent cut in pension, will now “only” have a 17 percent cut. (Until the city runs out of equipment to pawn.)

    I don’t know if the union objected to underfunding or not. These may not even be union workers.

    https://www.sacbee.com/news/politics-government/the-state-worker/article231750978.html

    Reply

    • Posted by Tough Love on June 20, 2019 at 7:13 pm

      Quoting Stephen Douglas …………

      ““Unions don’t object to the underfunding because they know the law protects their pensions no matter how bad the situation gets.”

      “Anyone staying current on the crisis should know that is past tense. ”
      ————————————————–
      BullSh**.

      If the Unions REALLY cared about the underfunding, they would do what is eminently “NECESSARY” to free up money to help pay down that underfunding. And THAT would included heathcare subsidy reductions AND a material reduction in FUTURE Service pension accruals for all current workers.

      The Unions are currently fighting even the most minor of such changes.
      ———————————–

      Stephen, even YOU (the ultimate supporter of all-things-Union) can’t possibly believe ……… given the abundant evidence to the contrary based on current Union activities ……….. that what you stated is true.

      Reply

  11. Posted by Anonymous on June 20, 2019 at 7:47 pm

    Calm down and look at the context, please.

    “… the law protects their pensions no matter how bad the situation gets.”

    Stein’s law….

    followed by an article about retirees whose pensions were NOT protected.

    It is the legal protection that is past tense.

    My Dad was a big union supporter (private sector). Not I. We worked in the same town for years in different companies. Mine was non-union. The union representing him tried to get me to help organize my company. I told them to go away. They tried to promise us heaven on Earth, yet my Dad’s pay was barely above minimum wage. Three months later, I was laid off, and another two months the company I worked for closed up shop. The union wasn’t a CNACER, they were just ineffective. Many unions are okay for some things, but certainly not omnipotent, and sometimes downright self destructive. I “joined IUOE with the state, because it was easier than bucking the system, and we got discounts at Disneyland.

    The Sunlight Policy Center claims the union is responsible for the NJ pension crisis. Ed Ring (California Policy Center) claims public unions are responsible for ALL of California’s financial problems.

    I think all of you are exaggerating the power of the unions. They were, however very helpful to me several times. Some claim the public sector doesn’t NEED unions because they already have good legal protections. Don’t be shocked… the state does not always follow employment or safety rules. The union can get some things done that an individual cannot.

    Reply

    • Posted by Tough Love on June 20, 2019 at 8:06 pm

      LOL ……………… I responded to what you DID say.

      If you meant to say something different, you should have done so, and my response (if any) would likely have been different.
      ————————-

      P.S. There IS some value to PRIVATE Sector unions (because they know that demanding too much will bankrupt their employer and put them out of work). The lack of similar restraints, combined with their insatiable greed, regardless of the Taxpayers ability to pay, indeed makes PUBLIC Sector unions a CANCER inflicted upon civilized Society.

      Reply

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