Here is a look at the Teachers’ Pension and Annuity Fund (TPAF) using valuation report exhibits and without any substantial benefit cuts or cash infusions this is how it will look based on projecting historical data:
NOTES:
- 6/30/20 will certainly show a massive investment loss for the plan year ended
- I do not expect the state to make any more contributions beyond what they have put in so far until the plan gets to pay-as-you-go status some time in early 2024
- Administrative expenses took a jump in PY05 and have increased despite decreasing asset values
Burypensions Blog 
Posted by MJ on April 21, 2020 at 10:23 am
Is anyone in the legislature even remotely concerned about any of this? 2024 is around the corner and after this virus thing dies down it will seem like tomorrow.
SMH
Posted by Rex the Wonder Dog! 🐶🐶🐶🦴🦴🦴 on April 22, 2020 at 1:45 am
The deplete date was 2024 BEFORE the virus, assuming a 7.5% return. Now it is December 2020. Stick a fork in these fat, lazy, over paid dork gov employees/losers, because they’re done…. 🙂
Posted by bpaterson on April 22, 2020 at 1:16 pm
Rex-brutal, just brutal. Teachers are certainly a necessity, nearly all of your epithets are uncalled for. (and i am not a teacher, nor any relative, nor had children in the system) How the heck can you say fat and lazy???????
Posted by Rex the Wonder Dog! 🐶🐶🐶🦴🦴🦴 on April 22, 2020 at 5:12 pm
Rex-brutal, just brutal. Teachers are certainly a necessity, nearly all of your epithets are uncalled for. ..
Come on BP, this is the Internet, it was invented for anonymous trolling 🙂 🙂 🙂
🐕 🐕 🐕
Posted by E on April 21, 2020 at 10:35 am
Off topic: Kim Jong-un sick after cardiac procedure. 36 yr old obese smoker has been overworked and has been sick last month or so.
BULLSHIT!!!!!! He has Coronavirus….you heard it here first. Keeping it under wraps because they corrupt country.
Posted by Very Sorry to Report More Bad News on NJ Public Pensions – Sunlight Policy Center on April 21, 2020 at 11:51 am
[…] bad is it likely to get? BuryPensions looked at TPAF and accounted for the anticipated substantial investment losses as well as the […]
Posted by Eric on April 21, 2020 at 12:01 pm
MJ
I am sure that New Jersey is looking for a federal bailout, as is the State of Illinois, which Illinois included, in a somewhat hidden proposal, pension funding assistance by the feds.
Eric
Posted by Tough Love on April 21, 2020 at 12:17 pm
Off Topic ………
In response to n outrageous bailout request from Illinois that included huge amounts unrelated to the COVID-19 Pandemic …….. such as for their worst-in-the-nation Public Sector pensions, Dr Andrew Biggs (the author of the AEI Public/Private SectorCompensation often referred to on this Blog) responded with the following:
Andrew G. Biggs
Personally, I’d give them some help (mostly loans) IF they froze the system and switched all employees to defined contribution plans. But the federal taxpayer shouldn’t prop up gold-plated pensions that most taxpayers themselves don’t have.
————————-
Great idea ………… as LOANS and WITH the freeze.
Same needs to be done in NJ (and CA).
Posted by A on April 21, 2020 at 12:56 pm
Mary Pat Campbell
“The largest single component driving the unfunded liability for these five plans (covering state employees, judges, General Assembly members, teachers [outside Cook County/Chicago], and state university employees) is that the state chose to underfund these pensions. Out of $126 billion in unfunded pension liabilities in fiscal year 2016, $52 billion is due to decades of deliberate underfunding.”
“Many of these aspects are shown in other states, too, but it’s the toxic mix of all of them at once that’s the killer. California’s Calpers, for example, has had an increasing unfunded liability; but they do not allow the deliberate official underfunding.”
Posted by Tough Love on April 21, 2020 at 1:09 pm
It is VERY VERY difficult to fully fund a Public Sector pension whose NORMAL COST (alone) is 5 to 10 TIMES what Private Sector workers typically get in 401K retirement security contributions from their employers.
Yup …….. the ROOT CAUSE of the pension mess is ludicrously excessive pension generosity, and the lack of fully funding isn’t the CAUSE of the pension mess, but a CONSEQUENCE of the real ROOT CAUSE ………. again, ludicrously excessive pension generosity.
Posted by bpaterson on April 22, 2020 at 1:26 pm
yes, like TL, use the proper verbiage: not “chose not to fund”…it was really: “found it impossible to fund”….at least in NJ’s actions. 15 years ago, that decade had the govt giving the public sector raises of 3-4-5-6% annually for years, probably clueless that also collaterally increases the pension obligation the same %s impacting total labor burden costs. And at minimal business expansion back then too. NJ being near the highest taxed state with the worst business climate due to taxation for all these years, one wonders what the other side would expect our elected officials to do? They did what had to be done, shortfall, but disregarding any future plan in place to face the issue created.
Posted by A on April 22, 2020 at 4:16 pm
Every year? I don’t know about New Jersey, but I have posted this before, Figure 2.
Wages/ wage increases are just not determined the same way in public and private employment. They are subject to entirely different influences. (Good place here to insert a snarky union diatribe.)
https://lao.ca.gov/analysis_2007/general_govt/gen_21_9800_anl07.aspx
I believe those raises added up over the years are -almost- equal to CPI increases.
In my experience, public workers often go without general increases for years, (because there just isn’t any money) then -try- to catch up. In California, and some other states, it may be “impossible to fund” pay increases, but pension contributions are required by law.
From a previous Burypension blog…
“Salary growth in state and local government and public education has lagged that of the private sector. Over twenty years, average private sector wages rose by 15 percent above inflation while state and local government pay rose by 8 percent and public education by 5 percent.”
A. Biggs
I don’t know how many other states are like New Jersey (I believe Kentucky is similar) which -requires- full contributions at the local level, but not the state.
Do as I say?
Posted by Rex the Wonder Dog! 🐶🐶🐶🦴🦴🦴 on April 23, 2020 at 2:24 am
In my experience, public workers often go without general increases for years, (because there just isn’t any money) then -try- to catch up. In California, and some other states, it may be “impossible to fund” pay increases…
Dougie, you are either he biggest F’ing liar of all-time, or a complete moron. It is one of the two, because this comment is such BULLSHIT no one, NO ONE, with a working brain could post it as reality …🐕 🐕 🐕
Posted by A on April 21, 2020 at 4:52 pm
Back to the drawing board. More assumptions, more internet math, more errors.
Your figures don’t jive with anybody. They may as well come out of thin air, or… whatever.
According to Biggs 2019 paper, cost of public employee benefits in New Jersey is about 3 times the cost of private sector benefits. On California, it is about 4 times. *
This is not using the human capital format, but statewide averages, so, like BLS data, public compensation -will- be much higher on average. It also includes police and fire, I believe.
Read the report. This one is only 42 pages, with entirely different methodology. There’s more than one way to skin a cat.
A good and interesting read, but for Pete’s sake lay off the math. Data is not your forte. Especially when it contradicts your bias.
Wages are constantly changing in both sectors. Not at the same rate, nor even necessarily in the same direction. What is true today will not be tomorrow, and wasn’t 12 years ago. None of your “demonstrations” would ever pass a peer review.
* In constant dollars and using gradually lowering discount rates.
We don’t need your education.
Posted by Tough Love on April 21, 2020 at 7:04 pm
Quoting Stephen Douglas ………..
“Back to the drawing board. More assumptions, more internet math, more errors.”
When a Public Sector pension has a NORMAL COST 5 to 10 TIMES what Private Sector workers typically get in retirement security (almost always via 401K DC Plans) ….. which they all do…… it is without question excessive.
Your continued arguments to the contrary just confirm you bias as a Retired CA Public Sector worker .
What we still ponder is whether you are paid to act as a mouthpiece for the Public Sector Unions.
————————
Quoting …………. “Data is not your forte.”
I deal with “Big DATA” all the time, so much so that you can only do the manipulations renting Google Cloud servers.
Yoy …….. are a joke………. a retired light-bulb-changer playing pension expert.
Posted by A on April 22, 2020 at 5:27 pm
I never claimed to be an expert. But I can read what the actual experts say.
Tough Love…
“When a Public Sector pension has a NORMAL COST 5 to 10 TIMES what Private Sector workers typically get in retirement security (almost always via 401K DC Plans) ….. which they all do…… it is without question excessive.”
Andrew Biggs…
“The NIPA data raise a number of important questions for policymakers. Has public sector compensation risen above pay for similarly-qualified employees in the private sector? Does the substantially larger share of total compensation dedicated to benefits in the public sector better serve the needs of public employees and governments’ need to attract and retain quality workers? These are policy questions that require different data and methods to answer. ”
“…the substantially larger share of total compensation dedicated to benefits…”
Is a valid policy question.
“…NORMAL COST 5 to 10 TIMES what Private Sector workers typically get…”
Is a rant. Which, again, ignores the concept, “It is not valid to compare pensions outside the context of total compensation.”
Tough Love
“it is without question excessive.”
Is an opinion. Nothing more.
Just curious, did you actually read the 2019 Biggs paper?
Biggs…
“Has public sector compensation risen above pay for similarly-qualified employees in the private sector? ”
“These are policy questions that require different data and methods to answer.”
There you go, data…
AND methods.
Posted by Rex the Wonder Dog! 🐶🐶🐶🦴🦴🦴 on April 22, 2020 at 1:48 am
California’s Calpers, for example, has had an increasing unfunded liability; but they do not allow the deliberate official underfunding.”
CalTURDS using an 8.5%, 8%, 7.5% and 7.% discount rate IS “deliberate” under-funding Dougie, you progressive surrender monkey!
Posted by A on April 21, 2020 at 12:32 pm
“For some reason she avoids discussing the ROOT CAUSE of the problem …………”
http://stump.marypat.org/images/740.png?1509319566
Posted by Tough Love on April 21, 2020 at 12:49 pm
Always the idiot.
Posted by A on April 21, 2020 at 1:35 pm
Always the phony.
Posted by Rex the Wonder Dog! 🐶🐶🐶🦴🦴🦴 on April 22, 2020 at 1:53 am
Always the progressive surrender monkey!
Posted by Tough Love on April 21, 2020 at 1:04 pm
From a “Pensions & Investment ” article …………..
“Going forward, increased contributions alone will not keep struggling plans afloat.
“It will have to come down to structural reform,” Karel Citroen, head of municipal research at Conning said. “I just don’t see how you’re going to address pension funding issues you see in this country without addressing the entitlement side of it.”
Mr. Citroen pointed out that, if it’s not possible to make such changes for current plan participants, structural changes should be put in place for new or future plan participants.
Mr. Citroen added that “it will probably come down to an escalation of this issue for one plan, like New Jersey or Illinois, for that mindset to be accepted by other constituents as well.””
Posted by boscoe on April 21, 2020 at 1:45 pm
So is Bury assuming that the “dedicated” $1 billion from the State Lottery will not be deposited in the pension funds after the current budget year?
Posted by Tough Love on April 21, 2020 at 1:57 pm
The NJ Lottery doesn’t “really” contribute anything because it’s contributions are offset by an equal and opposite reduction in the amount the State otherwise contributes.
Posted by boscoe on April 21, 2020 at 3:56 pm
That’s not really the question, is it? Mr. Bury is assuming there will be no state contributions to the TPAF after 2020. If the state wants to short its “regular” contribution from the budget, it just doesn’t appropriate the $$$. If the state wants to short its statutory contribution from the lottery, it needs to formally change the law or suspend it. It can certainly be done, but it requires each legislator and the Governor to go on record and face the wrath of the teachers’ unions. And as far as Bury’s not-cute comment below, it has little to nothing to do with the NJ Supreme Court or any other court.
Posted by Anonymous on April 21, 2020 at 7:11 pm
Good point.
Since whatever the lottery earns (I read that it will be lower this year …. in the $500M-$600M range) will go into the State pension Plans, the State would have to make a NEGATIVE contribution to offset it, which doesn’t sound like a possibility since it would mean seizing the lottery proceeds.
Posted by Tough Love on April 21, 2020 at 7:27 pm
I agree with you. If the State contributes NOTHING, it cannot “offset” the Lottery profits, at least not w/o the Legal changes you brought up.
Posted by bpaterson on April 22, 2020 at 1:30 pm
JB1 should adjust matrix, but lottery proceeds will drop from the assumed 1 bill. Doesnt buy any time even with the 1 bill, seeing those yuuuge depletions.
Posted by burypensions on April 21, 2020 at 2:10 pm
That’s so sweet that there are still people out there who have faith that New Jersey will follow the law and would never divert dedicated revenue for fear of the NJ Supreme Court.
Posted by E on April 21, 2020 at 2:32 pm
Why would they be scared when the precedent was set by an obese PT Barnum who signed a bill into law and then had his hand picked NJ Supreme Court day he didn’t have to follow it?
Cmon though, the Mastro report cleared the man!!! Give em a break.
Posted by E on April 21, 2020 at 2:35 pm
Out of all the shitty things that far bastard did to this state…the Mastro report has to be up there as the biggest f u to the citizens of this state.
Even Trump, whose ass he tried to stick his head up so damn far, had absolutely no use for him.
Posted by Tough Love on April 21, 2020 at 7:18 pm
DOWN BOY………… you get so freak-en A*N*G*R*Y every time you think of former Gov Christie*
* From a FINANCIAL perspective, Christie was the BEST Gov NJ ever had. Suspending Public Sector Pension Plan COLA has saved Taxpayers a bundle ! Hopefully they will NEVER be reinstated.
NOBODY in Private Sector Plans get annual COLA increases. What makes YOU so “special” you you should get them at Taxpayer expense ?
Get a grip !
Posted by PS Drone on April 21, 2020 at 9:28 pm
Looking forward to those years when inflation is running between. 20% and 30% and E is looking at a major league downdraft in his pension’s purchasing power. So sad.
Posted by Rex the Wonder Dog! 🐶🐶🐶🦴🦴🦴 on April 22, 2020 at 1:58 am
Looking forward to those years when inflation is running between. 20% and 30% and E is looking at a major league downdraft in his pension’s purchasing power.
EG will see more than inflation and a loss of purchasing power, he will see actual reductions in his pension, to the level the fund is funded IMO…. Not a matter of if, but when. You simply cannot gift out $100K/year pensions at age 50 for GED gov jobs, for ANY job! Of course you don’t see real companies and businesses gifting that kind of $$ out to their GED workforce….
Posted by Four Reasons Why Public Schools Won't Return to "Normal" Anytime Soon - NJ Left Behind on April 21, 2020 at 3:07 pm
[…] of holes in pension systems, John Bury predicts that without “any substantial benefit cuts or cash infusions,” the New Jersey […]
Posted by PS Drone on April 21, 2020 at 9:25 pm
What is with these comments? Are we supposed to fill in words for […]? No one here has time for that. Please flesh out your thoughts.
Posted by A on April 21, 2020 at 10:10 pm
Elipses, see the link.
“Speaking of holes in pension systems, John Bury predicts that without “any substantial benefit cuts or cash infusions,” the New Jersey Teachers’ Pension and Annuity Fund will run out of money in four years.”
Posted by A on April 21, 2020 at 5:01 pm
“It will have to come down to structural reform,”
I.e., “reductions”. Either DC plans or reduced DB formulas. Which will certainly lead to increases in wages. “You can pay me now, or you can pay me later.”
“To compete for quality employees, government employers may find they need to adjust salaries to make up for the reduction in retirement compensation,”
https://www.google.com/search?q=calpensions.com+increase+pay+wages+salary+for+pension+cuts&oq=calpensions.com+increase&aqs=chrome.1.69i57j35i39.14257j0j4&client=tablet-android-google&sourceid=chrome-mobile&ie=UTF-8
Posted by Tough Love on April 21, 2020 at 7:24 pm
90% BS ……………….. as usual.
Only 90% because there ARE ………… FEW high-end occupations that might require wages increases if pensions were materially reduced.
Posted by A on April 22, 2020 at 1:14 pm
If you follow pension tsunami…
Always important to read past the headline…
“School Superintendents Want Newsom to Freeze School District Pensions”
Actually, they want to freeze pension -contributions-
Posted by Tough Love on April 22, 2020 at 1:25 pm
I noticed that too ……….. and chuckled.
They know that current CA Case Law (the California Rule) won’t allow freezing pension accruals, so they addressed the immediate issue …. just don’t “contribute” anything now. Of course doing so just delays the financial reckoning.
What’s REALLY needed ……….. and the ONLY real “solution” ………. is indeed FREEZING future service pension accruals for all CURRENT workers. And it’s going to require a change in CA’s State Constitution to do so.
We need to do the SAME thing in NJ, and in NJ it only requires a new “LAW” (to reverse on old one), NOT a Constitutional amendment. It’s WAY past time to get moving on this.
Posted by 4 Reasons Our Schools Won't Go Back to 'Normal' Anytime Soon on April 27, 2020 at 12:50 pm
[…] of holes in pension systems, John Bury predicts that without “any substantial benefit cuts or cash infusions,” the New Jersey […]
Posted by Okay, Boomer: Why Mark Weber's Argument Won't Convince Millennials and Gen X'ers To Become Teachers. - NJ Left Behind on May 11, 2020 at 11:20 am
[…] get real: New Jersey’s teacher pension system is shot. Here’s a chart recently created by John Bury who notes elsewhere that if TPAF loses 15% this year, “New Jersey’s teachers’ pension system […]
Posted by PERS (Local) Depletion Date | Burypensions Blog on May 13, 2020 at 8:38 pm
[…] As the other plans run out of money on paper the temptation will be to shift money within the system. This won’t be necessary (or noticed) with the JRS plan in a couple of years as the state should be able to scrape up that $50 million pay-go amount but where else will the $5 billion be coming from for the Teachers plan in 2024? […]
Posted by No Schools → No Teachers → No Pensions | Burypensions Blog on August 2, 2020 at 10:22 pm
[…] TPAF (which will also be deprived of that employee contribution inflow) could bring the plan to its depletion date in that first […]
Posted by Four Reasons Why Public Schools Won't Return to "Normal" Anytime Soon - New Jersey Education Report on February 1, 2021 at 1:32 pm
[…] of holes in pension systems, John Bury predicts that without “any substantial benefit cuts or cash infusions,” the New Jersey […]