GASB68 vs Politician Pension Numbers in NJ

Now that the 6/30/20 GASB68 valuations are out comparisons can be done with the official valuations for the New Jersey pension plans upon which recommended (and often ignored) contribution amounts are calculated.  Putting everything into a spreadsheet we find:

GASB68:

 

Official Valuation:

 

Liability Comparisons

 

The difference was 39% in our 2014 comparison primarily due to the lowering of the valuation interest rate from 7.9% to 7.3% and what looks like the actuaries overstating the blended rate to get to only a 17% difference in liability values.

Another interesting difference is that the GASB68 asset values do not exactly match the market value amounts reported in the official valuation reports which may have to do with more manipulation and counting the NJ lottery as a plan asset.

 

33 responses to this post.

  1. Posted by Rex the Wonder Dog!🐶🐶🐶🐾🐾🐾 on June 10, 2021 at 12:26 pm

    This place is Deadsville without our full cast and crew of meatheads: 1) Tough Love; 2) El Guapo/Feo, 3) MJ; 4) PS Drone; 5) MJF … etc … I intentionally left out Monkey Boi Douglas/Stephen/Earth/TeddySteals/Anonymous/A/AssClownExtraordinaire… 🤣🐾🤣🐾🤣

    Reply

    • Posted by Rex the Wonder Dog!🐶🐶🐶🐾🐾🐾 on June 12, 2021 at 8:32 pm

      Please, PLEASE Tough Love, El Feo, MJ, PS Drone and MJF, come back home … I can’t take anymore of Dougieee … he is destroying my brain with his insane comments 🐒🐒🐒 … the brain damage he is giving me is almost to the point of NO RETURN. I need your help kids, please, save the Pup from the Dougieeee Abuse … I will do whatever it takes, just let me know!
      🐾🐕🐾🐕🐾🐕

      Reply

    • Posted by Stephen Douglas on June 13, 2021 at 11:44 am

    • Posted by Stephen Douglas on June 13, 2021 at 11:46 am

      for some reason

      Reply

  2. Posted by Stephen Douglas on June 10, 2021 at 4:42 pm

    6/10/21
    Blog Stats
    1,517,560 hits

    Still a go-to source for pension news.

    for some reason

    Reply

  3. Posted by Rex the Wonder Dog!🐶🐶🐶🐾🐾🐾 on June 10, 2021 at 6:52 pm

    GASB68 vs Politician Pension Numbers in NJ
    Someone needs to fix this⏫⏫⏫:
    Politician Phony Baloney Public Pension Numbers in NJ AND ALMOST EVERY STATE; EVERY PUBLIC PENSION IN AMERICA

    State Bankruptcy and Bailout Reactions: More Reactions
    The ants aren’t interested in feeding the grasshopper

    Mary Pat Campbell
    May 26, 2020
    The actual bankrupt states – Illinois and New Jersey rise to the top here – do not have the political will to reform their pensions in a real way. If they had, they would have already made some progress. Illinois has had half-hearted reform attempts shot down because they actually have to amend their constitution first. They have never come close to trying that, not for pensions. Not in fifty years.

    New Jersey hasn’t really even tried. They prefer stunts that don’t improve fund solvency at all. I will have more to write about New Jersey in my “States Under Fiscal Pressure” series I’m writing now.
    https://marypatcampbell.substack.com/p/state-bankruptcy-and-bailout-reactions-a13

    Reply

    • Posted by geo8rge on June 11, 2021 at 10:34 am

      “The ants aren’t interested in feeding the grasshopper” The ants aren’t interested in feeding the ant eaters either, but it turns out ants don’t have a choice. Although potentially ant eaters might eat all the ants.

      The NJ balance sheet appears out of balance but that might be because NJ perhaps has off balance sheet assets. Specifically, a huge reservoir of highly valued properties and very large capital gains. Illinois government has traditionally tried to use Chicago real estate as a back stop, but that plan has failed at least once in the past, https://mises.org/library/taxpayers-revolt-tax-resistance-during-great-depression .

      But Washington DC has also noticed Trenton’s piggy bank.

      Stop pretending it’s impossible to tax wealth
      https://news.yahoo.com/stop-pretending-impossible-tax-wealth-095208730.html

      Reply

      • Posted by Stephen Douglas on June 11, 2021 at 1:47 pm

        You Can’t Tell The Players Without A Program

        Or the ants.

        MPCs article is about bankrupt states, not just bankrupt pensions. Apparently states that short their pension contributions are not frugal in other matters either. (?)

        The article is mostly about recent payments to states for Covid relief, the MoneyPalooza Monstrosity.

        According to one source in the article (Richard Salsman at AIER), it’s a Red state/Blue state thing. Red ants? I think we discussed this before. “Correlation does not imply causation.”
        Red vs. Blue states could alternatively be described as rural vs urban.

        Reply

    • Posted by Stephen Douglas on June 11, 2021 at 12:42 pm

      Public finance is hard.

      Mary Pat Campbell

      Jun 9

      https://marypatcampbell.substack.com/p/national-public-pension-coalition

      “In many ways, TIA and NPPC have similar goals: they both know that a large unfunded pension liability is not good.

      TIA usually takes the point of view of the taxpayer. NPPC is championing public employees and retirees.

      They are not necessarily in conflict…. especially when the taxpayer can leave. There is a reason I emphasize this.

      How to protect public sector employees and retirees

      You want to protect the benefits of public employees and retirees?

      Demand that their benefits be fully funded. And the official financial statements help you see the trajectory for that.

      It does not protect the benefits of public employees and retirees to ignore the financial information the states and cities are reporting themselves. The measures in TIA’s reports give an indication of how much has already been promised, but not funded, whether it’s bonded debt or unfunded pension liabilities.”

      Reply

      • Posted by Rex the Wonder Dog!🐶🐶🐶🐾🐾🐾 on June 13, 2021 at 6:25 pm

        Public finance is hard.
        Only for public employee Stooges like you Monkey Boi 🤣😺🤣

        Reply

  4. Posted by Stephen Douglas on June 11, 2021 at 2:41 pm

    And it just keeps getting harder.

    Government budgets are always a balancing act. Sometimes more than others. One commenter used to continually claim, for years, that there was no budget shortage at all, citing various departments reserve funds. All told, in California, he/she claimed those funds put California in the black, if they were tapped for immediate general use.
    Imagine, if you will; CalPERS now has a balance north of 400 billion dollars. If 100 percent funded, they would be well over $500B. What happens in the next recession? Will that fund be too tempting? It certainly has in the past, for California and for New Jersey.
    Damn grasshoppers!

    Reply

    • Posted by Rex the Wonder Dog!🐶🐶🐶🐾🐾🐾 on June 12, 2021 at 8:26 pm

      Government budgets are always a balancing act.
      No Shit Sherlock! So, do you have any other ground breaking nuggets to tell us about Captain Obvious? … I swear, the comments Krazee Monkey Boi posts up are amazing for their sheer amount of comedy in them … 😺

      Reply

  5. Posted by Stephen Douglas on June 12, 2021 at 12:13 am

    “Cutbacks by state and local governments were a significant restraint on the economy in the slow recovery from the Great Recession.”

    State and local governments are a major piece of the U.S. economy, accounting for about 13% of all employment. They typically have balanced budget requirements, which mean that shortfalls in revenues must be offset with spending cuts or tax increases, actions which hurt taxpayers and impede the economic recovery. State and local governments have cut employment by about 7%—or roughly 1.3 million jobs—since the beginning of the pandemic, which some ascribe to dire fiscal conditions. Cutbacks by state and local governments were a significant restraint on the economy in the slow recovery from the Great Recession.

    https://www.brookings.edu/blog/up-front/2020/12/23/why-is-state-and-local-employment-falling-faster-than-revenues/

    Reply

    • Posted by Rex the Wonder Dog!🐶🐶🐶🐾🐾🐾 on June 12, 2021 at 1:05 pm

      More selectively edited “copy and paste” bullshit⏫⏫⏫ from Monkey Boi 🐒🐒🐒

      Reply

  6. Posted by Stephen Douglas on June 12, 2021 at 6:49 am

    U.S. state pension plans’ aggregate funding ratio was 81.3% in the quarter ended March 31, according to Wilshire Consulting estimates.

    ” So, US state pension plans’ aggregate funding ratio climbed 81.3% as at the end of Q1, the highest level since Wilshire has been aggregating data for state pension plans on a quarterly basis and since Wilshire’s 2007 state funding study on an annual basis.

    This is really good news, right?

    Yes and no. Ned McGuire, managing director at Wilshire Consulting, only focuses on gains in assets but the real reason the funding gap improved so markedly in Q1 (and over past year) was because the yield on the 10-year Treasury note went from 0.92% at the end of December to reach a high of 1.76% in mid March before tapering off slightly more recently.”

    “Why? Because the duration of pension liabilities is a lot bigger than the duration of pension assets, so a drop in long bond yields, especially from a low level, will disproportionately impact the funded status of a pension plan.

    When rates rise, even if asset values get hit, this is actually good for pensions because their future liabilities fall.”

    Pension Pulse
    April 21, 2021

    Reply

    • Posted by Rex the Wonder Dog!🐶🐶🐶🐾🐾🐾 on June 12, 2021 at 7:01 pm

      So, US state pension plans’ aggregate funding ratio climbed 81.3% as at the end of Q1, the highest level since Wilshire has been aggregating data for state pension plans on a quarterly basis and since Wilshire’s 2007 state funding study on an annual basis.

      This is really good news, right?

      Yes and no.
      It is TERRIBLE news you math challenged Monkey Moron! And I mean that in a good way 😺 To be at a measly 81% funded level after a 13+ year and still rolling, longest in US History BULL MARKET is LAUGHABLE. Just like your comments 🐒🐒🐒

      Reply

    • Posted by Rex the Wonder Dog!🐶🐶🐶🐾🐾🐾 on June 12, 2021 at 7:04 pm

      Stupid Monkey, no banana for you

      Reply

  7. Posted by Rex the Wonder Dog!🐶🐶🐶🐾🐾🐾 on June 12, 2021 at 1:07 pm

    We need Trump back in office now more than ever … Viva La Trump !

    Reply

  8. Posted by Stephen Douglas on June 13, 2021 at 1:04 pm

    An elephant in the room.

    “Overall, the federal government paid 17 percent more in total compensation than it would have if average compensation had been comparable with that in the private sector, after accounting for certain observable characteristics of workers.”

    From a 2017 CBO report comparing federal and private pay. (Data from 2010-2015.)

    “Overall, the federal government would have reduced its spending on wages by 3 percent if it had decreased the pay of its less educated employees and increased the pay of its more educated employees to match the wages of their private-sector counterparts.” *

    What no one wants to say out loud is that to save that 17 percent, virtually —all— the cuts have to come from the lowest paid federal workers; generally, those with a high school education, or less. Not a 17 percent cut, but a 53 percent “average” cut; much, much more for many in the lower income groups. (And, conceivably, transferring some of those savings to the highest paid federal workers?) That’s one big elephant.

    “Among workers with a high school diploma or less education, total compensation costs averaged 53 percent more for federal employees than for their private-sector counterparts.”

    “Total compensation costs among workers with a professional degree or doctorate, by contrast, were 18 percent lower for federal employees than for similar private-sector employees, on average.”

    * 3 percent refers to wages only, not pensions and benefits. “Taking from” the poorer to give to the richer is an interesting concept, though.

    Reply

    • Posted by Rex the Wonder Dog!🐶🐶🐶🐾🐾🐾 on June 13, 2021 at 4:54 pm

      “Overall, the federal government paid 17 percent more in total compensation than it would have if average compensation had been comparable with that in the private sector, after accounting for certain observable characteristics of workers.”
      Is CA the Federal Government you Babbling Buffon???

      Reply

  9. Posted by Stephen Douglas on June 13, 2021 at 2:01 pm

    The other elephant.

    A spate of studies comparing public and private pay have cropped up since about 2010. The reason for these studies is the greatly increasing cost of public sector pensions, and resulting tax increases. A very valid concern, not just for taxpayers, but for some public workers whose pensions may not be sustainable.

    The (cruel) irony, though, is that public pay has arguably –not– been increasing relative to private pay in the last dozen years, and pensions have been decreasing in almost every state. The rising costs are almost entirely due to failure to pay the proper, conservatively calculated actuarially required contributions.*

    Pension reform is not the same as pension reduction. Mathematically, to roughly equalize overall public/private compensation, the CBO study and state and local studies show that the “reduction” will have to come at the expense of the lowest paid public workers. I don’t believe that is politically feasible, or ethically or pragmatically logical.

    You cannot cut your way out of this without social or economic backlash. Unintended consequences. Pension reform is needed. Not pension reduction per se.

    *And historically low interest rates, but that’s another story.

    Reply

  10. Posted by Stephen Douglas on June 13, 2021 at 6:32 pm

    Generous To a Fault

    Note to Congress: stop doling out money to California until the state makes full use of the federal funds already available.

    David Crane

    February 8, 2021

    “California provides health insurance to retired public employees and their dependents, spending upward of $9,000 per recipient per year on OPEB, or “Other Post-Employment Benefits,” as distinguished from pensions.”

    “The state provides these benefits even when the retiree or dependent has another job that offers insurance, is covered by Medicare, or is entitled to premium support under the Affordable Care Act or to the California State Premium through California’s insurance exchange, which provides the nation’s highest levels of premium support. (A family of four with an annual income of more than $150,000 qualifies.) Yet despite all these supports, California governments and schools annually tap their own budgets for more than $10 billion to provide for OPEB.”

    One commenter:
    “It is indeed lamentable when the only complaint about unsustainable bloated government spending on unfunded “accrued” post-employment “benefits” is that the State is not blowing thru the phony “money” provided by the Feds.”
    ——————————————

    “Among workers with a high school diploma or less education, total compensation costs averaged 53 percent more for federal employees than for their private-sector counterparts.”

    It’s not a bug, it’s a feature.

    Lower level private sector workers are covered by a number of social programs; welfare, Medicaid, food stamps, EITC, housing subsidies, etc. that allow their employers to pay them much lower wages/benefits. We could reduce public worker benefits and relegate them to the same programs. Much of that 53 percent advantage is for healthcare. We could reduce benefits to lower level federal, state, and local government workers, just be aware of the unintended consequences.

    Reply

  11. […] unfunded liabilities as of June 30, 2020 are “more than $60 billion”. Much more ($128 billion under GASB68 and and $94 billion using understated valuation liabilities). But, setting that aside , how is Sweeney planning on reducing that massive […]

    Reply

  12. […] unfunded liabilities as of June 30, 2020 are “more than $60 billion”. Much more ($128 billion under GASB68 and and $94 billion using understated valuation liabilities). But, setting that aside , how is Sweeney planning on reducing that massive […]

    Reply

  13. […] Keep in mind when reading just this one excerpt below that $6.9 billion represents about six months worth of payments out of a pension system that is still accruing benefits at record levels and as of June 30, 2020 reported unfunded liabilities under GASB of $128 billion. […]

    Reply

  14. […] Keep in mind when reading just this one excerpt below that $6.9 billion represents about six months worth of payments out of a pension system that is still accruing benefits at record levels and as of June 30, 2020 reported unfunded liabilities under GASB of $128 billion. […]

    Reply

  15. […] their paymasters (who pay some very well) demand with no mentions to be made of things like that $128 billion in GASB underfunding or the lottery gimmick to stave off talk of any real […]

    Reply

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