NJEA SB Issue

The New Jersey Education Association (NJEA) is a billion-dollar enterprise that runs a good portion of the state backed by the union dues of its members who happen to be in the worst funded public pension system in the country. Yet the pensions of NJEA employees are both generous and well-funded.

However, in checking the plan’s 5500 filing for the year ended August 31, 2020, something unusual popped up on the Schedule SB. It looks like a filing error but who knows?

Going back to 2009 when these forms became easily accessible online here is the history of contributions made (including 3.5% of member salaries) into the NJEA defined benefit plan as reported on the Schedule SBs for the years available:

Looking over that history one would imagine that the life of a pension actuary is pretty sweet. When asked what the contribution can be for a year they can come back with $15 million every year, or nothing if you want, or $100 million if it suits you. Lot of leeway and not much chance of making a mistake.

But the latest SB for the NJEA plan did contain a mistake:

Considering how overfunded this plan is, 31b should be $5,637,033 and the excess contribution in 38a would not be a minuscule $231 but rather $5,637,264.

Looking at the 2018 filing (and all those going back to 2104) item 31b has always canceled out 31a:

There was no contribution for the year ended 8/31/19 but none was needed since the plan was overfunded. But for the year ended 8/31/20, based on how the form was filled out, had the contribution as adjusted with interest been more than $231 less there would have been a funding deficiency reported which is preposterous considering the amount of the excess assets.

Was this something to do with justifying a PPP loan or was it just a simple mistake that nobody (outside of here) was ever going to catch?

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Plan Name: New Jersey Education Association Employees’ Retirement and Trust Fund

EIN/PN: 21-0524390/001

Total participants @ 8/31/20: 574 including:

• Retirees: 336
• Separated but entitled to benefits: 11
• Still working: 227

Asset Value (Market) @ 9/1/19: 421,743,821

Value of liabilities using Eff. rate (5.52%) @ 9/1/19: $308,154,886 including:

• Retirees: $235,825,099
• Separated but entitled to benefits: $3,678,657
• Still working: $68,651,130

Funded ratio: 136.86%

Overfunding as of 9/1/19: $113,588,935

Asset Value (Market) as of 8/31/20: $460,400,608

Contributions (MB): $5,837,000

Contributions (H): $5,000,000

Employee Contributions: $1,125,463

Payouts: $19,452,053

Expenses: $2,520,738