New Jersey has the worst funded state retirement system in a country full of badly funded public retirement systems and yesterday’s Investment Council meeting provided a glaring example of why that dubious distinction is not going away.
As reported by njspotlight:
Dave and Cyndi Epstein were on a trip to Israel and decided to rent a car so that they could drive around and see the sites. As Dave pulled into a crowded Tel Aviv parking lot, he asked a police officer standing there, “Excuse me officer, is it all right to park here?”
“No,” said the cop. “Can’t you see that No Parking sign?”
“What about all those other cars in there?” Dave asked.
The cop shrugged. “They didn’t ask.”
In 2010 ‘reformer’ Christie took aim at curbing excessive benefits for public employees:
Gov. Chris Christie and lawmakers of both parties will unveil a series of sweeping pension and benefit reforms Monday that could affect every public employee in New Jersey while saving the state billions of dollars, according to four officials with direct knowledge of the plan.
The proposals would require workers and retirees at all levels of government and local school districts to contribute to their own health care costs, ban part-time workers at the state and local levels from participating in the underfunded state pension system, cap sick leave payouts for all public employees and constitutionally require the state to fully fund its pension obligations each year.
That state funding requirement turned out to be a joke and, after looking through the state database of active pension members, that ban on part-time workers does not seem to have completely taken in Union County.
New Jersey politicians are about to ram through a bill calling for quarterly contributions into the state retirement system that will actually REDUCE the amount of money that the state has to put into the plans in two ways:
Extending our example from the Quarterly Quackery blog, a total contribution of $700 million would reduce to $680 million on account of the interest adjustment in the valuation and then be further reduced to maybe $670 million to take into account the borrowing costs of the state with the second worst (and still dropping) credit rating in the nation.
More silliness from yesterday’s Ask the Governor:
s2810, introduced on November 14 and to be voted on today, would require New Jersey to pay its pension contributions on a quarterly basis by September 30, December 31, March 31, and June 30 of each year, beginning July 1, 2017.
The bill’s sponsor, State Senate President Steve Sweeney, had an opinion piece in njspotlight today claiming:
Making pension payments every three months — rather than at the end of the year — will ensure that the requisite contributions are made, not skipped. Today, New Jersey legislators will vote on bipartisan legislation to commit the state government to a schedule of quarterly pension payments that will provide fiscal stability to our underfunded pension system and save billions of dollars in future costs for state taxpayers.
Either Sweeney is willfully ignorant of pension funding or he believes his intended audience is since this bill will actually REDUCE the State’s pension contribution.
Senate President Steve Sweeney says the investment strategies of the state pension funds need changes to improve returns.
“I believe that instead of going to Wall Street to borrow money, that in the fixed portfolio of your pension system, borrow it from the pension system because right now you might get 2 percent on a 10-year bond. Well if I’m paying Wall Street 6.2, why not pay it to my pension instead. It will get us funded quicker, and I’m working on legislation to do that”.
So what’s wrong with this idea?
New Jersey announced their pension-hole numbers a month ago but how do they stack up against other states?
Bloomberg apparently did some compiling and, as it turns out: