- John Scott
- Dick LaRossa – $48,376
- Joe Bubba – $48,243
Soft Corruption by William E. Schluter ($14,663) has become a bible for one of my other lives as it reflects closely my experience with legalized graft in New Jersey politics. One example from the book tells of the story of the 1997 Pension Obligation Bond sale to which then-Senator Schluter had a front-row seat. From pages 12-13:
Soft corruption entered into this major policy initiative when three recalcitrant senators were pressured on the floor of the senate to vote for the proposal, despite their very strong reservations. They finally relented and voted to approve the measure. They subsequently received substantial campaign contributions from the senate campaign fund – only to lose the ensuing election. But all was not in vain, as they were awarded lucrative patronage appointments following their electoral losses.
Here is the story (pages 65-7):
Also no entertainment at lunch so I get this time to recap events – including for the first time in my memory a disruption (not counting snoring) and ejection.
Phil Murphy is in the process of paying off media outlets up front and politicians prospectively in order to become the next governor of New Jersey without committing to any substantial plan of action on any issue of importance which is why this comment from an also-ran-to-be sparked my interest:
So I dashed off a facebook message asking about his positions on pension reform and cleaning up the swamp that is New Jersey local government. The response came a few minutes ago with links.
Issues 1. Public Employees 2. Cutting Government Waste
The plan on cutting government waste is to have a state office with no power make up a report. The pension reform plan is even dumber.
P.L. 2007, c. 29, which became effective on January 1, 2008, was reform legislation “designed to ensure the system serves career public employees rather than political appointees” and to “cut out the entrenched core of abuse that has been corrupting our pension and benefits systems from within.” One of the components of the new law, N.J.S.A. 43:15A-7.2, excluded professional services contractors, such as municipal lawyers, architects and engineers from enrolling in the state’s PERS pension system.
At least one lawyer in New Jersey had a problem with that and his employers offered help.
We now know where a large chunk of the money from the increase in the gas tax will be going.
An order was released by the Securities and Exchange Commission soon after Governor Chris Christie’s state of the State speech yesterday announcing that:
The American Legislative Exchange Council (ALEC) earlier this year came out with an estimate of $5.6 trillion as the the total of the unfunded liabilities in state pension plans and now they have come out with a report laying part of the blame for the shortfall on politically motivated bad investments and, as it turns out, New Jersey tops another list:
Either Guy Haselmann, who has been a member of the New Jersey State Investment Council which oversees investments of the state’s pension funds since 2010, came out with an opinion piece defending hedge funds saying:
Numerous inaccurate stories and statements have also been made about hedge funds and the role they should play in the pension portfolio. [Our presumptive next governor Phil] Murphy said that “the State Investment Council paid $270 million in fees to hedge fund managers — $142 million of which was paid without regards to returns.” This statement is misleading as an absolute dollar amount of fees paid is a meaningless number. For example, anyone should be willing to pay $100 million, if they received $1 billion in return. It is net returns that matter and which have informational value.
Murphy also incorrectly said that “the Hedge Fund program lost 13 percent.” The fact is that in fiscal year 2015, the hedge fund program returned 4.21 percent and generated nearly $390 million of net profits, after all fees were paid. The hedge fund program’s return was higher than many other segments of the portfolio, including the fixed income and international equity investments.
With stock and bond prices hitting all-time highs in 2016, finding hedge funds, or other types of exposures, that offer diversification, has never been more important to the portfolio. As a case in point, the S&P 500 return in 2008 was negative 37 percent, while the return of the HFRI Macro Hedge Fund Index was greater than 5 percent during the same period.
Overall, hedge fund investments have served the state pension plan well over a long period of time, offering meaningful diversification, and better total returns with less risk.
The pension plan’s large underfunded status means that it is vital to avoid significant losses. Hedge funds can provide a type of exposure that improves the risk versus reward characteristics of the overall portfolio. Demonizing hedge funds without full understanding of the construction of the entire portfolio is detrimental to all beneficiaries.
Or Pensions & Investments: