Tag Archive: Pension Reform

What’s Happening today Wed. 01/15/2014

Today people are digesting the comments in Christie’s State of the State Address. For many the meal did not go down so well.

With Bridgegate on the minds of many and swirling suspicions in the air one might have thought that Christie would be more responsive. The State of the State Address might be designed to be lofty and to convey a sweep of past achievements and a broad vision for the future. However, there is something rotten in the state of our State (or more particularly in the Executive Office and the Port Authority.) He said little on the matter, and what he did say was not reassuring. He vaguely reiterated, “mistakes were clearly made,” but he did not  elaborate further. He failed to fess up about anything he might know or have done, and he placed the onus on others to find out the truth.

Furthermore, he put his future cooperation with investigative bodies in doubt. He said, “We will cooperate with all appropriate inquiries.” Apparently he will only respond to inquiries which he deems appropriate. Given the number of investigations that are likely to take place, more will be revealed. He had said on Thursday, “I’m not completed with those interviews yet, but when I am, if there is additional information that needs to be disclosed, I will do so.” He could have let people know what he knows and maybe have put the matter closer to rest. Instead, he has made his bed and will have to lie in it – uncomfortable, with little rest and a rotten smell in the air.      

He distracted attention away from Bridgegate (not suitable for a national or NJ audience) and spent much of his time talking about new initiatives. They included K-12 education, higher education, crime prevention, drug rehabilitation, job training. health care, and infrastructure investment. However,  they were just soundbite teases.  He said, “We have discussed many exciting opportunities for investment …. But here is the simple truth. We cannot afford to do it right now.”  He then put the blame on “soaring pension and debt costs.” Pension reform does call for increasingly hefty state contributions in the new and succeeding budgets. However, it was these reforms which he trumpeted for years after negotiating them with Democratic legislators. The reforms called for sacrifice from State employees and pensioners but the quid pro quo was that the State would resume required contributions. He left listeners unsure whether he was arguing for reduced contributions, more sacrifice or something else. He raised the subject but provided no solution.

If this was a bad moment to capture the attention of a national audience, he was successful. His discussion of sometimes arcane Jersey-specific issues was not of interest elsewhere, and cable TV’s attention waned.

Other than initially patting himself on the back with dubious successes (jobs, unemployment, holding the line against new taxes, Sandy recovery, and shrinking State employees), he said little of substance. His new initiatives vanished into thin air. Regarding Bridgegate he acknowledged nothing new and left us with uncertainty regarding his future cooperation. The final blow was raising the specter of another blood-letting battle over pensions.

Hypochristie

Cross-posted at A New Jersey Farmer

As a politician, we always assumed that Chris Christie had to have some hypocrisy in his blood. After all, he promised not to touch teacher’s pensions when he was running for Governor and we know how that promise turned out. He also said that he would use his prosecutorial skills to ferret out corruption in New Jersey, but that seems to be off the table as well.

Now comes word that the Governor is four-square behind a referendum on marriage equality in the state, but dead set against citizens voting on whether they want charter schools in their districts. Bob Braun’s article this week highlights Christie’s double vision, and an equal dose of doublespeak on the legislature’s part, with a sharp razor’s edge:

The contradiction – hypocrisy? – was set up nicely the other day when Assembly committees acted on the two issues. The Assembly Judiciary Committee, on a party-line vote, released a gay marriage bill; the Assembly Education Committee, also on a party-line vote, approved a bill allowing local voters to decide whether they want to pay for charter schools in their communities.

In the Judiciary Committee, the Republicans were for referendum and the Democrats were not. In the Education Committee, the opposite was true.

While the panels were meeting, Christie was at a town hall meeting and he repeated his insistence that same-sex marriage go to a referendum. “The fact is, they don’t trust the people of New Jersey to decide,” he said.

He made the comment at a charter school – and the governor has repeatedly said he would veto any bill allowing referendums on charter schools.

Nicely done, Bob.

But it doesn’t stop there. Christie the unalloyed conservative is now trying to recast himself as something of a moderate, figuring, correctly in my view, that the conservative movement will see a massive flame-out this year and recede from the Republican Party leading up to the 2016 election (assuming that Mitt Romney loses in November. Which he will.). This piece by Charles Stile has all the details. By calling for a referendum on marriage equality, Christie doesn’t have to veto a bill that would alienate gays. By signing a 10% income tax cut, he can play to the economic conservatives without bankrupting the state. And he can blame the Democratic majority if the plan is shelved.

How is this working out? Not bad according to this poll, but there are problems. Almost half of the respondents think Christie is concerning himself too much with his own political future, so he’ll have to run softer and maybe give up the dream of becoming Vice-President under Romney.

And just yesterday, the good guv’nor picked another fight with the New Jersey Education Association over comments NJEA Executive Director Vince Giordano made over the effects of school vouchers on urban public schools. Said Christie:

“As Vince drives out of the palace on State Street in his big luxury car and his $500,000 salary, I’m sure life’s really fair for him and if Vince’s kids were in a failing school district he could afford to send them to any school in New Jersey that could help them succeed.”

Never mind that NJEA headquarters is hardly a palace or what Giordano’s salary is. Christie and his family are plenty wealthy, live in a fairly exclusive suburb, and the Governor sends his children to one of the priciest private schools in the state. There’s something seriously wrong with calling out someone whose work supports the very teachers that Christie has been vilifying for his entire, um, tenure, in office.

As for the real issue, the evidence shows that both vouchers and charters are not the panacea he claims, but both do take public money out of the school systems that Christie blames for not meeting students’ and parents’ needs. He’s robbing the system, then blaming it for being ineffective.

That’s Hypochristie

King Christie’s Flack: Law? Who Cares About The Law?

So, the first legal challenge to the Sweeney-Christie pension bill has been filed, and it’s not by a union member.  Instead it is by a judge, who alleges that changing judge’s compensation during their term is against the New Jersey Constitution.

Superior Court Judge Paul DePascale is not saying that the law itself is unconstitutional, but that it cannot apply to him because the state constitution says salaries at his level and above “shall not be diminished during their term of appointment.”

Mike Drewniak, the former spokesman for US Attorney Chris Christie and current New Jersey Governor Chris Christie (the same guy, BTW), doesn’t seem to care about the legal issues at hand.  He, like his boss, wants to be able to do whatever he wants and the legal issues be damned!

“Of all classes of New Jersey state employees, judges of the Superior Court have enjoyed the lowest pension contribution rate and received the richest pension benefits,” Drewniak said. “Judge DePascale should probably just say thank you and look forward to a comfortable retirement.”

Take what we give you and be thankful!  And while your at it, eat cake!  And not the good kind with icing and candles, but the hard tasteless kind they had in France a couple hundred years ago.  

In all seriousness, that appears to be Drewniak’s attitude, that they are the regents and we are the subjects.  What King Christie does is for the good of the people, and the people should be thankful for whatever scraps they get.

But a little over two hundred years ago we fought a war specifically to avoid that kind of government.  We didn’t want a King able to levy taxes without our say so, or to put his troops in our homes, or to make arbitrary laws.  So we got ourselves free of that tyranny.

And one of the prime ways our founders created to avoid a return to this under King Christie or anyone else like him is that any citizen can go to court to seek redress against the government.

If that’s not good enough for you, Mike, or King Christie then maybe they should find a new line of work.

NJ Treasury Department Playing with Fire

Last year proved to be a bonanza for some of the top hedge fund owners including John Paulson who earned for himself a record $4.9 billion in 2010 based on a large wager in gold. The allure of these alternative investment funds is leading our Division of Treasury to play with fire. The New Jersey State Investment Council recently voted 8-3 to increase its Pension Fund alternative investments from the current allocation of 15% to 38%. The change could be approved in May.  more below…

With Friends Like These…

promoted by Rosi

We all know Gov. Christie’s position on public employee pensions. He wants to “reform” (i.e. heavily cut) them and is willing to compromise other priorities in pursuit of this goal. In his budget address, he explicitly said he would use a $500 million payment to the pension fund as “leverage” for broad reforms — nevermind that he is legally obligated to make that payment in this fiscal year regardless of any legislative action on pensions. The bottom line: we know where Chris Christie and other national conservative movement leaders stand on public employee pensions. Their position is clear.

What about national Democrats? more below…

Gov. Christie’s Budget Address Open Thread – A few of the sticking points

I’m still digesting this speech, but some immediate issues jumped out at me. What struck you, Blue Jersey? Read Gov. Chris Christie’s budget address.

Disparaging public employees: There was a reference to “keeping faith” with public employees in Gov. Christie’s budget address today. But the public-employee bashing came in the form of: “the rich benefits of the privileged few” who “do not contribute enough”. And that sounded more like the man.

Rich: Indeed, for a governor who threw his lot in with New Jersey’s richest the same year he touted “shared sacrifice”, the only references in the entire speech to “rich” came not in describing his own wealthy contributors and slush fund pals, or the cushy class he protected by vetoing the millionaire’s tax. In fact, that word – “rich” – was only used by Christie to describe New Jersey’s public employees. A great number of whom are represented by labor unions, the very definition of middle class.

Stand Up NJ and support collective bargaining and Wisconsin Workers – can you make the scene?

more below

Christie’s plan to Bankrupt Pension funds Deemed illegal

I’d like to think I follow New Jersey and the political landscape rather closely, but am I the only one who didn’t know that the Christie administration tried to declare bankruptcy with the pension funds?

State Treasurer Andrew Sidamon-Eristoff researched the idea of sending the state pension systems into bankruptcy in early March, but he said then that bankruptcy is not legally possible.

I get that the pension funds are in bad shape, in part because of the actions of the same people who say they are trying to fix it. And Christie can say he’s not a part of the problem, but he’s not making any payment into the fund with his budget this year either.

But this seemingly significant news is buried at the very end of a three page online story out this morning in the Asbury Park Press as the second to last line in a jam packed story about coming proposed pension changes from the Christie administration. It’s clear the focus will be on the larger story of what it means going forward and not this news at the very end of the story. We’ll have plenty more to say about the proposals. I understand that everything is under consideration, but the Christie administration has a way of taking action under the radar and putting their trash out very quietly so when asked, they can say we knew and just didn’t see it.

Updated by Jason: Thanks to Michael Symons with the Asbury Park Press and the Capitol Quickies blogfor pointing out that in fact I need to pay closer attention. From their Sunday March 7th story:(In their archives now)

Then Sidamon-Eristoff raised another idea.

“Can I put out a radical concept?” he asked, and was quickly told the microphones were still on. “Has any pension system anywhere in the world declared bankruptcy?”

Crawford said there is no provision under the bankruptcy law for such a filing, and Sidamon-Eristoff concurred. In an interview afterward, Sidamon-Eristoff said he had researched the law and also found that to be true.

“I ask that rhetorically because I wanted to know if there was more out there from what I understood from the research,” Sidamon-Eristoff said. “But the challenge is enormous.”

Dealing with the problem at the authorities

There are many difficulties facing our state. While state workers have been the aim recently through pension reform and many areas are about to feel the pain of budget cuts, the issue of salaries and benefits at state authorities continues to cast a large shadow. Here are some highlights from the executive summary of the report:

  • Eight executive officers have base salaries higher than Gov. Chris Christie’s $175,000.

  • There are 748 authority employees paid over $100,000 per year.

  • About half of the authorities reviewed didn’t take part in the state furlough program requiring 10 unpaid leave days.

  • Several authorities have more paid holidays than the state; provide more generous vacation and/or sick leave; let employees annually “cash in” unused sick and vacation time; and reimburse employees for mileage at the federal rate of 55 cents a mile rather than the state rate of 31 cents.
  • Some of these positions and salaries are compensated for their benefits through the same pension system Legislators have been so focused on fixing. According to the report, some authorities actually allow employees to cash in unused sick time at the end of each year, not even when they retire. But Speaker Oliver believes that the authorities also need to be included in pension reform plans:

    “Why should the Turnpike Authority be excluded? Why should the Sports and Exposition Authority be excluded? It’s all taxpayer generated money or money that rightfully belongs in the state treasury even though they are independent authorities.”

    This would set up a showdown with Senator Sweeney, who wants the Assembly to pass the Senate version so there isn’t further delay. He wants reforms at the authorities to move on a parallel track.

    While the number of employees at authorities has decreased over the last four years by 2002 employees and the majority have revised their policies to bring them in line with the state, there are still abuses in the system and much more work that needs to be done to reign in some of these authorities. You can see the full Inspector General’s report here. In an effort to begin dealing with the problems, the Governor issued Executive Order 15 yesterday:

    The governor’s 15th executive order bans those public entities from hiring lobbyists to seek influence with his administration, the Legislature or the federal government. It also scales back generous severance packages and caps travel and entertainment expenses for authority employees at $250. Existing contracts permitting lobbying or “golden parachutes” for departing workers must be provided to the governor’s office by March 1 and “terminated as soon as legally permissable,” Christie said.

    You can view the full Executive Order here. Christie acknowledged he will need to go the Legislative route as well to make some of the systemic changes necessary and he has already signaled a willingness to work with Senator Weinberg, who already has legislation in to create more transparency at state authorities.  

    Pension Reform Concrete

    Pew Research Center in a report issued this month, The Trillion Dollar Gap, points out that such is the gap at the end of Fiscal Year 2008 between the monies states have set aside to pay for employee’s retirement benefits and the price tag of those promises. Reducing the gap entails spending funds not available for health, education and important needs, and ongoing gaps could require higher taxes.

    Forty states were classified as needing improvement, Here is what Pew says about New Jersey:“New Jersey’s management of its long-term pension liability is cause for serious concern and the state needs to improve how it handles its retiree health care and other benefit obligations. New Jersey had a $7.5 billion pension surplus in 2000, but years of failing to meet the actuarially required contribution led to an unfunded liability of $34 billion in 2008. This has left the state’s pension plans with 73 percent of the assets needed, below the 80 percent benchmark that the U.S. Government Accountability Office says is preferred by experts.”

    “Meanwhile, New Jersey faces a $68.9 billion long-term liability for retiree health care and other benefits- one of the largest of any state-but has not set aside any assets to cover that obligation.”

    In 2008 and in the Senate’s package of bills this week New Jersey has taken steps to reduce the gap.  On thursday the Assembly is expected to introduce its version of the bills.

    Nonetheless, New Jersey’s position of having 73% of the assets needed is in contrast to the 84% average for all states. Hence the Senate will hold hold a public hearing Monday on a constitutional amendment bill that would bind the state to making its full payment to the pension fund.

    The bill which voters would have to approve requires the state and political subdivisions “to pay each year the full amount of the contribution it is required to make to any defined benefit pension plan operated by the State for public employees.”  It further “requires  the contribution to include the normal contribution and the unfunded accrued liability contribution…” The amendment permits the State a seven year period to gradually phase in its it payments to meet the requirement.

    More up-to-date financial data would help citizens to understand where we are now, but the problems are real and the solutions involve tough medicine. New Jersey has to get itself back into a position where it can meet pension obligations and have more funds for the wider needs of its citizens. The recession and some ill-advised pension fund investments did not help the Garden State. Fortunately, New Jersey, as opposed to a number of other states, in 2008 and in the current legislative session is addressing the problem. “It’s a long-term fix, it is not a quick fix,” said Sen. Barbara Buono (D-Middlesex), the majority leader. “Don’t underestimate what we’re doing here today.  This is the New Jersey Legislature, where things are maddeningly incremental.” Fortunately, even incremental changes can make a substantial difference over time.

    The final outcome of pension reform this year, particularly the constitutional amendment, is not set in concrete, but without substantial changes NJ will be under even heavier concrete that will impede meeting other pressing needs.