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HomeNew Jersey’s State Pension? Fuhgeddaboutit!!
Posted by Larry Doyle on August 19th, 2010 7:35 AM |
In a state that has a reputation for putting the ‘organized’ in ‘organized activities,’ is anybody surprised that New Jersey has been charged with misrepresenting the health of its state pensions? (The state has already settled). How do you think politicians get elected? Line the pockets of the unions with lavish pensions and perks, then stick it to future generations. This scam has been played for years. What’s new now?
The Wall Street Journal provides further details on this story in reporting, SEC Sues New Jersey as States’ Finances Stir Fears:
The Securities and Exchange Commission, in its first securities-fraud case against a state, accused New Jersey of misleading investors about the health of its two largest state pensions while selling billions of dollars in bonds.
State authorities settled the case without admitting or denying wrongdoing.
While it singled out New Jersey, the SEC is conducting several investigations into what other states disclosed about their weakened finances. (more…)
Bill Gates Attacks Fraudulent Accounting for Public School Pensions
Posted by Larry Doyle on July 13th, 2010 9:55 AM |
Bill Gates
Isn’t education supposed to be about the kids? Then how has our nation allowed political operatives in states, cities, and towns throughout our land to develop and manipulate accounting standards to benefit public employees within our school systems at the expense of our future generations?
Go ahead and rail on me as just another fiscal conservative who does not fully appreciate the dynamics of public education, especially in urban settings. I will respond with a strident, CHALLENGE!! Why? (more…)
Orin Kramer Provides More ‘Sense on Cents’
Posted by Larry Doyle on February 22nd, 2010 10:10 AM |
I first introduced Orin Kramer, chairman of the council overseeing the New Jersey State Pension, to readers of Sense on Cents on January 5th. On that date I wrote “Public Pension ‘Smoothies’ Will Cost $2 Trillion”, highlighting the massive gap in the funding of our public pension system.
Last evening on my radio show, my guest Ronald Holland addressed how we should ultimately expect our retirement funds to be taken over by the government partially for the purpose of funding these pensions. You can listen to the entire interview with Mr. Holland here.
We wake up this morning and are revisited by none other than Orin Kramer, who provides a succinct but enlightening View From the Top interview to the Financial Times: (more…)
“There Are No More Paper Clips to Cut”
Posted by Larry Doyle on July 13th, 2009 2:04 PM |
Can we afford public pension obligations?
If ever there were a political hot button, it is the issue of restructuring public pensions. I can hear the rumble rolling through cities and towns by my merely broaching this issue, but the fact of the matter is this topic must be addressed!
As with any debt, public pension obligations can either be paid in full or defaulted, devalued, or restructured. The public pension system in our cities, states, and towns is nothing more than the holy grail for a large swath of the electorate. Does the political power base in these districts have the courage to go down the restructuring road? In so doing, they potentially risk their own political lives given the strength of the electorate who are pension beneficiaries.
Why do I think restructuring pension obligations is a likely scenario? Very simply, there is only so far a mayor or governor can go with increased taxes and cuts in services. While I do not think restructuring pension obligations is an imminent development, I do think it will be part of the eventual reality of our new economy.
I see mounting evidence of this likelihood at a site I reference regularly, PensionWatch, which highlights:
That approaching wave of pension debt is bigger than it looks. The purpose of this site is to provide an overview of the multiple pension crises that are about to drown America’s taxpayers.
In my opinion, this story gets limited coverage because it touches the equivalent of the ‘third rail’ for politicians and their associates. Well, it is high time the population at large addresses these obligations. As USA Today writes, Our View on Retirement Benefits: Public-Employee Pensions Put Cities, States in Tight Squeeze:
Recent stock market declines have left public and private pension plans alike underfunded, but the problem is deeper for public plans because they offer bigger pensions and make them available earlier, particularly to public safety employees. Three-fifths of state-government pension funds owe at least 20% more money than they have. According to the National Association of State Retirement Administrators, the shortfall is $430 billion, or about $3,800 for every U.S. household. Other estimates put the number above $1 trillion. (LD’s emphasis)
The blame for this lies with vote-hungry politicians who promise rich retirement benefits from the wallets of future taxpayers.
Union inflexibility doesn’t help, either: In financially desperate Oakland, for example, where police starting salaries are $71,832 to $90,540 a year and pensions begin at age 50, the union rejects concessions.
Public-sector pensions already cost twice as much, per retiree, as the average private-sector pension, according to the U.S. Labor Department. This leaves cities and states no easy way out. They should not renege on their commitments, but the other options — raising taxes or cutting services — could prove so severe that bankruptcy would look like a sensible alternative.
I do not envision politicians willingly taking this issue on simply because the pension beneficiaries are typically their meal ticket to re-election. However, every once in a while we come across a politician who is willing to say he is not capable of “pulling the rabbit out of the hat.”
Scott Lang, mayor of the heavily Democratic city of New Bedford, MA, recently said as much. The Boston Globe reports Running on Empty:
Lang may be better remembered for his clarion call demanding structural changes in municipal government than for his performance in any specific area of city oversight. He is known for his candor, and he doesn’t disappoint.
“It’s absolute insanity. They’re unsustainable,’’ he says about pensions. “There isn’t the money to pay for an unfunded liability like that. All the revenues will be eaten up by past-due promises. Pensions have a 20-year schedule modeled after the industrial plan. It doesn’t fit today.’’
He says current pension and health insurance systems for city employees have to go, period. If not, they will destroy the city and its ability to maintain the services people expect like public safety. He calls for “pension relief’’ and “healthcare reform,’’ which in plain English means cuts.
“There are no more paper clips to cut.’’
To follow developing stories in the world of pensions, you can subscribe to PensionWatch from its home page, or even better you can access it here at Sense on Cents.
LD
