Gov is a crook

Pension Update from retired Vice President Keith Dunn
Posted: Friday / 6.6.2014
The State PBA in a joint lawsuit with the NJEA, FMBA, AFSCME, AFL-CIO and other unions and members today filed to block Governor Christie's attempt to cut the legally required contribution into the State's pension system. The lawsuit which calls the required payments a moral and financial obligation of the State seeks to require the State to keep its word to the State's employees and to the public who were promised Chapter 78 would resolve the pension funding crisis.

The State PBA will continue to utilize every legal and legislative option to strengthen the pension system for its members to ensure that the State not only pay its share of the debt caused by a decade of skipped pension payments but that it no longer jeopardize our future retirement and pension investment by intentionally underfunding the system. The years of blaming employees for the failed financial planning of the State and local government must end. State PBA members will be advised as this case proceeds through the court system and of other regulatory and legislative action taken to require the State to perform its legal obligations on our behalf.

Tags: Governor Christie, Pension, Keith Dunn
A Message from Executive Vice President Keith Dunn on Christie Pension Games
Posted: Friday / 5.30.2014 / 7:25 PM
State PBA Will Fight Christie Pension Games

State PBA members are rightfully concerned with the two latest attempts by the Governor to further erode the financial stability of the pension system.  Reducing the legally required pension payments and proposing a new round of pension cuts are merely a continuation of what public employees have been forced to endure since 2010.  But it is in the best interest of PBA members to be fully informed not only about what is being done in Trenton but what the State PBA is doing about it.

Pension Payment Cuts

In what legislative leaders at the time believed was a "compromise" to cut pension benefits and mandate health care payments in Chapter 78, a pension payment plan was built into the law to require the State to fully fund the pension system in 7 increasingly larger payments.  The size of these payments was not a shock to anyone, especially the Governor.  But as the deficit grew in the State Budget due to inflated and overly optimistic revenue projections that didn't pan out, the Governor saw the extra pension payments as an easy way out of a difficult budget hole.

In essence, the Governor's proposal makes only the actuarially required "Normal Cost" pension payment to cover the needs of the pension systems for this year.  The plan essentially ignores payments for the "Unfunded Liability" portion of the bill which contains the debt owed to the system through years of skipped payments and investment losses.  This is like making only the minimum payment on a credit card - it pays the bill but the interest and fees just keep adding up.  Legislative leaders, including those who championed Chapter 78, are vowing to fight the Governor on this plan and this debate will rage into the Budget passage at the end of June.

**This plan does not permit deferral or cuts in pension payment for local government employers that fund the vast majority of PFRS.

Hybrid Pensions?

If cutting pension payment wasn't enough to cause a panic for employees, the State Treasurer also floated a generic plan to create "hybrid pensions" that would in theory retain portions of the existing pension structure with a 401K.  State PBA members must remember that there is no specific proposal and more questions and rumors than fact on this concept as it stands today.  There is no bill to make it happen.  There is no formal "plan" to define how it would work and whether PFRS would be included.  There are also no bipartisan legislative statements supporting the concept as there was before the bill that became Chapter 78 was introduced.

State PBA members will be given specific details of any plan to reduce pensions, whether in PFRS or not, as soon as it moves from rumor to fact.

State PBA Response

Finally, the State PBA office has received calls about what we are doing and why we haven't been in the press on these matters.  PBA members should rest assured that there has been considerable action and attempts to reach the media over the past few weeks.

In addition to the normal lobbying, communication and political action that we must take at times like this that can't be advertised for obvious reasons, the State PBA has been developing a legal and regulatory strategy to tackle these threats head on.  The State PBA attorney has already been authorized to take any and all legal action to compel the pension payment be made on behalf of our members.  Since the State PBA and NJEA share the same law firm, the coordination of legal resources is fairly simple.

PFRS Board of Trustees Chairman Wayne Hall is also pursuing the rights of the PFRS Board to sue the State to mandate that the entire pension payment be made.  The PFRS Board has a fiduciary responsibility to protect the Fund.  Chairman Hall will be proposing his plan at the next PFRS Board meeting.

In addition, the State PBA retained actuary is continuing their effort to do a detailed analysis of the PFRS.  They are actively engaged in their research and have posed a series of questions to the State actuary and State Treasurer's Office to fill in the gaps in the official PFRS actuary report.  This process will take a few months and a full report will be provided to members when complete.

The State PBA has also been communicating with the media throughout this process.  The media has been provided with quotes and statements since the pension payment cut was proposed.  We can't control what the media prints and it is likely since the NJEA and CWA make up the vast majority of members that the pension payment cut (and hybrid pension approach) would impact that they are an obvious place to obtain a quote.  We will continue to speak out on this matter privately and publicly with the media.  But PBA members should not be discouraged if they don't see our names in a headline.

We know there is a considerable and organized effort by the Governor and those in the nation that support him to end traditional public employee pensions as we know it.  PBA members should be outraged by the repeated violation of trust and the games that these individuals seem happy to play when it is our lives, our investment and our future they are looking to destroy.  We will fight this plan and hope that there is an army of angry and motivated PBA members, retirees and their families standing beside us as we do