NJ Sustaining Corruption

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The Garden State Initiative released a report on the state of New Jersey finances. You have heard it all before but what keeps being left out of these ivory tower pronouncements is the systemic corruption at all levels and in all corners of officialdom here that makes even the slightest improvement in our general fiscal situation a pipe dream.
Here are some excerpts along with a few charts on the pension system, the last of which makes my point.
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Focus on that last chart. Liabilities actually decreased over the last two years. Significantly decreased against all logic and reason. Did everybody take a pay cut? Did 30% of plan participants disappear? No. The actuaries just got told to lower liability values and like dutiful apparatchiks they complied.

Author(s): John Bury
Publication Date: 22 Sept 2021
Publication Site: Burypensions

Teacher Retirement Systems: A Ranking of the States

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Bellwether Education Partners is a “national nonprofit focused on dramatically changing education and life outcomes for underserved children. [They] do this by helping education organizations accelerate their impact and by working to improve policy and practice.” And making good money* doing whatever that means.

Apparently this think tank got some interns to go through official teacher pension data reported by the 50 states and the District of Columbia to come up with rankings. New Jersey was not last overall (probably on account of the ARP money that went into the pension this year) but Medium-term and Long-term New Jersey did come in last…..and by a lot.

Author(s): John Bury

Publication Date: 3 September 2021

Publication Site: burypensions

ARP: “Actuarial Equivalent of a Guillotine”

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Right now on the American Rescue Plan (ARP) website:

Status of Applications [.xls] – Coming Soon

Until those spreadsheets start popping up we have no clue as to why, by whom, and how these bailout applications are being made but, before seeing any numbers, one thing bothers me.

A footnote on that ARP website reads:

**MPRA plans can restore benefits under 26 CFR 1.432(e)(9)-1(e)(3) at any time, including before applying for SFA.

So why aren’t plan participants like Carol Podesta-Smallen in the MarketWatch story not having their monthly pension amounts restored to pre-MPRA levels and getting large checks to make up for past reductions? It would reduce asset values in those plans but isn’t that a good thing when applying for bailout money?

Author(s): John Bury

Publication Date: 31 August 2021

Publication Site: burypensions

PBGC Multiemployer Pension Bailout – The Weeds

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The Pension Benefit Guaranty Corporation (PBGC) on July 9, 2021 announced an interim final rule implementing a new Special Financial Assistance (SFA) Program for financially troubled multiemployer defined benefit pension plans.

What struck me:

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It is expected that over 100 plans that would have otherwise become insolvent during the next 15 years will instead forestall insolvency as a direct result of receiving SFA. Section 9704 of ARP amends section 4005 of ERISA to establish an eighth fund for SFA from which PBGC will provide SFA to multiemployer plans under the program created by the addition of section 4262 of ERISA. The eighth fund will be credited with amounts from time to time as the Secretary of the Treasury, in conjunction with the Director of PBGC, determines appropriate, from the general fund of the Treasury Department. Transfers from the general fund to the eighth fund cannot occur after September 30, 2030. (page 6)

Unlike the financial assistance provided under section 4261 of ERISA, which is in the form of a loan and provided in periodic payments, a plan receiving SFA under section 4262 has no obligation to repay SFA, and PBGC must pay SFA in the form of a single, lump sum payment. (page 7)

Author(s): John Bury

Publication Date: 10 July 2021

Publication Site: burypensions

PBGC Rules on Multiemployer Pension Bailout

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The Pension Benefit Guaranty Corporation (PBGC) today announced an interim final rule implementing a new Special Financial Assistance (SFA) Program for financially troubled multiemployer defined benefit pension plans.

Pertinent excerpts coming over the weekend but, for now, it looks like the bailout number moved from $86 billion to $94 billion per the PBGC press release:

Author(s): John Bury

Publication Date: 9 July 2021

Publication Site: burypensions

Most New Jerseyans Are Fiscal Dullards

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That is what the Murphy administration has to believe for them to send out this piece of gripka:

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treating $10.19 billion in Biden relief money as if it will never have to be repaid (one way or another).

Keep in mind when reading just this one excerpt below that $6.9 billion represents about six months worth of payments out of a pension system that is still accruing benefits at record levels and as of June 30, 2020 reported unfunded liabilities under GASB of $128 billion.

Author(s): John Bury

Publication Date: 2 July 2021

Publication Site: Burypensions

Restoring Politician Pension Pork

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Jobs as judges, prosecutors, and municipal business administrators are the crock of gold at the end of a politician’s rainbow here and with bailouts, unlimited debt, and an apathetic tax base ripe for plucking politicians have an opportunity to sweeten the pots. According to politicoNJ that is exactly what they are planning on doing with five bills (one already enacted).

A4313transfers Administrative Law Judges from the Defined Contribution Retirement Program to the Public Employees’ Retirement System. The Office of Legislative Services (OLS) estimates that this bill will lead to annual State cost increases resulting from the transfer of Administrative Law Judges from the Defined Contribution Retirement Program to the Public Employees’ Retirement System. The first-year cost could approximate $2million.In subsequent fiscal years, the annual State cost will grow as a function of increases in judges’ salaries and other economic factors. The bill may also make Administrative Law Judges eligible for healthcare benefit sat retirement that are not available in the Defined Contribution Retirement Program.

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S3197Clarifies eligibility for deferred retirement for certain judges in JRS. PoliticoNJ guessed at who could benefit:

The bill appears to have been written with Middlesex County Prosecutor Yolanda Ciccone in mind, as she otherwise would have to leave the prosecutor’s position when she reaches the mandatory judicial retirement age of 70 in 2024 in order to collect her judicial pension. It also could potentially apply to Judge William Daniel, whom Murphy nominated last week as the next Union County prosecutor.

Author(s): John Bury

Publication Date: 19 June 2021

Publication Site: burypensions

How Stupid are Credit Rating Agencies?

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Yes, unfunded liabilities as of June 30, 2020 are “more than $60 billion”. Much more ($128 billion under GASB68 and and $94 billion using understated valuation liabilities). But, setting that aside , how is Sweeney planning on reducing that massive debt?

Simple: lower pension payments…..

Clearly, we need to do everything we can to cut the cost of our annual pension payments at both the state and local levels in order to continue to guarantee the retirement payments our retirees have earned and to reduce the unfunded liability that is such a burden to taxpayers.

That is why we have developed legislation to enable our state and local pension systems to add revenue-generating assets like water and sewage treatment systems, High Occupancy Toll (HOT) lanes, parking facilities and real estate to provide new, diversified sources of revenue for their investment portfolios.

Author(s): John Bury

Publication Date: 17 June 2021

Publication Site: Burypensions

NJ PFRS Asset Move

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The New Jersey Police and Firemen’s Retirement System (PFRS) was supposed to get their assets to invest three years ago but the process seems only to be starting now with an RFQ for Class Counsel that the PFRS board sent out yesterday.

Here is how much is involved.

From the latest Division of Investment report there is about $89 billion to split up.

From the latest actuarial reports for the system PFRS is allocated about one-third of the market value of assets:

Author(s): John Bury

Publication Date: 15 June 2021

Publication Site: Burypensions

What NJ Tells Creditors On Benefits

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According to the EMMA website New Jersey borrowed another $400 million last week for which they had to provide an Official Statement which included 20 pages on the situation with public pensions and benefits. Excerpts follow.

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The contribution of the Lottery Enterprise is valued as of June 30, 2020 at $12.569 billion, based on a 30-year straight line amortization. However, the first reevaluation of the value of the Lottery Enterprise required by LECA has not yet been performed. If the contribution of the Lottery Enterprise were not taken into consideration in calculating the funded ratio of the Pension Plans, the funded ratio of the Pension Plans as of June 30, 2020 would have been 37.6% instead of 49.8%. (page I-60)

Author(s): John Bury

Publication Date: 3 May 2021

Publication Site: Burypensions

NJ Taxpayers To Be Byrned Again

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The state income tax eventually failed to stem the rise in the highest property taxes in the country since it was based on providing money to hundreds of de facto fiefdoms with no oversight. Ms. Egea goes on to speculate that Governor Murphy, with an even more pressing need for revenue, has another new tax in mind:

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In 1976, New Jersey voters passed a constitutional amendment that dedicated the entire income tax to the Property Tax Relief Fund and lower property taxes in 1997 did help Brendan Byrne get reelected. There is no time for that this year so expect the massive debt and structural budget deficit to be the excuse for this new tax that should be hitting in 2022.

Author(s): John Bury

Publication Date: 26 April 2021

Publication Site: Burypensions

NJ Pension CAFR

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The Comprehensive Audited Financial Statement Report (CAFR) for the State of New Jersey, Division of Pensions and Benefits, as of June 30, 2020 appeared on the state website this month which means the actuarial reports should be out soon.

But, for now, some CAFR excerpts:

Financial Highlights Fiduciary Funds –Pension Trust Funds and Other Postemployment Benefit (OPEB) Plan (page 3)

Fiduciary net position decreased by $2.4 billion as a result of this year’s operations from $87.3 billion to $84.9 billion.

Additions for the year are $10.2 billion, which are comprised of member, employer, nonemployer, and employer specific and other pension contributions of $8.9 billion and net investment income of $1.3 billion.

Deductions for the year are $12.7 billion, which are comprised of benefits, refund payments, and transfers of $12.6 billion and administrative expenses of $62.0 million.

Author(s): John Bury

Publication Date: 21 April 2021

Publication Site: Burypensions