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Re: How teachers unions drive Jersey’s pension crisis
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Interesting string about an intractable issue...

Dolomiti says the state is legally obligated to pay that money.... and that's right, but allow me to finish that sentence so it's abundantly clear: The state is legally obligated to pay that money BY FURTHER INCREASING TAXES ON THE TAXPAYERS OF NEW JERSEY. That's the only way the state can get money. And, just in case you haven't noticed, we already pay the highest property taxes, among the highest income and sales taxes, have the most under-funded pension, and second lowest credit rating of any state in the country.

Now that we've established all this money is coming from NJ taxpayers recall the amount needed, $160 billion, is growing each day so we need to address a second, related issue. JCman8 says ?the state will eventually declare bankruptcy...? Well that's not quite correct. States can't ?legally? go bankrupt. ?Legally? all states can do to meet their obligations is raise taxes. What I think was meant is that there simply isn't enough money available to make good on the promises.

What next then.... Perhaps NJ's long suffering tax-payers could turn to the Feds for a hand out.... Imagine that, red states propping up the pensions of blue states public workers. I don't give that much chance.... It just doesn't look good at all.

My suggestion: leave the state ? thousands have already. If you must stay, and own a place, sell it NOW and rent instead. That way any value it has today is preserved. Ask yourself, how attractive is NJ real estate going to be in a few years time under any plausible scenario ? pensions paid or not. And don't worry about rents going up. With all those people leaving to escape the income, property and sales taxes, there will be plenty of apartments. You just need to accept that you'll pay punitive taxes as a NJ resident to fund somebody else's pension.

Bottom line: start planning your escape strategies now people, because it's going to get very ugly before it's all over. No matter which way you look at it, or who is to blame, we're just about out of other people's money.

Posted on: 2016/12/5 17:00
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Re: How teachers unions drive Jersey’s pension crisis
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Quote:

Dolomiti wrote:
Quote:

bodhipooh wrote:
[quote]
Dolomiti wrote:
[quote]One public employee that is definitely underpaid (ridiculously so) is the American soldier. Whether it is a commissioned officer, or an enlisted serviceman, those salaries are definitely too low and I'm glad to see a pension system in place for them.

You sure about that?

A 2010 study showed that the average compensation for a US active duty soldier is $100,000. 60% of this was non-cash (housing, medical etc).


Show me a study that calculates the average enlisted soldier is getting 100K in total compensation.

And, by the way, using a metric of "total compensation" that incorporates food allowance, housing allowance, medical benefits would make every welfare recipient that receives medicaid, food stamps and public housing an upper middle class person.

As for the other part questioning my assessment of subpar work ethic, and performance, I made that statement based on personal experience working with various NYC agencies employees on various projects. The stuff that goes on would be grounds for dismissal in the private sector. I have seen terrible employees with bad attitudes in many different settings and agencies, enough to know that accountability seems to be nonexistent.

Posted on: 2016/12/5 15:49
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Re: How teachers unions drive Jersey’s pension crisis
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bodhipooh wrote:
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Dolomiti wrote:
at the expense of short-changing public employees, who accept lower salaries in exchange for decent retirement.


This may have been true in the past, but this is certainly not true today. Many, many government employees today get salaries that are equal, or better, than the counterpart private sector salary, and often with subpar work ethic and work performance.

Where's your evidence for this?

Did you do an extensive analysis of the BLS national occupation wage estimates, comparing public and private sectors, and adjusting for the employee's level of education and the nature of the work?

Are police and firefighters so well compensated, that it's acceptable to reduce their retirement benefits?

Where is your evidence that public sector employees have a "subpar work ethic and performance?" What metrics are you using? Are you looking at extensive surveys that try to determine this?

By the way, is it as easy to automate the work of a teacher, police officer and social worker as it is a factory worker, line cook or construction worker?


Quote:
One public employee that is definitely underpaid (ridiculously so) is the American soldier. Whether it is a commissioned officer, or an enlisted serviceman, those salaries are definitely too low and I'm glad to see a pension system in place for them.

You sure about that?

A 2010 study showed that the average compensation for a US active duty soldier is $100,000. 60% of this was non-cash (housing, medical etc). An enlisted soldier is typically at the 75% percentile of earnings. Their wages grew faster than the private sector in the aftermath of the recession. At any given time, in recent years only a small percent are in combat situations (20% or less).

Veterans also have a lot of good benefits. While some of the recent issues get headlines, and the system is slammed due to a large number of vets from recent conflicts combined with a new awareness of conditions like PTSD and TBIs, the VA hospitals are still one of the best hospital systems in the US.

One CBO report concluded that hiring civilians instead of soldiers would save nearly $40,000 a year. (https://www.cbo.gov/sites/default/file ... y_Civilian_Mix_OneCol.pdf Table 5 / Page 39)

Posted on: 2016/12/5 15:27
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Re: How teachers unions drive Jersey’s pension crisis
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If public sector pensions were subject to the same standards and oversight as private plans under ERISA, just about every state official would be in jail, or at least subject to significant liability for breach of fiduciary duty.

Posted on: 2016/12/5 15:17
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Re: How teachers unions drive Jersey’s pension crisis
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I normally would agree with the posters here. But this is the problem, the teacher's union and other state employees have been paying into their pension plan, the various governors took their money and placed it in the general budget to give "tax cuts." Christie worked on a compromise in 2011, got employees to contribute more and did not fund the budget. From the state employees view, they have been robbed of their money. If private business did this, someone would go to jail. Solving the problem is not simple.

Posted on: 2016/12/5 14:51
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Re: How teachers unions drive Jersey’s pension crisis
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Dolomiti wrote:
at the expense of short-changing public employees, who accept lower salaries in exchange for decent retirement.


This may have been true in the past, but this is certainly not true today. Many, many government employees today get salaries that are equal, or better, than the counterpart private sector salary, and often with subpar work ethic and work performance.

One public employee that is definitely underpaid (ridiculously so) is the American soldier. Whether it is a commissioned officer, or an enlisted serviceman, those salaries are definitely too low and I'm glad to see a pension system in place for them.

Posted on: 2016/12/5 12:03
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Re: How teachers unions drive Jersey’s pension crisis
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CatDog wrote:
the honest truth is that NJ needs to end pensions altogether, and convert current pensions into 401ks.

Yeah... No.

401k might make it cheaper for NJ at some future date -- at the expense of short-changing public employees, who accept lower salaries in exchange for decent retirement.

But even if we switched every public employee to 401ks today, the state is legally obligated to pay those pensions, which means the fund will still be short by billions -- and will no longer receive the contributions from current state employees (as those will be diverted to new 401ks).

Pensions worked for decades. While they are a defined benefit, they produce a return based on the same types of investments as 401ks -- and while pension managers can make mistakes, individual investors usually make worse ones.

So, it seems to me what you're saying is not "let's change the retirement benefit structure." You're saying "let's pay public employees less for retirement."

For 20 yr annualized returns; pension funds are typically in the 7% range; individuals around 2%, as they often panic sell, or are short-sighted, or may be forced by economic circumstances to sell at times when the markets are low. Plus, early withdrawals have stiff penalties.

Thus, the average balance of a 401k at retirement is $91,000. The switch to 401ks has been an utter disaster for American workers and retirees.

Meanwhile, pension funds ARE sustainable -- when we actually fund them properly. Numerous governors refused to do so, and that's what has caused the issues.

Posted on: 2016/12/5 4:00
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Re: How teachers unions drive Jersey’s pension crisis
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borisp wrote:
"New Jersey has a severe pension crisis: Its unfunded pension liabilities are $95 billion. The state?s retiree health-care obligations add another $65 billion, for a total of $160 billion in unfunded liabilities (and this does not include another $40 billion for local government pensions). The entire state budget is $35 billion. New Jersey simply doesn?t have the money to pay for these pensions.

[quote]"How did New Jersey get into this situation?"

It got into that situation by governor after governor refusing to properly fund the pensions, starting back in the 90s.

The anti-union screed ignores a basic fact: For decades, teachers accepted a low salary in exchange for good benefits, including good pensions. The politicians of that time chose to delay the full cost of paying teachers.

It's a policy that works... until it doesn't.

In 1995, Whitman started diverting funds away from the pensions. Even at the time, it was obvious this was going to cause major headaches for the state in the future. One critic at the time pointed out that "it is the sort of thing that comes back to haunt you." She did it anyway. And the longer we don't make the funds whole, the more we have to make up.

By the way, state police and other government workers' pensions are in a similar state. Do you plan to also blame the police unions for being too powerful, and demanding excessive pensions...?

Posted on: 2016/12/5 3:27
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Re: How teachers unions drive Jersey’s pension crisis
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the honest truth is that NJ needs to end pensions altogether, and convert current pensions into 401ks. They are unsustainable, and the public unions have negotiated outrageous deals in order to support politicians through the years. Police, teachers, office workers, everyone gets crazy pensions. At least JC ended the policy of paying for lifetime healthcare and pensions for city workers even if they didn't complete their 20 years in JC but for other cities.

Posted on: 2016/12/5 3:12
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Re: How teachers unions drive Jersey’s pension crisis
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Great article, thanks for posting.

The gravy train will be ending soon enough. If a Democrat gets in, the day of reckoning might be delayed, but it is inevitable.

The state will eventually declare bankruptcy and pensions will be converted into 401ks. They quite simply are unsustainable.

Posted on: 2016/12/5 2:58
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How teachers unions drive Jersey’s pension crisis
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How teachers unions drive Jersey?s pension crisis

"New Jersey has a severe pension crisis: Its unfunded pension liabilities are $95 billion. The state?s retiree health-care obligations add another $65 billion, for a total of $160 billion in unfunded liabilities (and this does not include another $40 billion for local government pensions). The entire state budget is $35 billion. New Jersey simply doesn?t have the money to pay for these pensions.

How did New Jersey get into this situation? The pension crisis is a direct consequence of NJEA?s enormous political power."

Posted on: 2016/12/5 2:55
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