Study: More changes needed in N.J. pension system Tuesday, January 28, 2014 Last updated: Tuesday January 28, 2014, 5:27 PM BY JOHN REITMEYER STATE HOUSE BUREAU The Record From the Political State blog on NorthJersey Despite the ”huge strides” made by Governor Christie and the state Legislature just a few years ago, a new study out Tuesday recommends more changes to bring New Jersey’s pension system back to health, including increased state contributions and more public employee givebacks. The study released by the Common Sense Institute of New Jersey, a nonprofit think tank that advocates free market policies, looked closely at the separate pensions funds for teachers, law enforcement and general public employees. Authors Richard Dreyfuss, an actuary and consultant who is currently a senior fellow at The Manhattan Institute, and Steven Malanga, a columnist and Manhattan Institute senior fellow, also took into account the pension system changes enacted in 2011 by Christie, a Republican, and the Democrats who control the state Legislature. They included forcing employees to pay more for their pension benefits and suspending cost-of-living increases. Despite those reforms, which Dreyfuss and Malanga praised, the current funding deficit of the state pension system is somewhere between $45 billion and $56 billion depending on how it’s calculated, they said. And New Jersey’s pension problems remain among the worst in the country, with only Illinois in more dire straits, Malanga said. He also said Wall Street ratings agencies are looking more closely now at public pension debt, a factor New Jersey feels whenever it tries to borrow money for capital investments such as schools and roads. “We are in a new era when it comes to pension problems,” Malanga said. The study offers a series of recommendations, including more transparent financial reporting, more public employee givebacks and a firm commitment from the state to make its actuarial required payment. “Absent these additional reforms these pension plans will remain unsustainable with the only question being by how much and when insolvency will occur,” the report said. Asked how imminent the problem is during a presentation in the State House on Tuesday, Dreyfuss said major problems would likely occur within two decades. “If this is left unchecked, if you play this out 15 or 20 years, you have an increasing likelihood that these plans will be insolvent or unlikely to recovery,” Dreyfuss said. Christie signaled new changes could be coming to the pension system during his State of the State address earlier this month. Democrats took that to mean the governor could be walking away from his commitment to increase the state’s annual payment into the pension system, which is expected to be over $2 billion in the new fiscal year, though still less than actuaries would recommend the state put in. But Dreyfuss said getting up to full payment as soon as possible should be a top priority, even above getting public employees to make further concessions. “Ultimately, you need to properly fund these plans,” he said. And he offered some sympathy for the current group of public officials, saying most of the damage was done in prior years by previous governors and Legislatures. “It’s unfortunate that the current body of policymakers has to deal with this,” he said. Christie is due to present a new state budget next month. “This is obviously going to be a hot topic this year,” said Jerry Cantrell, president of the Common Sense Institute of New Jersey. “I suspect it’s going to be an interesting conversation between now and June.”
Posted on: Wed, 29 Jan 2014 02:23:40 +0000
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