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State Employee Retirement Benefits

Twenty percent of New Jersey’s budget is projected to be spent on pensions for state employees by 2010 according to an article published today by the Associated Press. I do not believe it and neither should you.

A careful read of the article brings out the usual misnomers. State Treasurer John E. McCormac said

We have a better (benefit) plan than any corporation in the state. … I don’t know that we should.

But Gannett puts the blame on gimmicks and abuse. These are retirees receiving COLA increases. Forgive New Jersey retirees for keeping up with the cost of living. That other pension plans do not match COLA is not the issue. COLA is a tool to ensure those on fixed incomes are not penalized as time moves on. That is hardly a gimmick. 

In addition, state employees are faulted for being promoted to boost their retirement benefits. The article makes it sound as though this is a shady issue. What is problematic about workers working for promotions? In the school system, this is seen in teachers or other certified staff working as principals for three or more years. Retirement benefits are based on a worker’s highest three salaried years. Schools need principals. If a teacher is certified, has a desire to be one, and is deemed qualified, why shouldn’t he be hired as an administrator? What is the alternative?

APP also points out to risky investments which were made managing the funds. That hardly seems to be a fault of the retirees. Why should state employees be penalized for mismanagement? The thought of curtailing pension payments because the state made poor investments is ludicrous.

The state borrowed $2.8 billion from the pension fund in 1997 while everyone screamed. The state thought (incorrectly) that it would pay the debt off by investments it had. But, of course, as we learned above, it made poor investments and the market burst. Now the state is scrambling to find a way to pay back that money. Again, that hardly seems to be the fault of state employees or the retirees.

Note, none of the article substantiated that in five years the state will be paying 20% of its budget on retirement benefits. Nowhere in the article did we read why benefit payouts are increasing. All we read was how the state has mismanaged funds. While news, it is not what the lead purports. Yet, I suspect that most of the discussion about this will be that the overpaid state workers are dragging down New Jersey.

Also blogged on this date . . .

• What Am I Listening to Now? - 2008
• Spent - 2007
• NJ Supreme Court Slows Education Drain - 2006
• Around the House - 2003

Tags: budget, Education, money, New Jersey, Politics