NJEA’s Beatty: Gov. Murphy Is Best in the Nation When It Comes to Collaborating with Public Unions – and This Year’s Budget Proves It
July 6, 2021
More Flawed Research from Jersey Jazzman and NJ Policy Perspective, Once Again Aligning with the NJEA
July 9, 2021
A surprising puff piece on NJ pensions from NJ Spotlight’s John Reitmeyer, who is usually a very good, fair reporter. Yes, it’s true that NJ is making a record payment into its woefully underfunded public pensions, and, yes, it’s true that stellar investment returns boosted pension assets to $90.6 billion (from $84.9 billion as of June 30, 2020). Reitmeyer dutifully records these facts and the chest-thumping by Gov. Murphy, Senate President Sweeney and Assembly Speaker Coughlin. After all, it’s an election year, and all the above pols are running for re-election, so it pays to keep the public unions happy.
But Reitmeyer neglects to point out that NJ’s public pensions will remain woefully underfunded despite all of the above. As of June 30, 2020, the state’s public pensions had liabilities of $213.2 billion, so with $84.9 billion of assets, the pensions were 39.8% funded: that’s 40 cents set aside for each $1 owed. With assets now at $90.6 billion (and keeping the liabilities the same), the funded ratio increases to … 42.5%. Even with the record state contribution this year, the funded ratio is unlikely to top 45% – still one of the worst in the nation.
As of June 30, 2020, the state’s largest public pension, the Teachers Pension and Annuity Fund, was 24.6% funded. With all the money being poured into it, TPAF may reach a 30% funded level – still one of the single worst public pensions in America and most certainly still in crisis.
The bottom line is that the state is contributing over 15% of the entire budget to pensions. With this year’s gusher of federal aid, 15% is doable, but what happens when that money goes away? Will NJ still devote 15% of its budget to public pensions? What happens if there is a market downturn?
Meanwhile, NJ’s public pensions remain unreformed and will exert inexorable upward pressure on pension liabilities every year into the future. Sen. Sweeney had a plan to reform pensions in a way similar to successful reforms in other states, but he has apparently dropped that idea. Word has it that he wants to run for governor in 2025, and maybe he has decided that he needs public union support.
NJ pensions are still in crisis. NJ citizens could have used more than a cheerleader reporting the news.