A brief addendum to Sunlight’s blog on Tuesday about how the teachers’ pension fund (TPAF) is still at risk despite record contributions by Gov. Murphy. The ever-vigilant BuryPensions provided some additional words (data) of warning about the condition of New Jersey’s public pensions.
Bury’s data shows that from 2000 to 2021, the number of retirees has increased from 180,570 to 348,846. Meanwhile, the number of active workers has decreased from 445,382 to 441,559. So the ratio of active workers to retirees has decreased from 2.5 to 1.3: that is, there are only 1.3 active workers supporting every retiree.
This is a problem because as the number of retirees inexorably grows – people are living longer – so does the cost of their defined benefit pensions. Indeed, from 2000 to 2021, liabilities (what is owed to retirees) increased from $67 billion to $188 billion. As these liabilities continue to grow, if there are fewer active workers per retiree paying into the pension system, then either the active workers will have to pay more into the system or the state will, which means taxpayers will. Of course, public unions like the NJEA will fight increased pensions contributions tooth and nail, and pols like Murphy (who has benefited from $15.5 million of NJEA largesse) will never cross them. So that means higher taxes.
This is yet another problem with Murphy’s devoting 14% of the state budget to pension payments – during two years where state revenues soared thanks to federal pandemic aid and a booming stock market. The amount that it takes merely to tread water with New Jersey’s underfunded pensions will continue to rise along with the system’s liabilities. When state revenues inevitably revert back to normalized levels, larger and larger percentages of the state budget will have to be devoted to public pensions. This is not sustainable.
Given these trends, a potential pension crisis looms in New Jersey’s future. This is why Murphy’s throwing $6-7 billion a year into an unreformed pension system makes no sense. That is, unless Murphy’s goal is to please his pubic union supporters so he can run for president.
But what about the future of our state, Governor Murphy?