Hence, New Jersey continues its long history of making promises to retired teachers that it will never keep.
For some insight into the history of N.J.'s pension miasma, read the new report by Mike Lilley called “Pensions, Politics, and the New Jersey Education Association."
For context, N.J.'s current unfunded pension liability comes to $95 billion. If you add in health benefits, our unfunded liability is $160 billion. The entire annual state budget is about $35 billion. And all the hoopla about a "millionaire's tax"? Jeff Bennett points out that enacting this tax would bring in a whopping $565 million per year.
The math is impossible.
Lilley explains that this fiscal disaster is why "the Mercatus Center ranks New Jersey dead last among states in long-term fiscal solvency and why New Jersey has the second-lowest bond rating of any state (above only Illinois). Passing the amendment without any reform would condemn the state and its citizens to a bleak future.
Read the whole thing, but here’s a few highlights:
- "The average teacher puts in $195,000 over the course of a 30-year career and gets back a total of $2.6 million in benefits.11 The 2005 Benefits Review Task Force, created by Acting Governor Richard Codey to analyze New Jersey’s pension and benefit system, reached a similar conclusion."
- "New Jersey’s broken pension system is a direct consequence of the NJEA’s enormous political power. The only thing the NJEA did not receive was full funding. Politicians, keenly focused on self-preservation and presented with the choice of pleasing the NJEA or keeping taxes down, did both—they gave the NJEA what it wanted on pensions but did not spend the money to fund them. Sure, the NJEA made a lot of noise at rallies and in the press, but until recently, the NJEA never punished lawmakers for not funding pensions the way it punished them for trying to shift pensions to local districts, cutting state education aid, or reducing benefits. Instead, during the time that pensions were being shortchanged, both incumbents and NJEA-endorsed candidates were elected at extremely high rates."
- [T]he amounts required to adequately fund current pension liabilities even after Christie’s reforms are simply unsustainable. As the New Jersey Pension and Health Benefit Study Commission found, the state would need to spend $4–6 billion every year for the next 20 years to close the funding gap.13 That is more than 12 percent of the current $35 billion budget, which is money the state does not have. Yet that is what the NJEA wanted to lock into the constitution.