The New Jersey Teachers Pension and Annuity Fund (TPAF) will be drained dry on June 30th, 2027, about eleven and a half years from now. This means that younger teachers who have been faithfully making their mandated contributions towards deferred compensation funding will be kicked to the curb. No politician or economist -- looking at you, Phil Murphy -- can possibly contrive a scheme to replenish TPAF without dramatic reforms, including concessions from beneficiaries.
But conditions are not nearly as dire in New Jersey Education Association’s s front office.
The numbers for post-2027 retiring teachers out in the field are grim. Experts concur that healthy pension funds should be funded at about 80% of liability but the TPAF is currently funded at 28.7% of its total liability of $55.4 billion. You can’t lay this quagmire solely at the feet of Chris Christie because the history of NJ’s pension disaster is far longer than two terms, dating at least as far as 1992 when Governor Jim Florio rashly overestimated returns on investments in order to balance the budget, to 1994 when Governor Christine Whitman borrowed money to make pension payments, to 2001 when Governor Donald DiFrancesco gifted a 9% increase in pension pay-outs to state employees by inflating the value of available funds. And so on.
But how about the pensions of teacher union leaders? You’d think they’d be at the mercy of TPAF, just like those they represent, but -- surprise! -- they’re not. According to a guest post up at John Bury's blog Bury Pensions, the head honchos at NJEA protect their own pensions through a far more reliable source than TPAF. Here’s an example, courtesy of Mr. Bury.
Edward Richardson is Executive Director of NJEA and, according to Column D of NJEA’s 2015 990, made $233,688 the previous year. But Column F, the last column of NJEA's 990, adds additional compensation, which the IRS says is “compensation other than reportable compensation, including deferred compensation not currently reportable on Form W-2, box 1 or 5 or Form 1099-MISC, box 7, and certain nontaxable benefits, as discussed in detail in the instructions for Schedule J, (Form 990), Part II.”
Mr. Richardson’s Column F totals $470,239, which Bury concludes is a combination of “the value of benefit accruals under the Defined Benefit Plan and contributions under the 401(k) Plan that the NJEA maintains for its employees."
How healthy is the fund that will supply retirement benefits for Mr. Richardson and his colleagues? It is funded at almost 130% of liabilities. Compare that NJEA members’ 28%.
To paraphrase George Orwell, all educators are equal but some educators are more equal than others.
Labels: NJEA, pensions, Phil Murphy, TPAF