Why no one should be shocked that New Jersey has a pension problem

Rick: How can you close me up? On what grounds?

Captain Renault: I’m shocked, shocked to find that gambling is going on in here![a croupier hands Renault a pile of money]

Croupier: Your winnings, sir.

Captain Renault: [sotto voce] Oh, thank you very much. [aloud]

Captain Renault: Everybody out at once!

We may not be in Casablanca, but insincerity was on full display yesterday when a Superior Court judge in New Jersey issued a ruling that Governor Christie has the authority to slash a scheduled pension payment due to a massive cash crunch. But the real news is old news: N.J.’s pension promises to state workers are a charade unless someone – from either the executive branch or the top echelon of the unions – starts telling the truth.

Christie announced his intention last month to violate state law and not make a full pension payment of $1.58 billion because the state budget office, ever the optimist, overestimated state income tax revenues by about $650 million. Hence, the inability to make the full payment, yet one more variation of a theme in a two-decade performance over the last two decades by Jersey governors, politicians, and lobbyists. (See this recent column for a history of N.J.’s pensions scams.)

In response to Christie’s announcement, eight labor unions sued the Governor and the state treasurer.

In her decision, Judge Jacobson ruled that despite the dire need to stabilize the pension system, “the court finds that the governor has nonetheless demonstrated that the state’s current fiscal situation is an emergency.” With a billion dollar hole in our budget, full payment  to the pension system would cause “severe and immediate impacts on vulnerable populations” and, indeed, Christie has the executive authority — remember, the N.J. governorship is just about the most powerful in the country — to make the cut to preserve the state’s fiscal solvency and (relative) stability.

Judge Jacobson did confirm labor groups’ right to contractual agreements regarding pensions and she left 2015’s payment open to further litigation.

Governor Christie declared victory, crowing, “I am pleased the court recognized the necessity and urgency of this decision so that we can provide key funding for our schools, our colleges, our hospitals, and other essential services.”

Union leaders declared victory too.

Hetty Rosenstein, head of CWA warned, “We will continue to fight for our members’ pensions, and we are heartened that the judge confirmed the contractual right to funding.” PBA Executive Vice President Pat Coligan issued a statement that described the Judge’s ruling as a “sad continuation of the poor decision making by the State that has purposely underfunded our pension system.”

More in our bailiwick, NJEA President Wendell Steinhauer, who earlier called Christie’s pension payment cut  “illegal, irresponsible and reckless,” told The Record that “enforcing that contractual right will be the cornerstone of our litigation going forward, as we seek to hold Governor Christie accountable for obeying the law he signed.”

Cue up “Casablanca.” Public union leaders are, shocked, shocked to find that New Jersey pension system is unsustainable and, instead, take umbrage at then-candidate Christie’s equally duplicitous promise in 2009 that “I will protect your pensions. Nothing about your pension is going to change when I am governor.”

But union leaders know that N.J. can’t recapture the money spent through Gov. Donald DiFrancesco’s 9 percent benefits increase in 2001 or, for that matter, perform some sort of alchemy to restore the lack of pension payments that date back to the Whitman Administration. The money’s not there.

NJEA executives aren’t exactly counting their personal pennies. While the teacher union doesn’t release salaries of its top executives, in 2010 the Star Ledger reported that “together, NJEA president Barbara Keshishian, executive director Vincent Giordano and spokesman Steve Wollmer earn more than a million dollars. Keshishian…earns $256,450 annually. Giordano, with salary and deferred compensation, earned $550,203 in 2009, and Wollmer makes $300,000.”

There’s no deception or moral failing in large salaries. I’m sure they earn them. The transgression is perpetuating the canard that young public school teachers in N.J. will actually have full pensions after 25 years of service. Judge Jacobson raised that concern in court but Christie told her “not to worry about it.” The Governor stated, “We can pay our checks for a very long time, but not forever.”

According to John Bury, who blogs about Jersey’s pension mess, in 2019 the pension fund will have $0 assets. In other words, barring major civil service reform and a complete overhaul of the pension system, the fund will be mighty precarious in as little as five years.

Either union leaders don’t do the math or they do and know the truth. What’s worse: ignorance or deception? Either way, teachers have a right to be angry, not just at the lies told by governors but the lies told by union leaders.

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Laura Waters is president of the Lawrence Township School Board in Mercer County. She also writes about New Jersey’s public education on her blog NJ Left Behind. Follow her on Twitter @NJLeftbehind.