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Archive for the ‘State Pension Funds’ Category

It wasn’t exactly smooth sailing, but in the end the pension reforms passed…but without a key element.

The provision allowing public employees to pay into a 401-k style plan ( also known as the “opt-out” ) went down in an amendment. It was this sticking point that led to a standstill on the floor of the Assembly Monday when Democrats emerged from caucus confident that the entire bill (S-2) would be held.

What followed was a series of closed door meetings amongst the leadership and the Governor. It’s funny because my life covering politics is actually a series of meetings behind closed doors that i am not allowed to attend. It’s kinda like the velvet rope clubs of my youth. But in this case, I am never on the list. So, we try and piece together what transpires after the fact.

here is what I can discern. The Governor and Sweeney appear to have reached an agreement early on for these reforms. Christie agreed to let Sweeney take most of the credit. And he should. Sweeney championed these reforms four years ago, but didn’t have a partner in the Governor’s office who would sign off on them. Now he does. So when the state’s top Democrat started hearing that there were some defections among the Assembly Dems, he started trying to roundup the votes. I’m told that Joe D of Essex County for example, had promised to deliver votes for the reforms that weren’t panning out.

Well, On Monday afternoon those closed door meetings began. And it finally took Speaker Oliver and Majority Leader Cryan meeting with Sweeney to get the Senate prez to agree to remove the opt-out. Sweeney seemed to view this thing as his baby, and didn’t want it changed. But the Assembly ain’t his house. And what is emerging here is a bit of a class divide. Dems see the Assembly as the last bastion of the people’s will. The opt-out is the only provision that is truly ideological. It endorses the view that maybe the idea of guaranteed government provided pensions is old and stale and needs to be phased out. And that troubled D’s who told me they were not prepared to allow it. Democrats believe in pensions and protecting working people. In fact, even some Republicans were troubled by the actuaries on the opt-out. In effect, they feared it would chip away at the health of an already troubled system and numbers suggesting otherwise were not all that clear.

So, a lot of political capital has now been spent. It was a more bruising battle than some had anticipated. You might even see Assembly Dems push back by forcing their Authorities reform on the Senate as they believe pensions were rammed down their throats a bit. Authorities targets more upper income people which brings us back to the class issue.

Assemblyman Declan O’Scanlon has introduced a bill that eliminates the 9% pension enhancement going forward ( something the Gov also wants ), but I’m told the Dems will need the bad taste in their mouths to dissolve a bit before they will even consider that.

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Wednesday’s Assembly Budget Committee hearing was quite a show. Literally. I mean, a parent with developmentally disabled children, a blind 13-year old boy…in other words a handful of good people who will be adversely affected by Chris Christie’s proposed mid-year cuts.

I suppose if the Democrats think Christie isn’t playing fair by governing through “fiat” then they too can deliver a forceful blow back. It’s hard after all when you meet someone who really needs whatever modest help he or she is getting from the state and conclude that they don’t deserve it. ( Take that! You whiny advocates for mental health!!! )

On Thursday, the Senate’s State Government Committee took public testimony on the pension reform bills. I was expecting to see more of show here, but it wound up being a tad undramatic. The unions criticized the proposals although in a more muted fashion. I suppose they know that reform is inevitable and since the bills do not really force changes for current employees, they might as well take the hit and hope that whatever is going on in the Assembly will produce comparable bills that leave currents harmless.

What was curious about the new-and-improved Senate committee ( which now includes wagering, tourism and historic preservation ) was that Shirley Turner was absent. Officially I was told that she was busy since the committee doesn’t normally meet on this day. But some conspiracy theorists opined that she was not on board with these bills, and might therefore have agreed or even been pressured to take the day off. After all, the only way Democrats can stand up to their constituents in the unions is if they speak with one voice. Why should Turner get a pass and be allowed to vote against? Needless to say, with substitute Barbara Buono sitting on the committee in Turner’s absence, the four bills cleared unanimously.

Programming note: In case you were wondering about the previous post’s title “Yes I can…as long as the Democrats say it’s OK” that is indeed a ‘Spinal Tap’ reference. It’s a play on Bruno Kirby’s speech to the band about what the name of Sammy Davis Jr.’s autobiography should actually be titled.

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I love saying “pension bomb.” Not only does it take a somewhat wonky issue and make it sound cool, but it’s also a pretty accurate way to sum up what’s happening.

Here is the very un-sexy fact about solving this problem: none of the current leaders will likely be in power to reap the rewards if bold action is taken now. It took years for the problem to balloon into a full fledged crisis and it could take a generation for the ship to right itself.

Which is why you gotta give Senate President Stephen Sweeney some credit. This is the sacred cow of working folks and it’s tough to take them on publicly even if many people are on your side.

The climate has actually gotten so murky that I am told the NJEA is considering running ads to pre-empt the upcoming budget season which could conceivably place teachers in the cross-hairs.

But some have also chimed in that the reforms don’t go far enough. In other words if we are going to choose this point in time to diffuse the bomb, we might as well really take the shrapnel out of it.

One of the proposals is to extend the retirement calculation from three years to five. That will produce savings, no doubt. But the real savings would come from taking on local police and fire unions that only use their last year of service to calculate their pension. Very often, that final year can be loaded up with OT. So, big savings would accumulate if that was extended from one to three. But somehow, I can’t really see top Dems taking on first responders in the post-9/11 environment which we were reminded over Christmas – still very much exists.

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What is the old adage in journalism?

Follow the money, right? Well, when you start to do that in this case something seems a little, well – off key.

The story begins in the Spring of 2008. New Jersey invests $182 million of state pension money into an ailing Lehman Bros. Four months later, the investment house fails and NJ losses $118 of that investment. As one Republican told me, the only two entities to invest in Lehman at that time ( while its stock price was plummeting ) was NJ and the government of South Korea.

anyhoo…the state then proceeds to sue Lehman to recoup the money ( I know, right?!! get in line ), but that’s not the scandalous part of this story.

Apparently three members of the Investment council who were appointed by the Governor, then reappointed earlier this year had ties to Lehman when that decision was made. Each of them either worked or had worked for the investment giant.

Their re-appointments must be approved by the Senate Judiciary Committee and ultimately the full Senate. So, Republicans on the committee have asked to interview them publicly. “No,” says Paul Sarlo, the Chairman of the Judiciary Committee. There are too many appointments that need to be considered…and besides,  The Investment Council doesn’t make any decisions related to investing state pension funds, the Division of Investment does.

Apparently the council’s job is only to help set policy. But the fact that they have no role differs slightly from what Treasury Department Spokesman Tom Vincz says which is that all three members “recused themselves” when it came to the decision about the Lehman investments.

So, which is it?

To be fair, the $118 million is only a fraction of the state’s $60 billion pension fund. But that’s still a lot of money.

Doesn’t this whole affair remind you slightly of the plot to that 1995 Scorsese film “Casino.” Just without all the murder, drugs and mob ties…or none that we know of.

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