There was a general session today at the Enrolled Actuaries meeting entitled “Public Pension Funding- An Emerging Crisis” with two of the three speakers disagreeing with the premise.
Except when I brought up New Jersey.
I’ll get into details of the presentation when I’m not standing at a hotel computer and when I have the handout on pdf for all to see. For now I will recount my contribution to the session.
I began by refuting the standard argument of underfunding apologists about governments not going away any time soon by noting that Prichard, Alabama does indeed continue to exist even though they haven’t paid 150 retirees in their pension plan in a year and a half.
I then got into New Jersey…..the 10 years of contribution holidays……the legislature arbitrarily decreeing that 1/7th of the ARC is plenty for now…..Governor Christie blithely blowing off the state’s $3.1 billion contribution for 2010 and threatening to do the same with that 1/7th mini-contribution.
Keith Brainard’s exact words escape me but they were along the lines of: “New Jersey is a special case”. I don’t believe anyone in that room full of pension actuaries would argue the point and this is what the taxpayers and media of New Jersey (and evenutally the bond buyers) should be aware of. It’s OK to laugh.
New Jersey is a freak. A national joke. Nobody else gets a $3.1 billion bill and refuses to pay. They may sell Pension Obligation Bonds or pass it on to future generations in other ways but they acknowledge some responsibility to at least be creative in paying it. This is aberrant behaviour. Whereas other states in their funding methods may be metaphorically sneaking smokes to an emphysema patient New Jersey is systematically chopping off limbs.
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