Mobilizing angry taxpayers is how Senate President Steve Sweeney plans to solve New Jersey’s public pension crisis. He sat on a panel of experts at a Monmouth University forum, which grimly predicted that retirement funds for the state’s public workers and teachers could go belly-up within the next few years.
“Remember the movie ‘Network’?” Sweeney asked. “For some of the older guys — ‘I’m mad as hell and I’m not going to take this anymore?’ That’s the kind of energy we’re going to need the public to engage in.”
“I’m just trying to get you to connect the dots that it’s just not a pension crisis in isolation. It’s stuff that affects you students today and it’s stuff that will continue to affect you going forward,” said Tom Byrne, a member of the New Jersey Pension and Health Benefits Study Commission and former chair of the State Investment Council.
New Jersey has a $115 billion public pension liability and it’s only about 56 percent funded. Three of the systems — for judges, teachers and state employees — face insolvency by the years 2022, 2029 and 2034, respectively. By 2030, New Jersey will be obligated to pay $7.1 billion into the pension system.
“If you’re a family of four, that’s $65,000 you’re obligated to pay just to pay for pension and health care benefits to public employees,” said Peter Reinhart, director of the Kislak Real Estate Institute at Monmouth University.
“We can’t raise taxes enough; there’s not enough taxes to raise. We’re chasing people out of the state,” said Sweeney.
The task force assembled by Sweeney earlier this year recommended shifting all new public workers into 401(k)s but not changing the system for vested employees. But others argued former governors and Legislatures created this current crisis by disregarding the state’s pension payment obligations.
“Because we don’t want to deal with the employer finding the resources to meet their obligation, we want to say to the public employee, ‘The only way we can meet this is to cut your benefits.’ Now if you think that’s a fair plan to play on, I would suggest otherwise,” said New Jersey Policy Perspective President Gordon MacInnes.
Gov. Phil Murphy was recently able to wrangle a cost-saving health benefits compromise with public workers, but there’s no love lost between Sweeney and the public sector unions, particularly after the NJEA spent $5 million to defeat him in the last election. He expects no compromise going forward.
“What I hear is, ‘You’re not our boss. The governor is.’ Really? I’m the one that funds the contracts that he approves, so I get a say, too. And we’re going have a say going forward,” Sweeney said.
The NJEA said it already made concessions in 2011 and “remains ready to go to work on these issues. It’s unfortunate that Senator Sweeney sees it as a war. Public employees are not his enemy. That hostile, negative approach has failed him in the past and it will fail him again. We know there’s a better way and we are ready to work with people who understand that.”
The panel emphasized there’s no silver bullet. Instead, solving this problem will require biting the bullet and significant political and public will.