Put NJ’s problems on Christine Todd Whitman. She is the one who tapped the pension funds to balance her budget
I’m glad you mentioned that as I’m wondering how many governors and state legislators treated the pension funds as a a giant ATM or Payday Loan. Center.
This always gets omitted: The main buyers of fraudulent MBS’s were the state pension funds. The value of those investments went to zero during the financial meltdown. The impact of that is essentially never reported.
Wasn’t there a big scandal in Ohio about Cronies being placed into one of the big Pension funds and making all sorts of skeezy investments? Back in the mid aughts?
Don’t forget the prison population as a driver of state costs…
Pension administrators were counting on median returns of 7.5 percent that year [2016]. Instead, they made just 1 percent.
The Dow was up 13.4% and Nasdaq 7.5% in 2016. What the fuck are these people doing???
Oddly missing from this story is a short word beginning with the letter T.
State revenues took a hit in the early 2000s because most state tax systems (not directly rates but anything based on federal definitions) took a hit from the GWB tax cuts. Not to mention all of Grover Norquist’s mini-me’s. Which compromised the ability to pay state employees, leading to the pension increases as deferred compensation. While also making it harder to fund those pensions.
And now, of course, the AP couldn’t possibly mention the idea of raising revenue as a way of meeting obligations to both residents and pensioners.
About 1/2 what’s been spent in Iraq would cover this.
Most state income taxes piggyback the federal return so they’re likely to take another big hit when the latest “reforms” go into effect.
I do not trust anything that Pew says about state pensions. Pew has supported efforts to hurt state pensions for public employees. "We want to bring to your attention . . . the deceptive work that the Pew Center on the States is engaged in across the country in order to promote their cash balance overhaul policy,” a group of 10 Kentucky state senators and representatives cautioned in an open letter to legislators in other states. The letter warned lawmakers “about the ramifications of letting Pew into your state,” as well as “its unholy alliance with the Arnold Foundation.”
For decades States across the country have been dealing with employee wage demands now by promising better and better retirement plans later. This is what happens when politicians believe supply side fairy dust. It is sort of the Whimpy theory of government. “I will gladly pay you Tuesday for a hamburger today.”
I don’ think most state pension funds are allowed to play the stock market. Instead they buy bonds. Guess what has been depressed for over a decade–the bond market.
Edit: I have just taken a quick look, while state pension funds often play in the stock market, for some reason they have not reaped the full rewards available as the market soared. More research is necessary.
That’s pretty much the way republicans see any public funds, with billionaires being the only ones with the PIN.
Yes indeed, all those graphs that show stagnant wages come home to roost in pension funds.
I work for the County of San Diego and prior to my joining up the County started making a big contribution to the employees pension payments, (why yes, the employees do indeed pay out of their salary into their pension- a lot) instead of giving them wage increases, for all the usual reasons, putting off the payments, employees never getting vested, and so on.
Now that deal has expired and I’m paying a larger percentage of my salary into the pension and bringing home hardly more than I was bringing home 5 years ago.
And as paulw notices, tax cuts. Since the States were/are getting less revenues for their operations as taxes get cut budgets get cut, and since the deVos’ of the world are always looking for ways to get their hands on more money, privatizing schools by increasing the pressure on States education funding and dangling out these “free” school dollars via charter schools etc, well, education gets cut, salaries get cut, more experienced higher paid teachers get cut, pension levy’s drop, and so on. Toss in the GWB recession, gee, pensions can’t meet their obligations without bigger payments from their organizations, who can’t afford that because they’ve cut their own revenue streams etc ad nauseum.
It’s a trend! The solution? Remove Republicans from government, tax the rich, seize their estates, and make them cry. Oh, and redistribute their ill gotten wealth to the people and institutions they’ve stolen it from.
As the recipient of a state pension from CA after more than 30 years working for the state, I have been frustrated for years by the overseers of our state pension system’s shortsidedness. Retirement options were eased in lieu of raises, and retirement funding somehow never was seen as a necessity. The retirement system was stuck for a long time expecting annual increases in investments of 8-12%. Anyone could see that problems would increase as baby boomers retired in larger numbers. Even if , as was the case with my salary, I had gone more than 5 years without even a COLA when I left.
I get indignant when the issue is posed as one between greedy retirees and current needs for police, fire, health, etc. Retirees rely on the promises made - I did. I traded the opportunity for a multi- million dollar position for the satisfaction of public service - and looked forward to a steady pension.
The tax cuts imposed by various administrations have had extraordinary effects on state public services far beyond public pensions. CA’s public school system has steadily declined in ratings. The University and state college system that made education available at a small cost now matches and exceeds private higher education institutions in costs. Our infrastructure is crumbling. Etc., etc., etc.
Retirees and pensions should not be scapegoats for bad government decisions. It diverts attention from the fundamental erosion of government and its services for the general public - with no cost to the increasingly isolated and enriched “upper” class.
It’s an AP story, Jake.