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BY BOB HOLT
NEWJERSEYNEWSROOM.COM
West Deptford, a South Jersey town of 20,000 reported to be massively in debt, heard Governor Chris Christie’s message of reform on Thursday.
Though about a dozen angry teachers greeted Christie outside the gym at Pope John Paul II Learning Center and a number of vocal critics were scattered through the audience, the crowd was mostly receptive to his call for fiscal restraint.
An Associated Press report on NorthJersey.com says Christie told the crowd of more than 400 at a West Deptford town hall meeting that his reforms are necessary if they want to see their property taxes stay level or go down.
The Courier Post reports that self-appointed township watchdog Sam Cianfarini said his property taxes had skyrocketed to service West Deptford's $142 million debt.
Christie spoke of a couple of his ideas — doubling property tax rebates for middle-income families and seniors and pouring more than $500 million into the state's fast-depleting pension account. He also said the school district would see a 4 percent state funding increase.
But he made it clear he would deliver the rebates and pension payment only if his health benefits and pension reforms were passed. Christie said if changes aren't made to the state pension system it will go broke by 2020.
On Tuesday, as he delivered his 2012 budget, Christie made it clear to the Democratic majority they would bear the blame if pensions and benefits reforms weren't enacted by spring.
Christie's $29.4 billion budget proposal calls for the Democratic-controlled Legislature to enact major changes to public employees' pension and health benefits.
According to NJ.com, an example of what might happen when a pension fund dries up occurred in Prichard, Alabama, with a population of 27,000 in 2009.
The town stopped sending checks to 150 retired workers—city clerks, firefighters and police among them—and many of them now rely on the charity of friends, family and the community for basic survival. A retired fire chief died in a home without electricity and running water, too proud to ask for help.
Democrats accuse Christie of fudging the pension numbers and making scapegoats of the Legislature and of public employees most affected by his proposals.
Much of West Deptford’s debt comes from the failed RiverWinds waterfront project — boosted by Senate President Steve Sweeney when he was freeholder-director of Gloucester County. Namwest LLC, the Phoenix-based firm that was awarded the contract in 2005, went bankrupt in 2009.
Today, the riverfront that was to boast a hotel, convention center, marina and upscale homes is mostly empty.
Well USED, I guess I'm one of those "number crunchers", and I'm quite good at it. So to answer your question I "ran some #s". Your $120K in contributions (paid as 8.5% of your pay over the last 25 years) would have accumulated (assuming 8% interest) to just about $276K at the end of the $25 years. Using the same spreadsheet I created to do that, it looks like you final salary is about $110K, which means you annual pension (after 25 years) is 65% of that or about $71,500. Assuming you are about 55, and that $71,500 includes a 3% COLA (at least until Gov. Christie is successful in taking that away), the Lump Sum value of your COLA-adjusted $71,500 annual pension is just about $1.4 Million.
To summarize, the ACCUMULATED value of your contribution is roughly $276K, but you've been "promised" a pension with a Present value of $1.4Million, meaning the TAXPAYER-funded share is $1,400,000-$276,000= $1,124,000 . This means that your pension will cost taxpayers (measured in UP FRONT funds) over 4 times the accumulated value of your own contributions.
This is approaching the #s from a different perspective, but it confirms the royal taxpayer screwing as shown in greater detail in my earlier comment.
Private sector employers typically contribute 3%-8% of an employee’s cash pay towards retirement, yet the total cost (expressed as a level annual % of cash pay throughout one’s career) of Public Sector Defined Benefit pensions (for a 30-year employee retiring at age 55) ranges from 29% to 58% depending on the richness of the benefit formula (with safety workers generally at the highest end).
More specifically, for the noted formulas, the level annual %s of cash pay are as follows:
2% per year of service w/o COLA – 29%
2% per year of service with COLA – 39%
3% per year of service w/o COLA – 44%
3% per year of service with COLA – 58%
Even after deducting the typical employee contribution of about 5% of pay, that still leaves the employer (meaning TAXPAYERS) contributing 24% to 53% of pay. The middle of these %s is 38.5% vs 5.5% (the middle of the range of what Private Sector employers contribute) or SEVEN (yes SEVEN) times greater.
This is completely absurd, and the very modest “tweaking” at the edges by practically begging employees for a few more percent of pay contributions will NOT even begin solve the HUGE financial problem.
TOTAL COMPENSATION (Cash Pay plus Pensions plus Benefits) should be comparable in the Public and Private Sectors for similar jobs, and with Cash Pay in the Public Sector now AT LEAST equal to (if not greater) than that in the Private Sector, there is ZERO justification for greater Public Sector Pensions and Benefits .
Not for PAST service, but for FUTURE service, Public Sector pension accruals must immediately be brought FULLY down to the level of their Private Sector counterparts. Due to the huge reduction needed, the ONLY way to do this is to freeze the current defined benefit plans for CURRENT (yes CURRENT) workers, and switch everyone into a 401K-style Defined Contribution Plan with an employer contribution in the same 3%-8% range granted Private Sector workers.
Additionally, since Private Sector retirees rarely get any retiree healthcare subsidy before eligibility for Medicare at age 65, similar restrictions should apply to Public Sector retirees.
It’s TAXPAYERS’ money and Civil Servants are NOT more worthy of bigger pensions and better benefits.
Let me preface this by stating I am a registered Republican.
What makes the public employee feel entitled to his pension and health care coverage? How about the fact that he was guaranteed those benefits when he agreed to enter the public sector to serve as a teacher, policeman, or fireman. If you want to make changes to the benefits that will be provided to future workers, that is acceptable. But it is not rationale to take your frustration out on public employees who worked their entire lives to secure the benefits promised to them by the state of New Jersey. IBM or Ford cannot just decide one day that they do not like paying their retired employees' pension plan. Keep in mind, you could of entered the public sector and you would not have had to spend the twilight of your life living off of your depleted 401K and meager Social Security.
Is a public employee born with this sense of entitlement or were they simply always this way?