By Brenda Flanagan
“Powerful people. They got a lot of people’s lives in their hands,” said retiree Sheppard Benyard.
Benyard harbors few illusions about his public pension. He knows the $73 billion fund’s teetering on the brink of insolvency — it’s $44 billion in debt. And years of union protests and lawsuits still have not persuaded state lawmakers or the governor to fully fund it.
As for Gov. Christie signing a new law requiring quarterly payments into the pension fund, Benyard said, “Christie said some time ago he was going to fund it. He never did. Now they’re going to fund it quarterly? We’ll see. Wait and see. That’s all we can do.”
“We’re hopeful that this leads us to the culture of making our payments,” said Assembly Speaker Vincent Prieto.
Prieto supports the new law because it’s been too easy for politicians to raid that big, year-end payment and stiff the pension.
“If something happens, that’s the low-hanging fruit that normally is taken and not paid and that’s what had been happening through many, many years,” Prieto said.
So, instead of one lump payment at the end of each fiscal year — June 30 — the new law calls for smaller payments made at the end of each quarter — Sept. 30, Dec. 31, March 31 and June 30. Jersey will start budgeting under the new law starting with the new fiscal year July 1, so the first quarterly payment will come due at the end of next September. But critics claim the law can’t compel payments or amounts.
“It’s like the effect of a recommendation. Without the constitutional amendment requiring payments, you could be getting quarterly payments of nothing,” said Hetty Rosenstein, New Jersey state director for the Communications Workers of America.
“There isn’t a hard obligation in every budget cycle to make a contribution and so it becomes subject to the kind of negotiations we see right now going on in the Legislature,” said Assemblyman John Wisniewski.
Financial analyst John Bury says the fund needs serious reform — not this.
“It’s internal manipulation, and it’s deck chairs on the Titanic. This is going under, and you really got to go into the engine room and fix that or get another boat because defined benefits run by governments just don’t work,” he said.
New Jersey’s unfunded pension liability helped drag the state’s credit rating down for the 10th time under Christie. But a constitutional amendment to mandate pension payments could backfire, says Assemblywoman Holly Schepisi.
“God forbid we had some emergent situation — another Hurricane Sandy or something like that — there would’ve been no flexibility within the state to ensure emergency type situations were taken care of,” she said.
“They’re not worried. They’re going to get theirs. They’ve got pensions, they got health care. They got all the good stuff. We out here, struggling,” Benyard said.
Here’s the bottom line: the pension crisis is still a crisis. This new law can encourage the state to make pension payments, but it can’t make them do it.