NJ's Pension Problem: 'A Bipartisan Adventure in Malfeasance.'

Tuesday, January 18, 2011

Workers with their pension papers (Bill Bamberger)

Welcome to Politics Bites, where every afternoon at It's a Free Country, we bring you the unmissable quotes from the morning's political conversations on WNYC. Today on The Brian Lehrer Show, WNYC reporter Bob Hennelly talked about New Jersey's debt crisis and the debate around public employee pensions.

In New Jersey, a state facing $54 billion in unfunded pension liabilities, Governor Chris Christie has said bluntly and repeatedly that if public sector unions don't compromise with him to restructure benefits, their pensions will become insolvent within the next decade. The public employee pension crisis has received a lot of attention in recent months as more and more states come to terms with their crippling debts. The issue's sudden prominence makes it feel like a new threat, but Bob Hennelly said that it's been a long time coming in New Jersey.

When Republicans were in charge in 2001, we had a situation where they raised the pension benefits substantially for public workers without having a funding piece. The state has been making promises and even during the [Christine] Whitman administration speculated on the pension, borrowed from it to play the market. Then during the Democratic period of time, they didn't make contributions into it. Even in the current administration, Christie balanced the budget by not putting in the $3 billion required by the pension in the current term.

Hennelly called it a "bipartisan adventure in malfeasance." But he also said the pension crisis reflects something deeper than simple mismanagement.

We are basically seeing that the very tough debate is being presaged in the public sector union that we're having nationally about the social contract that existed and was implied in Social Security. Those were drafted in another time when people didn't live so long, and all the actual presumptions were based on that. Now people are living longer and we have to renegotiate those contracts. That said, what the unions are concerned about is that Christie is leaving out the super wealthy who have been doing really well throughout this whole period.

Hennelly said that leaving it up to every state to handle their pension problem alone misses an opportunity for sweeping reform and improvement. Much as those social contracts need renegotiating, our public sector system as a whole is due for a change.

It's really time for a national evaluation of all of these in the aggregate, because it's happening on every balance sheet in every state, county and municipality. We need to bring these all together and look at them in a holistic way, because what's going to happen is, piecemeal, we're going to see local governments cut services even as there's more demand for them, unless there's some kind of comprehensive solution.


Bob Hennelly


More in:

Comments [8]

As a New Jersey public retiree and senior citizen, I'm very concerned that the State of New Jersey is preparing to welsh on its social contract with us.Governor Cristie is holding required pension funding hostage to his "pension reform". The pension system has not been fully funded for more than 15 years through Republican and Democratic administrations.It depends largely on employee contributions with some anemic investment returns since the great crash.

Cristie has shown a complete lack of good faith in withholding $3.1 billion dollars in state funding . The current defecit is estimated at $54 billion dollars with another $66 billion in health care costs. I don't agree with Cristie on much, but I do agree without change the system will default within 10 years..But what type of change?

What will happen to us retirees if the system defaults? I understand we have language in the New Jersey Constitution that implies the pension is a contract and a debt that must be paid. But some debate this interpretation.They say if the State doesn't have the money, this debt does not have to be paid, just like an insurance annuity contract.

We also have the Non-Forfieiture Clause, a statute passed when Governor Whitman raided the $20 billion to speculate in the stock manket and was forced to put the money back by the New Jersey Supreme Court. The Non-Forfeiture Clause states pensions must be paid in full and on time. Hopefully judges will uphold it, as they are also in the pension system.

If our system defaults, we will have an entirely unprecedented situation. Technicall y States can't go bankrupt,but in effect New Jersey will be bankrupt. We have no guarantee the Federal government will bail us out, like the European Union.bailing out Greece Public pensions have no Federal guarantee like private pensions.

So what happens? The State may raise taxes and cur services, very unpaletable to the pubiic and legislators in Trenton. It may try to borrow, difficult to do at any reasonable rate of interest if the pension is in default. It may try to sell or lease State assets, such as the Turnpike, Parkway,and Statehouse.

But knowing the galoots in Trenton, I believe their first move will be to try to stick it to the retirees. They may try to offer us 50 cents on the dollar or even end our checks completely, like those poor retirees an Prichard, Alabama.

We public retirees in New Jersey must organize to protect our pension assets and rights.

Jan. 19 2011 10:29 PM
Rem Mills from New Jersey

As a New Jersey public retiree and senior citizen, I feel we retirees must organize to protect our interests. As Milton Filker, president of my old A.F.S.C.M.E local many years ago and a great mentor of mine said,"When something happens you don't like---ORGANIZE!!!"

Many of the public retirees seem like contented cows in la-la land. They don't realize the very real danger we're in. We can't depend on the unions entirely to protect us. I've spoken to many union leaders.They are very concerned and are doing many things.. But retirees generally don't pay union dues. Union leaders have to primarily serve their active members. When crunch time comes, they may sell retirees down the river.

Many of us public retirees are organizing on Face Book, Twitter, and other sites to help protect our pension rights. We will not go quiet into that dark night. We are senior citizens and vote in large numbers.We are preparing for legal and political action.

Jan. 18 2011 11:23 PM

Whenever there is such rancorous either/or rhetoric on a topic, hiding squarely in between all the hoopla is a gem of compromise, that when worked out thoroughly, can become a win-win solution to the problem.

Let's hope it happens, soon! Too many discouraged public sector workers out there!

Jan. 18 2011 06:38 PM
Mike from NJ and American citizen

I really appreciate Mr. Hennelly"s reports. He is right on when he wonders why the Public isn't so concerned about the huge wealth disparites between the upper 1% and the rest of us. The middle class is really getting squeezed and to blame teachers and public workers is really a major cop out. The large banks and Wall Streeters are still protected and seem to be prospering. Why can't the public direct their anger at these folks.

Jan. 18 2011 02:56 PM
Nick from The Chemically Altered Vistas of NJ


What a mess!

I really feel for those guys though. Despite what popular opinion suggests, state employees are hard working, and have to deal with a very large amount of really ridiculous stuff. Police, teachers, DFYS, community college admin, court workers, and govt admin all are tough jobs. They do get a lot of time off and a great pension, but it is a trade off. If you do what they do for a corporation or business, you would be paid much more. Any NJ employees, keep your head up and keep fighting. Make some concessions, but don't give away your whole pot. Communicate with your union shop leader!

Jan. 18 2011 01:17 PM

In regard to previous governors and legislatures that failed to fund the pension system: We do not constitutionally hold our public servants accountable for what they are mandated to do but fail to do. It should be possible for a supreme court justice to hear a complaint about this and issue a court mandate in remedy. The remedy would be to force the governor to occupy his office and the legislature to stay in session round the clock until they pass legislation to address the problem. They can either repeal the mandate, or meet it--but they cannot go home until they do something!

Jan. 18 2011 12:40 PM
Fafa from Harlem

The disparity that Bob bemoans is greatest between blacks and whites. (See Insight Center stats at That the guy - Bob - who is amazed that the media did not address income inequality in the context of Dr. King, does not address the obvious racial aspect of it, is, frankly, also amazing.

Jan. 18 2011 10:48 AM
amalgam from Manhattan by day, NJ by night

Ah yes, my state's Gov. - Christie - weighs in (no pun intended) on the myriad issues facing NJ and the rest of the U.S., and, well, the world.

Smart negotiation and renegotiation of legally binding contracts (including the general social contract) is the key to most of the problems we have with state budgets, along with the coalescing of municipal services between small localities instead of keeping some of the redundant, independent services which is now in effect.

Mr. Hennelly is correct on the "footloose" nature of current global capital and the system established to promote it, including shadow banking, "offshoring," and the "race-to-the-bottom."

Academia has made this a major component of its thinking for the past 20+ years, but the general public and discourse has largely failed to acknowledge its primacy in the world we live in. Hopefully the media and the American public can start to think and discuss this soon...

Jan. 18 2011 10:45 AM

Leave a Comment

Email addresses are required but never displayed.

Get the WNYC Morning Brief in your inbox.
We'll send you our top 5 stories every day, plus breaking news and weather.


About It's A Free Country ®

Archive of It's A Free Country articles and posts. Visit the It's A Free Country Home Page for lots more.

Supported by

WNYC is supported by the Charles H. Revson Foundation: Because a great city needs an informed and engaged public.  Learn more at


Supported by