From the Star-Ledger, March 3, 2010
When the Senate voted last week to reform New Jersey’s public employee pension and benefits system, it was under the glaring watch of a visitors’ gallery packed with angry state workers. Hundreds more lined the halls of the Statehouse, shouting their disapproval so that it was impossible not to hear them.
State worker unions are angry and they are doing all they can to drum up that anger through the ranks. Unfortunately, their campaign has been built on distortions and misinformation.
The state pension system is now nearly $46 billion in the red. When the fund’s unfunded liability was “only” $34 billion, the Pew Center for the States — a nonpartisan national research institute — ranked it as the third-highest unfunded liability in the country. New Jersey’s unfunded retiree health care liability is the nation’s highest. Overall, Pew ranked our entire system among the country’s eight worst.
The unions claim this all could have been avoided had the state made its regular payments into the pension system. However, the fact is even if the state had made every payment to the penny, the system would still be nearly 30 percent unfunded — a multibillion-dollar gap.
When former governor Christie Whitman passed her pension bonding scheme, some unions worked with her on the back-end to get their own members’ retirement age dropped to 55 and their pension contribution dropped 40 percent. State union leaders never batted an eyelash in 2001 when the governor and Legislature boosted pensions 9 percent without offering any means to pay for it, and then negotiated a 40 percent decrease in their members’ pension contributions — things they knew the system could not sustain.
The union leaders need to take off their blinders and stop ignoring their own complicity in this problem.
The impact of that past inaction to stop schemes they knew would have a long-term effect on the fund’s health can now be quantified. On its own, the 9 percent boost in 2001, which we now need to reverse, blew a $4 billion hole in the pension fund in just eight years.
Not only is it time for the union leaders to own up to their own co-starring role in creating this mess, it’s also time they start being honest with their members about the minimal impact the reforms we now are seeking will have. As a union leader who helps provide health and retirement plans to private sector workers, I know that a promise of a secure retirement must be a promise kept. But more important, one must be honest.
The union leaders have failed to inform their members that they won’t even be affected by the vast majority of these reforms; the state would be on shaky legal ground if it changed the rules for current employees mid-game. But changes for all future employees will save both the system and taxpayers billions of dollars in the long run. They also will ensure that pensions are only provided to the career full-time employees the system was created to support in the first place.
The unions have also staked their position against requiring all public employees to put 1.5 percent of their salaries towards the cost of their health benefits — something all state and some local employees already do through their negotiated contracts. Given that New Jersey workers in the private sector on average contribute more than $3,000 annually towards their health care, making this across-the-board change is a small but entirely fair price to pay. And it will have an immediate impact on government spending, decreasing by more than $300 million annually the amount property taxpayers would otherwise have to pay.
Without change, the entire pension and benefits system would soon collapse under its own weight. Instead of receiving the benefits they were promised and worked decades towards, career public employees would instead see reduced benefits, or nothing at all.
If the problem was only skipped payments, the anger of the unions could be justified. But it’s not — and the complicity of the unions in past schemes only contributed to the failing system we now are trying to fix.
One can only wonder how the union leaders couldn’t see this day coming years ago.