The title of NJSpotlight’s recent article on New Jersey’s pensions,”Public pension funds in better shape, study says,” conveys an overly optimistic message. The body of the report does highlight some of Pew’s concerns about New Jersey but Spotlight perplexingly fails to give the details about Pew’s actual assessment of the state of New Jersey’s public pensions, which is very grim.
Pew’s study covers 2019 numbers, so it was before the stellar 2020-21 investment returns and this year’s mega-pension payment, but Spotlight’s readers should be informed of the grim reality of exactly where New Jersey’s pensions stood in 2019 – both on an absolute basis and when compared to other states. So Sunlight will take it upon itself to provide that important information.
According to Pew:
Even worse, the largest public pension fund, the Teachers’ Pension and Annuity Fund (TPAF) – is much worse condition than the overall fund. Sunlight estimates that even after the stellar 2020-21 investment returns, TPAF is less than 30% funded. TPAF is broken and needs to be fixed.
Importantly, Pew shows that there are many ways to reform pensions and make them more sustainable. This is particularly necessary for states like New Jersey because “[f]or states already paying down large pension debts — retirement system costs in some states eat up more than 15% of state revenue — further contribution increases may be difficult to fund without cutting essential services and programs or raising taxes.” Yet Governor Murphy is choosing to leave this unsustainable mess for future New Jerseyans to clean up.
Rather than fix the pensions, Murphy – with his eyes on his re-election campaign – chose to cave to his public union pals by vetoing Senate President Sweeney’s pension reform efforts and then dumping $6.9 billion (over 15% of the state budget) into New Jersey’s pension black-hole.
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