Christie on Pension, Health Benefits Reform: 'No Magic Wand' (Video)
The governor spoke to a packed community center Wednesday.
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With pension and health benefits reform fresh on the minds of teachers and other attendees at a packed Fair Lawn Community Center, Gov. Chris Christie used his town hall Wednesday to tout the legislation as bipartisan compromise.
Speaking with the backdrop of a "Doing the Big Things" banner, Christie said that while New Jersey citizens "continue to sit by and watch them accomplish nothing" on a national level, legislators in Trenton have put their partisan feelings aside to take steps toward bridging the state's $54 billion pension deficit and $67 billion health benefits shortfall.
Both systems were "headed for insolvency as early as 2018," Christie said. For those who criticize his "my way or the highway approach," the governor said that "facts are stubborn things."
"I don't like every compromise, but I was not sent here to pose and preen, I was sent here to govern," Christie said.
The State Senate approved S-2937 on Monday afternoon by a margin of 24-15, and the legislation goes before the Assembly on Thursday. The bill makes various changes to the manner in which the Teachers’ Pension and Annuity Fund (TPAF), the Judicial Retirement System (JRS), the Public Employees’ Retirement System (PERS), the Police and Firemen’s Retirement System (PFRS), and the State Police Retirement System (SPRS) operates and to the benefit provisions of those systems.
Increases in the employee contribution rates to pension funds are as follows: from 5.5 percent to 6.5 percent, plus an additional 1 percent phased-in over seven years beginning in the first year, meaning after 12 months, after the bill’s effective date for TPAF and PERS (including legislators, Law Enforcement Officer (LEO) members, and workers compensation judges); from 3 percent to 12 percent for JRS phased-in over seven years; from 8.5 percent to 10 percent for PFRS members and members of PERS Prosecutors Part; and from 7.5 percent to 9 percent for SPRS members.
Christie hearkened back to his January "State of the State" address, when he said it was "time for New Jersey to do the big things." The "big things" were getting the pension and benefits system under control, balancing the state budget and cutting spending, and reforming the state's education system, he said.
"Every one of those accomplishments has been the result of compromise of both parties," Christie said, explaining that New Jersey has "set an example for the rest of America" for how both parties should work together to solve big problems.
Christie compared New Jersey's problems to a dinner in which near the end, his predecessors as governor vacated the table and went to the bathroom, leaving him to pay the bill.
"Everyone can yell and scream about how we got here, and there is plenty of blame to go around," he said.
Asked if, after 17 months in office, he would accept some responsibility for the problems he is trying to fix, Christie responded that "I inherited that, I take responsibility for it because it's on my watch." However, Christie noted that over the past 17 years, the state has only made any kind of payment to the pension system a total of two times.
"Every governor who has come before me, and now me, bears a portion of that responsibility," he said.
After $820 million in K-12 education cuts, Christie said he "still was unable to make any kind of pension payment." Therefore, to avoid further cuts, the pension reform bill "was the most responsible choice to make," he said.
In order to make New Jersey more affordable for "our children and grandchildren," Christie said attitudes of "It's okay to cut spending but don't cut mine" must be shunned, in exchange for the willingness to make "tough choices" like pension reform.
The crowd was mostly civil by town hall standards, save for one group of six supporters of perennial presidential candidate Lyndon LaRouche in the bleachers who were escorted out by police after singing and interrupting Christie. The governor called their display "free entertainment."
"Well, for those of you who are standing, there are some seats now available," he said after they were escorted out.
Before attendees asked questions, Christie warned that "You give it, you're getting it back."
"You set the tone, I will respond and comment," he said.
Yoel Weinfeld of New Milford asked the governor if he supports seceding from the union, given his attitude about Washington's epidemic. Christie said "We have to demand more from the people we elect, and we have to set a better example at every level."
"Inaction is not an alternative. The status quo is not an alternative," he said.
Lisa Yourman, a former Fair Lawn Board of Education member and a local small business owner, spoke of the burden of absorbing health insurance costs, prompting Christie to speak of the need to "keep in mind the context within which we are operating" when it comes to health benefits reform. People like Yourman, in addition to hefty benefits costs, pay income taxes and property taxes to support public employee salaries, he said. About 75 percent of the property tax burden comes from employee pensions, benefits and salaries, Christie explained.
"You have to control those expenses," he said. "I'm here to tell you there's no magic wand, and you can't have everything."
Alan Clements, a Fair Lawn High School teacher, said "I'm obviously concerned about changes that [Christie is] making midstream."
"You work for 20 years with expectations of retiring and then all of the sudden eveything's changed on you. It doesn't seem fair," Clements said. Christie's approach seems "more like a dictatorship than a democracy," he said.
"Many teachers voted for him, because of his stance on educaiton, and now I think they regret it. I know they regret it," Clements said.
Richard Vecchiarello, a 5th grade teacher Forrest Elementary in Fair Lawn, said in reaction to the bill that "it was the state that bankrupted the [pension and benefits] system by failing to pay into it," and now New Jersey is "asking them and them alone, public workers, to make up all the shortfall."
Barbara Koziol, a realtor from Elmwood Park, said she understood the concerns of public employees, but that she thinks Christie is "trying to address the concerns." Of the state's financial troubles, Koziol said "you can't sweep it under the carpet."
"I think he's trying his best with what has faced him," Koziol said of Christie.
Howard Mark of Fair Lawn said "I wrote to [Christie] last year about education, and he responded," proudly displaying the letter he received back from Christie's office.
Stuart Pace
10:04 pm on Wednesday, June 22, 2011
The Fair Lawn PD did a great job on very short notice. Well done PD!
Ridgewood Mom
2:23 pm on Saturday, June 25, 2011
A bit like saying "thank you sir may I have another" after being stabbed in the back.
jerzy gurl
5:30 am on Thursday, June 23, 2011
Just love the way he handled those hecklers without missing a beat.
Tony Almeada
11:27 am on Thursday, June 23, 2011
love Christie
Marianne Herrmann
2:33 pm on Thursday, June 23, 2011
Governor Christie is lying to the people of New Jersey. He has given hundreds of millions of dollars in tax breaks to Xanadu, he even spoke about giving them hundreds of millions to upgrade the facade...he is building boutique casinos in Atlantic City, etc., etc. He is breaking the back of these workers because they would most likely vote Democratic. They do not make private sector salaries and should not be treated as if they do. I would like to see Governor Christie live on 40 thousand a year and then have his medical costs raised 2-3 times higher. He is a big hypocrite because his choices are based on his politics and his religion, not what is best for the workers of New Jersey.
JAD
9:16 am on Sunday, June 26, 2011
Malcome, you posed data for one school system the salaries for 28% of the workforce, you failed to include the breakdown for the other 72% who make between 40k and 100k. Your tunnel vision towards those who fit into you argument leave a big hole in your rational. What about DPW workers? Fire? Human Service workers? etc. You cannot point out the minority who make a "larger" salary while ignoring those do not make anywhere near those numbers. Typically those, especially within the education system, have higher education that makes the salary of 100+k per year in line for education level.
As far as Christie's salary comparing the salary of a person in a different field who has held the position for a few years to one in another who has held a position for 15+ years is a stretch of an argument as best.
Dr.Doom
12:20 pm on Sunday, June 26, 2011
Ridgewood
133 (26%) public school employes make $100K+
190 (37%) public school employes make $90K+
247 (48%) public school employes make $80K+
312 (61%) public school employes make $70K+
416 (82%) public school employes make $60K+
JAD
6:37 pm on Sunday, June 26, 2011
Punkins figures are vague at best but I'll work with those for the sake of argument. You are telling me is that paying 61% of a school system employees who have a bachelors or higher 70k seems out of sync with the rest of NJ? Comparing NJ salaries with those of other states is not a lateral argument, the cost of living is much higher here then compared to TX for example.
You don't think that going into a position with a minimum of a BA and after 15 years in said position, you should expect to make 75K per year? There are admins in the city who make more than that with less education.
You know that this "reform" is affecting those in the other agencies equally, right?
Dr.Doom
9:50 pm on Sunday, June 26, 2011
Figures are from the NJ state public domain ( for reference http://php.app.com/edstaff/search.php). The argument here is not that BS after the 15 years should be making less than $70K. It all depends on the field and the company one works for(in this case state of NJ) unfortunatly having BS/MS/PHD in any given field does not guarantee nor should be the guarantee of the certain pay. I know lawyers who make less than that and people college dropouts who make 3 times as much.
The public employees’ salaries and their well being should not be out of synch of the well being of the taxpayers. If any private company does not do well - there are layoffs and/or pay cuts, over wise company goes down along with everyone in it. It's only when we are looking at the public school employees (especially in the last 5 years) we see the pattern of cutting programs and salary increases for the public school employees.
Taxpayers on one hand have to deal with realities of life (see above example with private company) and on the other hand have to deal with the tax increases to pay for the other people (public employees) who don’t want to deal with realities of life.
B@B
6:51 pm on Saturday, June 25, 2011
Marianne, you are 100% correct. This governor, like his teabagger compatriots in Wisconsin, Michigan, and Florida, is out there handing out cash to billionaires while telling YOU that your problem isn't bankers and the Koch Brothers, it's your kids' teacher...it's the fireman who came to your house the day the bacon grease caught fire; the cop who showed up when you were sideswiped while driving your kids home from school. As long as they can keep people's attention focused DOWN the economic ladder (or across), maybe they won't notice the billionaires stealing the last few bucks from their back pockets.
All these public sector workers have paid into the system. Governors from Whitman on have STOLEN THEIR MONEY.
JAD
9:11 am on Sunday, June 26, 2011
Malcolm what you are spouting is close to accurate if you if fail to acknowledged the facts.
Prior to the state dipping into the pension system to fund property tax rebates and special projects it was funded 100+%. The system as it currently runs needs to be 80% solvent to continue payments as negotiated by EVERY ONES elected officials.
I don't think many within the state system have an issue with concessions being made on their end. Much of the issue lies with the legislation of salary and insurance benefits. These new legislation's will set into stone those who work for state and local municipalities will in fact be making less each year then they did the previous year. "Shared sacrifice" should be just that, shared by all within the state, not vilifying a group to create an us against them mentality. The state government set this into motion long before Christie set foot into office, he has just further perpetuated the issue and is frankly not fixing anything.
Dr.Doom
4:05 pm on Sunday, June 26, 2011
there is $8b of unfunded liabilities for 2010 which is 30% of the NJ budget. I dont think property tax rebates and special projects would have made much of the difference. the system was designed to be funded first couple of years by moving the cost down the road.
Also in regards to the property tax rebates that are designed for the age 65 or older or blind or disabled, i would say money much better spend there then for some $100K+ public employees who work 35hrs/week with cadilac health plans.
Also did you notice how the most taxed states CA, NY, CT, NJ have the biggest state public employee count and have the biggest budget problems.
JAD
6:18 pm on Sunday, June 26, 2011
Punkin
There has not been a payment from the state of NJ into the Pension system in 10+ years. There is no way the system could undergo that level of under funding and still remain solvent. This is without taking into account the compounded interest that is now lacking in the system. The smoke and mirrors does not remove this as the catalyst for the situation the state is now in.
Why are you only looking at those employees who make 100K or more per year? Should we just ignore those who make less? You must also be aware that many pension employees do not pay into the Social Security system, right? This means upon retirement they receive NO benefits from SS. the state has never paid into SS on their behalf, at a rate of 6.2%on average. The state has instead taken the 6.2% and funded special projects and rebates, that went to many other people then the elderly and blind it was design for, and have paid NOTHING.
Name me one private employer who is given a pass both financially as well as legally into paying into either SS or a pension system.
Dr.Doom
6:59 pm on Sunday, June 26, 2011
JAD, for this year 80K state employees on average earned $63K, which makes it $5B.
Lets calculate the salaries paid by the state for the last 50 years = $250B (today's money).
The 6.5% is $16B in today's money
Assuming the public employees also put 6.5% it would add another $16B in todays money.
So when comparing to the SS the amount of the fund would be $32B in todays money.
Current unfunded liability is $53.9B and the fund amount is $66B so in the perfect world the fund total would be $110B.
Care to explain the difference between those numbers?
JAD
10:04 pm on Sunday, June 26, 2011
I'll gladly explain the errors in your thought process. Here you go.
Where in your calculation o you take into account for compounded interest? I see you've one crude calculations for inflation yet completely neglected the interest on said money. Also when your doing you calculations please take into account that the funds were funded to 120% solvent until Whitman started deferring payments. Apparently the system worked fine up until that point.
Placing the blame solely onto the employees is naive concept, perhaps thinking outside party lines would be more a more prudent when thinking of the issues.
Dr.Doom
9:36 pm on Monday, June 27, 2011
about 120% - have you ever heard of financial/accounting vehicles designed to perform differently during different times, for example first N number of years its to show one kind of benefit, then later change completely (for example mortgage 5 year interest only ARM), the plan was designed to work till the active life of the polititians who came up with the idea
Now to come back to the crude calculations, Number of employees and salaries are taken from the http://www.nj.gov/csc/about/publications/workforce/
Following took place in order to calculate the final number
1. Assumption - Salary increases average out to 3.4% during the last 50 years (based on last 10 years, propagated till 60s)
2. Number of employees taken from the link above
3. ASSUMPTION - Not a single $ was drawn from the pension plan (we all know how optimistic that is)
4. ASSUMPTION - ROI is 5.5% compounded every year since 1960 (pretty optimistic given what actually happened)
5. SCENARIO - Public Employees and state put 6.5% each into the pension plan since 1960
Final Number is still $39B, still pretty short of existing balance and very short of the expected balance of $110B
JAD
9:36 am on Tuesday, June 28, 2011
Where are you pulling your 6.5% from? You are aware that neither the employee or the employer actually only pay 6.5%, right? The 6.2% number I gave earlier was only in comparison to what should be paid into, but in many pension systems is not, the social security system. Both the employee and employer pay a higher %, higher for the employees than the state, into the system. Some pension systems the employees are currently paying 8.5% into the pension system and 2%towards their current healthcare benefits. The employer, or the state is paying 7.2%, or 1% over what they would be paying into Social Security. This, of course varies from pension to pension. Each union contract carries different benefits, hence a blanket "fix" is doing nothing but appeasing the masses until a new scapegoat surfaces to take the brunt of the us vs. them wrath.
Do you have any actual figures to support your theory or is it all just an assumed scenario on your part? More questions to factor into your equation is what retirement age are you giving to the employees, what % of employees are not collecting any benefits due to death, non retirement etc.?
Dr.Doom
7:50 pm on Tuesday, June 28, 2011
6.5% in response to the "state never paid into SS on their behalf, at a rate of 6.2%on average". The calculation is in response to the comparing the Soc Sec with the State owned plan. Looks like that if employees and state would pay 6.5% for the last 50 years the plan would have $39B.
The caluclation assumed not a single $ was taken from the plan by retirees.
You are welcome to validate those calculations. I specifyed all the inputs i used to calculate the numbers.
JAD
8:42 pm on Tuesday, June 28, 2011
I'm not saying this to be an a** but what is your point in throwing out theoretical numbers to prove your point? You apparently have no clue as to what is or should have been paid into the pension and benefits system and are doing this on the fly to garner evidence for your opinion. The simple fact is that both the employee as well as the employer either paid or should have paid more than the % you used in your initial calculations, different pension systems have different requirements for both the state as well as the employee, the age or terms of service differ by agencies, etc.
The 6.2% was only to show what the state should be paying to meet minimal employer responsibility regardless of public/private status. Once that 6.2% is deducted from what the state currently has agreed to pay into the pension system, your only talking 1.5-2% additional. ANY private company I have every worked for as a professional matched or paid as an additional benefit a minimum of 5% into a 403b. Can you honestly say that the state paying 2% towards a retirement system either a 401k, 403b or the pension system is egregious?
Either way I'm out of this. There are times in life you recognize too much time is wasted debating when neither party is open to learning.
Dr.Doom
9:12 pm on Tuesday, June 28, 2011
no one requires any company to contribute into the 401k/b or the pension system. Once company stops any contribution to the pension system i don’t see any protests around.
Guess what - i put into my retirement 16% of my salary (10% 401K + 6.2%SS) also I’m 100% sure that there will be no Soc Sec once i retire. Also I do get pay cuts from time to time.
You don’t see me standing on the street near the inflated rat, waiving the transporants and yelling "Nazis" on top of my lungs. Or you dont expact that my neighbours start paying more just to keep my salaray raises in place.
Once i believe that i can make more money and more benefits and company is not of the same opinion I’ll just go to different place.
FREE MARKET ECONOMY AT WORKS.
Marianne Herrmann
3:56 pm on Sunday, June 26, 2011
JAD, you said it all. Actually if we look further into Christie's alleged affiliations...
Jack B Goode
10:10 pm on Sunday, June 26, 2011
FYI the adopted Pension and Health Care Reform Bill MANDATES pension payments from this point forward reversing a dangerous trend that both parties are guilty of.
BSquared
9:09 am on Tuesday, June 28, 2011
I just don't see how having 500,000 middle class people pay 8% - 35% of benefits will help save a state of 8.7 million? It is not as if my taxes are going to go down. The one thing that bothers me is we as a state and a nation are so divided. The animosity from the private sector towards public workers and public workers towards private employees is unreal.
B@B
9:29 am on Tuesday, June 28, 2011
BSquared: Bingo! This is how the middle class dies -- squabbling amongst each other for scraps as corporate executives and bankers amass more and more of the nation's wealth for themselves. The problem is that a few preposterously rich guys simply cannot buy enough STUFF to keep an economy this size going.
BROADWAYblos
4:53 pm on Tuesday, June 28, 2011
This governor is the master at passing the buck. He has not tackled anything. Rich get richer, poor get poorer. Hes a putz!
Dr.Doom
10:26 pm on Tuesday, June 28, 2011
Bunch of useless slogans and proclamations never helped anyone especially people it is pretending to defend