New Jersey Republicans advance pension reform initiatives

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • Comment on this story

A plan supported by Gov. Chris Christie to reform the state’s troubled public pension system was introduced on Monday in the New Jersey House by Republican Assemblymen Declan O’Scanlon and Gary Chiusano, with Sen. Joseph Pennacchio planning to introduce the same measures in the Senate.

“The system in its present form is unworkable which is a major concern for every resident in the state,” O’Scanlon said. “This legislation will provide comprehensive and substantive improvements to save the system and protect taxpayers. If continue on our present course, public employees will lose their pensions and beleaguered taxpayers will face crushing tax increases.”

“There are several major public policies which need to be reformed in order to make New Jersey more affordable, and the public pension program is one of them,” Chiusano said. “The plan is grossly underfunded and will collapse without far-reaching systemic improvements. By enacting these measures, we will stabilize the state’s pension contribution at a manageable level and ensure its long-term viability. These reforms will ease the burden on taxpayers and strengthen the pension system for our public employees.”

If no changes are made to the current system, O’Scanlon and Chiusana said that the current unfunded liability of $54 billion will balloon to over $180 billion by 2041.

Under the sweeping proposal, future employees would be mostly affected by the 139-page bill.  The highlights include:

  • The retirement age would be raised to 65 for most employees, reflecting an increase in life expectancy. To retire early, workers would be required to have worked 30 years, instead of the current 25.
  • Workers would be required to contribute 8.5 percent of their salaries towards retirement.
  • Pensions would be calculated on employees’ earnings from their five highest-paid years, up from the current three.
  • Firefighters and police would have the maximum pension benefit reduced from 70 percent of their current salaries to 65 percent.
  • Cost of living increases would be eliminated.
  • The 9 percent pension increase given to workers in 2001 would be eliminated for current and future employees.

Two weeks ago, Democrat Senate President Stephen Sweeney proposed a bill that stopped short of the Republican’s bill.

Sweeney’s bill would replace the present oversight boards of the public employees, teachers, police and firefighter pension systems with joint boards of management and labor organizations. The boards would oversee the management of the pension funds and have the power to adjust annual contributions and benefits based on the investment performance of the funds.

The plan would require workers to make additional pension contributions if the wanted to take advantage of the 9 percent pension increase given in 2001.

Workers with fewer than five years of employment would not receive cost-of-living adjustments, unless the board found some way to pay for it.

Sweeney said “This legislation will remove politics from the process and establish a private-sector model for the pension system. This will be comprehensive reform that will ensure that those who benefit from the pension fund are paying their fair share without adding any additional burden to already overtaxed taxpayers in New Jersey.”

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon

Bloomberg proposes changes to NYC pension system to save city from financial disaster

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • 2 comments

New York’s Mayor Michael R. Bloomberg announced a proposal on Wednesday that would end some of the city’s most generous pension provisions for its workers and save billions of dollars in the process. He said unless there is aggressive pension reform, the current system will soon bankrupt the city.

Bloomberg, who until recently, was considered an ally of the unions, is now in the position of drawing their ire.

Vowing to save the city from bankruptcy, NYC Mayor Michael R. Bloomberg proposed controversial pension reform.

Some of the proposed changes include mandatory 10 years of employment before new hires are eligible for benefits– double the current number of years, and require them to be at least 65 years old before receiving benefits. Currently, workers can begin drawing benefits as early as age 57, and many cops and fire fighters receive full benefits after 20 years, no matter how old they are.

Another proposed change would prevent employees from being able to use overtime wages in determining the base for their retirement pay, a controversial and widespread abuse known as “pension spiking.” City managers routinely allow retiring workers to load up on overtime in their final year before retirement, often increasing their pension payments by over 50 percent.

All new city employees would be required to pay more of their own monies into their retirement accounts, and some existing employees, mostly police and firefighters would lose some existing benefits, namely a $12,000 annual stipend they receive in addition to their regular pension.

“This reflects the dire fiscal circumstances the city faces, the devastating impact of increasing pension costs and the desperate need for aggressive reforms,” said Marc La Vorgna, a mayoral spokesman told the New York Times.

The current move is an about-face for Bloomberg, who in the past has used generous pension benefits as a way to keep the city’s 300,000 workers happy and prevent them from striking at times of contract negotiations. As recently as 2008, Bloomberg helped push through a new teachers union contract that included a pension provision allowing them to retire five years earlier than before, with full retirement benefits.

Later that same year, as the financial crisis was in full swing and wages were stagnant throughout the country, Bloomberg gave the city’s largest municipal union back-to-back 4 percent raises, without any concessions on pension benefits.

If successful, the changes could immediately save the city at least $200 million per year, although far larger savings, in the billions of dollars would be further down the road.

One union official, angry over the proposals, called Bloomberg a “dictator.” Harry Nespoli, chairman of the Municipal Labor Committee, an umbrella group of unions, said that Bloomberg had “has set back labor relations 40 years.” Nespoli added “We’re fed up with this. He’s going to have a battle. We’re just not going to roll over.”

Teachers union chief, Michael Mulgrew, called the mayor “insane,” and said that Bloomberg “has just decided, I’m going to attack, attack, attack everybody.”

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • 2 comments

Illinois school superintendents get rich on pension benefits by fleeing state

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • 8 comments

Retired school superintendents are making a mad dash for the border, that is, the state border, in order to effectively double up on their annual compensation.

And that’s exactly what’s happening in Illinois, and likely other states, according to an investigative report in the Chicago Tribune. In fact, while educators are moving out of state to get around pension payment rules, superintendents from other states are moving into Illinois, presumably to fill in for the jobs left by those taking advantage of the loophole.

Illinois state laws are in place to prevent its public school superintendents from retiring and triggering outsized pensions, and then taking another superintendent job to collect two checks from the state. Unfortunately, when politicians crafted the law, they forgot to limit retirees’ pensions if a superintendant took a job across state lines.

In many cases, those moving into Illinois are also retirees, hiding from their state while cashing pension checks and continuing to earn large salaries.

Even though the state’s pension system is in serious financial straits, there’s nothing much that can be done under existing rules, since it’s all legal.

“We have allowed a system to develop that is grossly underfunded and that has very generous benefits,” said Laurence Msall, president of Chicago’s Civic Federation, a nonprofit government research organization. “To draw a pension from the state … and then immediately go get another job as a superintendent or in another teaching capacity — they’re really not retiring.”

Some examples found by Tribune investigators include:

  • Retired superintendent of New Trier Township High School District Hank Bangser, collects a $261,681 state pension, while working as a school superintendent in Southern California’s Ojai Unified School District making $170,000. His total annual compensation: $431,681.
  • Retired Wheaton Superintendent Gary Catalani receives a $237,195 Illinois state pension while earning another $195,000 from the Scottsdale, Arizona school district. His total annual compensation: $432,195.
  • Retired South Cook superintendent Eric King receives a $166,608 Illinois state pension and earns another $168,343 salary as the superintendent of the Muncie, Indiana school district, for a total of $334,951.
  • Retired East Maine Superintendent Kathleen Williams receives a $177,711 Illinois state pension, and earns another $156,000 in Wausau, Wisconsin. Her total compensation: $333,711.
  • Retired Superintendent Rebecca van der Bogert collects a $169,050 Illinois state pension, another $21,974 from Massachusetts, and currently works in Florida as the head of the Palm Beach Day Academy.
  • Retired superintendent of the Oak Park and River Forest Districts Attila Weniger, receives an Illinois state pension of $180,302 while earning another $149,500 as the superintendent of the Stevens Point Area Public Schools District in Wisconsin, for a total of $329,802.

The is no system in place that monitors how many retired school superintendents are crossing state lines to work while they are “retired,” and there is no system in the state that checks to make sure that the superintendents are not working another job in Illinois.

Tribune reporters tracked down retired superintendents through Internet searches, newspaper articles and public records, since state records do not track the whereabouts or employment of the retirees.

However, data at the Illinois State Board of Education does show dozens of superintendents moving into its system with 20 or more years of employment at out-of-state districts, but does not show how many are receiving pensions.

All of the superintendents who were contacted by the Tribune defended their employment while collecting retirement benefits, and some were angry that the issue was being raised.

“Somebody who retires can go to another state and work. To me, that is the story, and that’s what I’ve done,” Weninger said.

“I worked uninterrupted for 36 years and obviously made all the (retirement) contributions, as did all of my colleagues,” Bangser, 61, said. “The point is that, I think like anything else, you operate under the rules, restrictions and guidelines of whatever is in place at the time.”

Others see it differently.

One critic, Jeremy Gold, a New York-based actuary and pension expert, called earning multiple government incomes “indicative of sloppy governance and a cavalier attitude by those ‘public servants’ who exploit these loopholes selfishly.”

Gold said “Illinois is the poster child for pension abuses. One of my colleagues calls this child because or children must pay for fiscal irresponsibility.”

“We have allowed a system to develop that is grossly underfunded and that has very generous benefits,” said Laurence Msall, president of Chicago’s Civic Federation, a nonprofit government research organization. “To draw a pension from the state … and then immediately go get another job as a superintendent or in another teaching capacity — they’re really not retiring.”

Another issue that arises when school superintendents play musical chairs, by retiring for the pension and then taking a position elsewhere, is that they deprive employment opportunities for younger administrators moving up in the system, potentially adding to unemployment.

The Chicago Tribune

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • 8 comments

Correction department employees switching jobs to scam pension system

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • Comment on this story

A Fox undercover operation in Boston has exposed shady, but legal loophole in the Massachusetts Department of Correction that allows managerial and administrative workers to retire many years earlier than they would otherwise be entitled to receive full pension benefits.

Here’s the way it works: A department employee in another group, makes a career switch and becomes a correction officer, a more hazardous job that allows employees to retire far earlier than other positions.  As long as the employee remains a corrections officer for 12 months, they are treated for retirement purposes as though they spent their entire employment in that position.

The practice is known as group jumping, and Fox found 14 instances of the practice since 2005.

One such employee interviewed briefly by Fox, was Cheryl Nelson. She spent nearly thirty years working as an office assistant in the department, before becoming a corrections officer in 2008. She acknowledged that she is on track to now retire with a full pension 11 years than she could have as an administrative employee.

Nelson disagreed she was gaming the system. “It helps me as a single person to better my retirement. I’ve got to think about my future,” she said. “I don’t think I’ve taken advantage of anything with the state. Absolutely not,” she said.

Mike Widmer, President of the Massachusetts Taxpayers Foundation disagreed with her assessment and said there was only one reason an employee would switch to a corrections officer at the end of their career, that being to enhance their pension benefits at the expense of taxpayers.

Widmer called maneuver legal “but it’s absolutely wrong. It’s wrong morally and it’s wrong fiscally.” He added that group jumping has been going on for years.

Gov. Deval Patrick has already weighed in on the issue, and suggested a special commission look into the problem, but last year’s legislative body failed to do so. The governor’s spokesman, Jay Gonzalez, said that a comprehensive pension reform package is in the works and will be proposed early this year.

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon

California releases eye-opening salary database for all cities and counties

  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon
  • Comment on this story

The controller’s office in Sacramento has just released a database of the annual pay and benefits of all employees of cities and counties throughout the state of California.

The specific employee names have been removed for purposes of confidentiality, although the job titles of each position is listed. The complete list can be found here.

When compiling the list, the controller counted total 2009 wages as the amount reported to the federal government for Medicare tax purposes. That total includes bonuses, overtime, deferred compensation, and paid-in-cash sick leave and vacation days.

There is also a column called “applicable defined benefit pension formula”, that shows two numbers separated by a “@” symbol. The first figure is a percentage of their final annual pay that they receive when they retire, and the second figure is the age at which they can retire.

For example, most public safety officials show the code, 3@50. This simply means that they can retire at 50 and receive a pension equal to 3 times the number of years of service. If such an employee retired at age 50, with 30 years of service, they would receive retirement pay equal to 90 percent of their final year’s salary.

Some of the figures are eye opening. Burbank shows that one its firefighters earned $165,347, a library director earned $156,193 and an electrician $118,243.

  • expose this
  • Share
  • Bookmark to Delicious
  • Bookmark to StumbleUpon