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NEW JERSEY COPS ■ AUGUST 2014
Government Affairs
Can we have faith in the ‘Task” at hand?
The concept of “pension reform”
was not born in the Christie Administration. In fact, in 2005 an independent group of experts were
called by then Gov. Codey (Executive Order 39-2005) to examine New Jersey’s
pension and benefit system and to make
Rob Nixon recommendations designed to control the
costs of those benefits. The “Murphy Commission,” named for its chairman, former
Goldman Sachs executive Philip Murphy, was made up of
corporate executives and academics and through a series
of public hearings they issued a report that predated much
of the debate of the past few years.
While the Murphy Commission did call for lowering
some pension and health benefit calculations, it did make
a few findings that a decade later the state still has not
lived up to. First and most obvious, the commission found
clearly: “State and local governments have a moral obligation to their employees to make the [pension] payments
they promised to make.” (2005 Benefits Review Task Force,
Executive Summary, Page 3) Second, the commission
found: “The collective bargaining process must be
respected and input from public employees is essential as
future changes are considered.” (2005 Benefits Review
Task Force, Executive Summary, Page 3) Finally, while calling for benefit cuts, the Murphy Commission rejected
placing employees in a 401K-style retirement plan.
A decade later, another New Jersey governor has issued
an executive order calling together a group of experts to
study the pension and benefits offered to public employees and to make recommendations for further cuts. This
call for study has a strange sense of déjà vu to it. The
Codey and Christie pension study executive orders are
nearly identical regarding the assignment for both the
2005 and 2014 Task Forces. But there are a number of differences between the two that potentially leaves this new
task force lacking.
First, the 2005 Murphy Commission report already hit
the nail on the head. In its first recommendation, the commission was clear that the state and local governments
must make the entire actuarially-required pension contributions to fully fund the systems. And while the governor is not wrong to say he has contributed more to the
pension than any governor in recent history, and that he
didn’t start the problem, a major factor in pension underfunding stands out. The lack of a full
pension payment and the reduction of local government employer contributions contradict the
very first recommendation from the Murphy
Commission.
Second, the Murphy Commission held five public hearings where financial experts, former state treasurers,
stakeholders and the public offered thoughts, recommendations and concerns on the issue. The commission
took its job seriously and carefully listened, challenged
and discussed the pros and cons of their responsibilities.
The State PBA was an active participant in that process
and we were fortunate to have held a number of meetings
with Mr. Murphy, task force members and the staff. It was
an open and public process and their report which can be
found at www.state.nj.us/benefitsreview/final_report.pdf
reflects that process.
Unfortunately, the governor’s proposed task force has 30
days to meet, consider the evidence and report back to
him. But there will be no public comment and, assuming
no employee representation on the task force (which hasn’t been appointed as this goes to press), there will be no
expertise at the table for the groups that represent the
individuals whose very benefits are to be questioned. Thirty days to study national public and private sector benefits and to compare them to each individual pension
system is certainly not enough to encourage a detailed
and complete analysis of a complex issue.
The executive order the governor issued on Aug. 1 also
states that the task