New Jersey Pension Commission Releases First Report

Chris Christie

It came a little behind schedule, but the New Jersey Pension and Health Benefit Study Commission released its preliminary report yesterday.

This first report was all about identifying and detailing the causes and current state of New Jersey’s pension funding shortfall. As such, no recommendations were made for fixing the system.

Although the report, notably, did not name Chris Christie, it did lay a portion of the blame on politicians for creating the pension mess. From

The report in part blames politicians for failing to properly fund the pensions and siphoning surpluses during robust years resulting in a $37 billion unfunded liability in the state pension funds.

“While high benefit levels are one driver of unfunded liabilities, the lack of state contributions is a critical contributing factor,” the report states. “Put simply, if the state cannot find the economic means and discipline to consistently fund its pension obligations, the system will fail. The funding decisions over the last twenty years are telling examples of bipartisan contribution to fiscal distress.”

The report also said that Gov. Christie’s 2011 pension reforms didn’t sufficiently address the system’s problems.

Matt Arco of put the report’s talking points more succinctly:

1. The looming unfunded liability is massive

2. Retiree health care costs are massive (and unpaid for)

3. Blame can be spread across the board

4. Failure to fix the problem will cost millions more

5. The 2011 reforms weren’t enough

The full report can be read here.

Chicago’s Emanuel Raises Retiree Health Premiums By 40 Percent

Rahm Emanuel Oval Office Barack Obama

In July, the Illinois Supreme Court ruled that subsidized health care premiums for state retirees were protected under the Illinois Constitution.

But Chicago Mayor Rahm Emanuel challenged that ruling Friday when he increased health insurance premiums for city retirees by 40 percent. The move is part of an ongoing effort to decrease the numerous retirement-related costs that weigh heavily on Chicago’s finances.

Reported by the Chicago Sun-Times:

Mayor Rahm Emanuel on Friday dropped another financial bombshell on Chicago’s 25,000 retired city workers and their dependents: their monthly health insurance premiums will be going up by a whopping 40 percent — in spite of a pending lawsuit and a precedent-setting Illinois Supreme Court ruling.

Last year, Emanuel announced plans to save $108.7 million a year by phasing out the city’s 55 percent subsidy for retiree health care and forcing retirees to make the switch to Obamacare.

For the city, the Year One savings was $25 million. For retirees, that translated into an increase in monthly health insurance premiums in the 20 percent and 30 percent-range.

On Friday, city retirees and their dependents got hit again — only this time, even harder. The city notified them of a 30-percent to 40-percent increase that will cost most of the retirees between another $300 to $400 a month.

Retirees and other observers expressed genuine surprise at the move, especially because it comes on the heels of a court ruling that appeared to protect against such policy actions. From the Sun-Times:

The [40 percent] increase stunned Clinton Krislov, an attorney representing retirees in a marathon legal battle against the city and not only because health care costs appear to be “flattening,” as he put it.

What’s even more surprising is the fact that Emanuel is forging full-speed ahead with his phase-out of the 55 percent city subsidy, in spite of a July court ruling that could tip the scales against the city.

The Illinois Supreme Court ruled then that subsidized health care premiums for state employees are protected under the Illinois Constitution and that the General Assembly was “precluded from diminishing or impairing that benefit.”

City retirees have a similar lawsuit pending that Krislov expects to result in a similar outcome.

“Restraint might have been called for until the case is over, but restraint doesn’t seem to be the plan here. The plan is to wean retirees off the city subsidy and have them off entirely by Jan. 1, 2017,” Krislov said late Friday.

The city released a statement Friday, saying the increased premiums would help to “right the city’s financial ship.”

Emanuel has promised to avoid raising taxes, particularly property taxes, before this year’s election.


Photo: Pete Souza [Public domain], via Wikimedia Commons