New York City and New Jersey, like most places, have separate pension plans for teachers, police officers, and firefighters, and large general pension plans for all other public employees combined. This post is about updated Census Bureau data, for the years 1957 to 2016, for the general pension plans: the New York City Employees Retirement System (NYCERS), which also covers New York City transit workers, the New York (state) Public Employees Pension and Retirement System, which also covers local government workers (including police officers and firefighters) in the rest of New York State, and the New Jersey Public Employees Retirement System, which covers most public employees in New Jersey. In general the findings are the same as they were the last time I analyzed this data.
It has been a few years, however, so I have decided to repeat the analysis and update the charts below, and add a further discussion on hedge funds and the rate of return at the end. The data shows a pension disaster not only for New Jersey, where taxpayers have contributed very little over the years, but also for New York City, where taxes are high and taxpayers have contributed massively. The New York State system is in somewhat better shape – but in much worse shape than a decade ago.
Last year, when I went to update the tables I had compiled of U.S. Census Bureau data on public employee pensions over the decades, I found that the City of New York had started misreporting data for the NYC teacher pension fund.
Reporting to the Bureau that the teachers’ own money in their Tax Deferred Annuity (TDA) accounts was actually pension fund money, to make the pension fund deficit seem less disastrous. And not reporting the payments from the actual pension fund to those TDA accounts as pension benefits, to make teacher pensions seem less costly than they actually are. I spoke with the Bureau about this, and they told me that they intended to speak with NYC about it, but no corrections would be made until this year. So I chose not to finish updating the tables and write posts.
This year I downloaded the data, and found the same errors. The Bureau told me it had intended to make a correction, but the incorrect data had “crept back in.” But if I waited until next year at this time, surely the data will be corrected. But instead of waiting another year, I decided to use the Annual Report of the NYC Teachers Retirement System to correct the data myself. The results are in the spreadsheets linked and available for download below.
In the 1950s and 1960s, a generation used New York City (and other central cities) as cash cows, and then decamped for the suburbs, spitting on the ground as they left. They voted themselves richer pensions but didn’t pay for them, with the best off public employees – police, fire, teachers – among the first to run for the exits. They ran up debts while failing to maintain the infrastructure. They benefitted from rent control even as their income increased, providing them with money needed to buy homes in the suburbs but not providing landlords with a sufficient incentive to reinvest in their buildings. Eventually, as things started to go downhill, the large corporations that the cities had nurtured followed the middle class out the door, to their own fortress like suburban campuses.
Now it is five decades later and what do we find? Like a plague of locusts, the generations that moved to the suburbs have turned the same trick there. New Jersey and Connecticut are small states that had a number of small, pre-suburban industrial cities. For the most part, however, these two states are suburban – the two most suburban states in the nation, and for most of the past four decades the two richest. Despite this they are now among the most bankrupt. And once again, the rats are fleeing the sinking ship.
This is a “give the people what they want” post. After recently completing two analyses of public employee pensions for 50 states over 20 and 40 years, I’m not really up to do another one. And yet I find that the database of Census Bureau data I compiled on the individual public employee pension funds in New York and New Jersey, and the related posts I wrote, a year and 20 months ago are still among the most read and downloaded on “Saying the Unsaid in New York,” according to WordPress.
The Bureau has released data for FY 2013, and I have appended it to the database I compiled previously. And updated the charts for New York City, New York State and New Jersey teacher pension funds, the New Jersey and New York City police and fire pension funds, and the funds for other employees in New York City, New York State and New Jersey. These are linked below. I’m not going to write another three posts on this data – there aren’t enough changes from year-to-year to make it worthwhile. But I do plan to comment on some items that have come out (or not come out) in the news over the past year. Because every year, ordinary people and younger generations get robbed in NYC via public employee pensions. Just like on Wall Street.
All across the country, despite an economy that has been officially out of recession for half a decade and record stock prices, Americans are being subjected to one round of state and local government tax increases and/or public service and benefit cuts after another. In many cases the pay and benefits of younger and future public employees has been slashed, and in a few cases even existing employees and retirees have also been hit with reductions in retirement benefits. The reason is the soaring cost of public employee pensions, but that cost should not be soaring at all.
Most public employees are promised a set of retirement benefits when they are hired, in exchange for choosing a public service career, and those benefits are supposed to be paid for gradually over the years when each employee is working. At first the politicians and public employees unions blamed the post 2000 and 2008 stock market crashes, following stock market bubbles, for the harm they were imposing the rest of us. But now that the zero interest rate policies of the Federal Reserve have inflated another bubble, they are silent.
The fact is U.S. state and local governments are facing a public employee pension disaster not because of the ups and downs of the stock market, but because of thefts by older generations through retroactive pension increases, spiking and fraud, and taxpayer underfunding of the pensions public employees had been promised to begin with, which is the equivalent of wage theft. The extent of the problem, and the distribution of guilt between public employee unions and past taxpayers, varies from state to state. This post will use Census of Governments data to show who has robbed the future from younger generations, to what extent, with regard to public employee pensions. Continue reading →