New Jersey Pension "Deform"!

Republican Christine Todd Whitman, running on a tax-cutting platform, defeated Florio in the 1993 governor's race. To help pay for her promised tax cuts, Whitman, like her predecessor, turned to the pension fund. In 1994, at her urging, the legislature adopted another pension "reform" act that allowed her to reduce state and local contributions to the plan by nearly $1.5 billion in 1994 and 1995, according to the task force report. Florio's and Whitman's accounting changes were "the one-two punch from which the retirement system has never recovered," says Douglas Forrester, who was the assistant state treasurer under Kean.

For all the miscues, New Jersey's pension woes can't be blamed on particularly poor investment results. An examination of state reports shows that the fund's returns have more or less tracked the broad stock market's. The real problem has been the underfunding.

If union concessions, cost cutting, and higher taxes are not enough, then what? Inevitably, New Jersey and other states would turn to Uncle Sam for help. The pressure on Congress would be great. "How will they say no to state workers when they've said yes to bankers?"

(*Congress is very good at funding foreign wars, occupations and "rebuilding" - Maybe it's time to "rebuild" the good old USA!)

"The pension obligations could spark a huge problem for New Jersey," says Thomas Kean, a former Republican governor. "They must be paid because they are absolutely an obligation of the state, but as it is, the budget is balanced with chewing gum and sealing wax"

(*"must be paid" because they are an "absolute obligation" - How then can the COLA be eliminated and call the pension obligation being paid?)

Sources -

http://money.cnn.com/2009/05/12/news/economy/benner_pension.fortune/index.htm
Star Ledger - January 2013