They neglected their members’ pensions while taking care of themselves.

When it comes to their pensions, New Jersey teachers have a lot to be upset about. Nearly half of them have significantly reduced pensions.  All of them have pensions that are severely underfunded. How did this happen?

The facts show that in the 1990s and 2000s NJEA leadership made fateful and ultimately disastrous decisions. They bet teachers’ pensions on gaining them the non-forfeitable right to their pension benefits. They took the lead in political deals that allowed “surplus” assets to be substituted for required pension contributions. They irresponsibly enhanced benefits without securing sound funding for them. They looked on while TPAF’s unfunded liabilities climbed to unsustainable levels. They allowed TPAF to deteriorate until insolvency threatened.

And then they were forced by political reality to accept the Chapter 78 reforms because the pension system was in crisis. Yet the non-forfeitable right ensured that most of the pain was inflicted on prospective teachers in the form of reduced pensions.

Meanwhile, using the dues of those very same teachers, NJEA leadership made sure their own pensions were both gold-plated and overfunded. NJEA leadership took care of themselves but not their members. They have a lot to answer for.

Even after Governor Murphy spent billions for additional funding, the Teachers’ Pension and Annuity Fund (TPAF) was 33.9% funded for FY2022.  That means that the state has less than 34 cents set aside for every dollar it owes to retirees.  This is a crisis condition.

That’s why a recent Urban Institute study placed TPAF in the “Deep Red” category — as one of the nine worst public pensions funds in America.  TPAF is projected to run out of money in 20 years or less, which would be a disaster for New Jersey.

FY 2022 shows why. Because TPAF is structurally unsound, poor investment returns meant that TPAF had to sell $1.89 billion in assets to meet its annual payments to retirees.  Meanwhile, TPAF’s liabilities continued to climb.  The result was a 33.9% funded ratio.

Yet Murphy continues to refuse to do the the hard work of restructuring TPAF.  To please his biggest political supporter, the NJEA, he is pouring billions of good (taxpayer) money after bad.  Pandemic-related revenue windfalls have allowed Murphy to increase state spending to record levels, but what happens when these windfalls go away?

It’s time for New Jersey’s teachers to wake up to the ugly truths and hard facts about their pensions:

They are vastly inferior to the pensions that the New Jersey Education Association (NJEA) leadership provides for themselves – all paid for by teachers’ dues.

The NJEA is not telling teachers the truth about their pension fund: the Teachers’ Pension and Annuity Fund (TPAF) is in such deep trouble that teachers’ and even retirees’ retirements may be at risk.

TPAF is unfair to new and younger teachers, the majority of whom will lose money participating in TPAF and end up subsidizing the minority of teachers who make teaching a life-long career.

The New Jersey Education Association (NJEA), New Jersey’s most powerful special interest, has lived up to Powell’s words – much to the detriment of New Jersey citizens.

“The fiscal future of New Jersey is bleak,” concluded the recent bipartisan legislative workgroup. This grim conclusion was largely based on the fact that New Jersey’s public pension and health benefit system is a looming disaster that threatens the state’s future. Under generally accepted national accounting standards, the total amount of the state’s unfunded public pension and health care liabilities is $190.1 billion.