Federal criminal investigators and the Securities and Exchange Commission are looking into New Jersey's pension system after a report found the state diverted billions of dollars
from it for other purposes, such as state aid to Abbott school districts
Abbott districts have been spending at some of the highest levels in the State, and well beyond non-Abbott districts, with no discernable correlation to improved achievement.
Of the 25 highest spending K-12 districts, 17 are Abbott districts. Moreover, the three highest spending K-12 districts in the State are Abbott districts.
The Abbott districts have not been required to exercise the fiscal discipline that the State and other school districts must undergo; instead they have been allowed to balance their budget through virtually unlimited supplemental funding requests.
The SEC, which regulates stock and bond markets, will try to determine whether state officials misrepresented the impact of pension-fund maneuvers
in documents provided to investors and the U.S. Attorney's Office is looking into any criminal violations. Investigations into the state’s mismanagement of the grossly under-funded pension system
could take years
The shortfall developed since 2001, as the collapse of the stock market drained $22 billion from the funds. Lawmakers compounded the problem by using accounting gimmicks to skip required annual payments into the funds and to cover billions of dollars in additional costs from increased retirement benefits they granted to public employees.
The state of New Jersey’s Division of Law employs 530 attorneys
, but apparently none with the expertise to represent the state
in these federal civil and criminal investigations
. The New Jersey Treasury Department has hired a law firm
, Fried, Frank, Harris, Shriver and Jacobson, to defend the state.
David Wald, spokesman for state Attorney General Stuart Rabner, said he didn't know immediately how much money has been spent on the outside law firm, but said its lawyers will get $495 per hour, with associates paid $180 per hour.
So, let’s review how New Jersey taxpayers got into this mess.
- As the state admitted to the New Jersey Supreme Court, the Abbott school districts have spent billions upon billions of taxpayer money without the slightest bit of fiscal discipline and with no discernable improvement in student achievement.
To help fund the Abbot districts’ virtually unlimited funding requests, the state diverted billions from state pension contributions to satisfy these insatiable demands.
The additional Abbott funding was used to increase pay, benefits and the number of jobs in these school districts, which further exacerbated the state’s pension funding liability.
To curry favor with the state’s public employees, pension benefits were increased in 2001 and were “paid” for with accounting gimmicks, further compounding the state’s pension funding crisis.
Facing federal investigations into the state’s pension funding debacle, taxpayers will foot the tab for outside council to defend the politicians and state employees who got us into this mess. The 530 lawyers on the state’s payroll and in the pension system aren’t up to the job.
Is it any wonder why New Jersey’s broke?
Labels: New Jersey, Pension Funding, Political Corruption, State Worker Benefits