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N.J.'s 18.6% Pension Funding Least in U.S., Moody's Finds

Elise Young/Bloomberg News/January 15, 2016

Governor Chris Christie contributed 18.6 percent of what New Jersey's pension fund needed in fiscal 2014, lowest among U.S. states, according to Moody's Investors Service.

The governor, a 53-year-old Republican seeking the presidential nomination, skipped billions of dollars in payments for 2014 and 2015, and reduced the 2016 planned contribution, saying the state didn't have the money. A state Supreme Court ruling in June allowed Christie to bypass his own 2011 law requiring a series of extra payments to bring the fund, with 800,000 beneficiaries, closer to actuarial demands.

For 2014, adjusted net pension liabilities declined for 27 states, driven by strong investment returns. Still, 50-state aggregate liabilities increased to $1.3 trillion, and Moody's expects fiscal 2015 liabilities to grow because of weaker market performance.

Most states made budgetary contributions at or close to their actuarially determined contribution levels," according to a report released Friday by Moody's. Thirty-six gave more than 90 percent. Only two -- New Jersey and California, at 48.2 percent -- fell below 60 percent.

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Op-Ed: A Modest Proposal Regarding Cost-of-Living Adjustments

Charles Ouslander/NJ Spotlight/January 15, 2016

The recent torrent of news articles, editorials, public debates, litigation, and legislative posturing about New Jersey's beleaguered pension system has finally crested. It appears highly likely that the Legislature will soon adopt a constitutional resolution to be placed on this November's ballot mandating that quarterly state contributions be made into the pension system in accordance with actuarial calculations, instead of the random amounts of money occasionally placed into the funds. The state's abject failure to properly fund the various state-administered pension plans is a bipartisan disaster committed by both the Legislature and several governors over the past 20 years.

I have had personal involvement with the pension system as I am representing myself in a case awaiting a date for oral argument before the Supreme Court of New Jersey (Berg v. Christie). The lawsuit is often known as the COLA case, because it challenges Gov. Chris Christie's abolishment of cost-of-living adjustments (for people who have already retired), under his 2011 pension-reform law. Through my handling of this case over the years, I have become more familiar with pension law and theory than I ever thought possible. I am writing, however, not to complain, but to suggest a modest proposal in the hopes of salvaging a retirement system that has consistently provided hard earned-pension benefits to public workers for over 50 years. My proposal involves adopting the federal retirement system currently used for civilian employees, for all new hires, once the funding for our pension system has been established via the proposed constitutional amendment.

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PSMA Retirees' Network Update

The PSMA Retiree Network will be represented on the Stronger United Independent Labor Council through its participation with PSMA.

The Retiree Network held its Quarterly Meeting on January 27, 2016 at Wegmans in West Windsor.

PSMA Retirees' Network membership continues to grow. We added 4 new members in December and January bring our total membership to 46!

The Retiree Network is the only organization that can bring you the support of PSMA and the IBEW - so help us grow our membership!

Please take a moment and send an email to a state retiree to ask them to join. If you know of a retired state employee please have him or her go to for more information.

Contribute to PSMA PAC

In order for an organization to be effective it has to have a well-funded Political Action Committee (PAC). PSMA is not allowed to use dues to given donations to candidates and political parties. All monies used for that purpose come from a separate PSMA PAC which gets its funding directly from contributions by members. This past year the PSMA PAC made some very critical donations to legislators who ended up supporting us in our quest for union legislation.

This effort requires a small contribution from everyone. Please consider donating $2.00 or more per paycheck to the PSMA PAC. You can get a special PAC dues deduction card by e-mailing, or directly from your payroll clerk. You can also send a donation to:

212 West State Street
Trenton, NJ 08608
Welcome to the Public Sector Managers' Association

The Public Sector Managers' Association, Inc. (PSMA) has been recognized by the State of New Jersey as the Constitutional Representative of all non- aligned/non-union managers in New Jersey government as of November 13, 1993 pursuant to Article 1, Paragraph 19 of the New Jersey State Constitution. PSMA's responsibility under that provision is to serve as a vehicle for two-way communication between the State as an employer and its managerial employees. The representation, however, is limited to managers who are PSMA dues-paying members of the State government. PSMA is a partner with the International Brotherhood of Electrical Workers (IBEW) Local 30 which represents certain managers in State government. PSMA works closely with IBEW Local 30 on issues related to managers who are represented by IBEW Local 30 and those that are not eligible for representation.

PSMA's mission is to serve managers in New Jersey government by achieving and maintaining superior and ethical management service; promoting a high regard for our managers by those outside and within the government; and restoring equity to the human resource policies and practices of New Jersey government as they relate to managers.

PSMA Update

As you know, PSMA has been the voice for managers for well over 20 years. We delivered managers a union! This was not without the support of our members.

We need your help by stepping up to continue this fight - this includes joining our Board of Directors and getting more members!

Please email Lisa Ginther, PSMA Executive Director at if you have any questions, or if you're interested in joining our Board.

We ask that you speak to other managers, especially managers that supervise other managers, to get them to join PSMA - please have them visit the PSMA Website!

Thank you for your support and loyalty to the only professional organization for NJ State Managers - formed by State Managers.

Opinion: The Truth About N.J.'s Pension Crisis and How to Fix It

By Mark J. Magyar/Star-Ledger/January 06, 2016

Next November, New Jerseyans will be asked to vote on a constitutional amendment to require the state government to make regular quarterly pension payments, which would put the state's pension system - and the state of New Jersey itself - on the road to fiscal solvency within six years.

The biggest winners, if the constitutional amendment passes, are not public employees - who will get their pensions anyway - but all of New Jersey's taxpayers.

State laws, Supreme Court rulings and legal opinions have already established that public employees are entitled to the vested pension benefits they have earned.

The dirty little secret Gov. Chris Christie is not telling you is that the state ultimately will have to pay the bill - whether the money comes out of pension funds or directly out of the state budget - and that the cost goes up exponentially every year we fail to act.

That is why Senate President Stephen Sweeney introduced legislation to put a constitutional amendment on the ballot to require the state to make pension payments on a regular schedule that makes fiscal sense and saves taxpayers billions. Senate and Assembly committees are holding hearings on the proposed amendment Thursday.

The math is simple.

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Op-Ed: Deeper Debt Waiting for Taxpayers Due to Pension Irresponsibility

Robert D. Klausner/NJ Spotlight/January 11, 2016

In the debate over whether New Jersey should pass a ballot question this year to require the state to fulfill its obligation to fund public-worker pensions, the answer to one extremely important question has been spun by politicians in a variety of directions: What happens if the state continues to follow Gov. Chris Christie's current path and doesn't pay the required amount and lets the pension funds run out money? Kept in mind that actuaries agree this will begin to happen in six short years when the PERS pension system hits its depletion date in 2022.

The answer to this crucial question has been miscategorized by Christie and others on numerous occasions for political reasons in order to leverage the Legislature and workers into further givebacks. The legal reality, of course, is much different. Christie has gone so far as to state in last year's budget address that New Jersey can "no longer afford defined benefit pension systems. It bankrupted Detroit, it bankrupted General Motors, and it will bankrupt us." We will hear more about this in his State of the State speech, I'm sure, where he will most likely continue to demagogue "irresponsible unions."

Gov. Christie, a licensed lawyer and former U.S Attorney, knows this is a false comparison. But its sounds good and it's really scary to hear, so why not tell a little white lie to get the point across?

I've been fortunate to represent public-pension systems for more than 39 years in 20 different states, including New Jersey. Currently, I represent the board of trustees for the three largest pension funds in the state, and I argued the recent pension case before the New Jersey state Supreme Court in June. I also was the fiduciary counsel to Detroit's pension fund during its bankruptcy. I mention this only to illustrate that I've been down this road before, and it doesn't lead anywhere near where the governor says it does. Here are the reasons why:

In the 2015 case Burgos v. State of New Jersey, the Supreme Court ruled that the state's current pension obligations must be paid. There is no getting around the bill; it must be paid. Pensions are deferred compensation that has been earned, and no amount of political spin will erase the bill. The justices also ruled that employees have a contractual right to receive their pensions. The reason the Christie administration hailed the decision as a victory is because the court ruled that the constitution's debt-limitations clause limited the court's ability to extract full payments immediately. This got Christie off the hook, but not the state. The fact remains that in the long run the debt must be paid.

Secondly, states cannot go bankrupt. Federal law allows municipalities like Detroit to declare bankruptcy, as well as corporations like General Motors, which are governed by private-sector law. The State of New Jersey, however, is a public entity. Comparing our state to a local government or private corporation is disingenuous, which Christie knows.

Knowing these two facts -- that the state must pay the bills it has accrued and that the state cannot go bankrupt -- the logical question remains: If the pension funds run out of money, then what?

The reality is that the state is on the hook. The state Legislature and governor will be forced by the courts to make the payments from the general fund on a yearly pay-as-you-go basis.

But here is the reason taxpayers should be outraged by this financial mismanagement. By continuing to skip or reduce payments now, as has been done over the last 15 budget cycles by both Democratic and Republican administrations, our pension bill is growing exponentially because it is not accruing investment returns on these missed payments.

To put this in perspective, Gov. Christie has failed to make $17.5 billion in required pension payments since taking office in 2010, including payments mandated by the pension-reform law he himself championed -- then subsequently walked away from. After Christie's second term expires and he is long gone from the State House, taxpayers will have to pay $3 for every $1 he skipped. The current tab for this fiscal irresponsibility: $52.5 billion. And unless the State lives up to its responsibility immediately, it's only going to continue to grow.

The Legislature is attempting to correct this by placing the pension question on the ballot this year. For New Jersey taxpayers' sake, I hope it passes.

Robert D. Klausner is an attorney and author specializing in retirement law and has represented public-pension systems before the U.S. Supreme Court.
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