The already tattered reputation of my home state of New Jersey took another pounding today following revelations that the SEC and the U.S Attorneys office is investigating the state's $80 billion pension system for misleading investors about billions in funding shortfalls.
As Bloomberg News notes, the problem dates the bull market of the 1990s when the state pension fund moved to an accounting method based on the market value of investments which boosted the value of the pension fund as stocks soared and allowed officials to reduce payments. Of course, things went awry when the bull market crashed.
New Jersey has begun contributing again to the pension system under Gov. Jon Corzine, putting in $1 billion during the last fiscal year with plans to contribute more, Bloomberg says.
The SEC is considering strengthening rules governing the municipal bond market, so it's likely that other pension funds will get scrutinized.
But other states will be hard pressed to top NJ in terms of financial shenanigans. The Star-Ledger reports that New Jersey has skipped $8.1 billion in payments for the pensions for hundreds of thousands of current and retired workers including police, firefighters, government workers and teachers since 1997.
They certainly deserved better from our leaders in Trenton.
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Reader Comments (Page 1 of 1)
5-31-2007 @ 5:37PM
Randian said...
Why should there still be a pension fund for public servants? Private sector has more or less abolished pension plans. I am having a hard time keeping employees away from government jobs because I cannot match the perks they get. This is all topsy-turvy. This has to change before NJ becomes business-friendly again.
5-31-2007 @ 6:09PM
William Trent said...
The "NJ Pension Fund" did nothing underhanded. It was legislators who adopted the new funding rules (retroactively using peak market levels after the bubble had bust) who should be blamed.