Wednesday, May 19, 2010

Open Letter to Governor Christie

Governor Christie,

I have been following the steps you have been taking in regard to the Pension System and Health Benefits, as well as your other steps to bring some sensibility to our state's finances. Just so you know, I am a 57 y/o male from Cape May County who voted FOR YOU, even though I am registered as an independent. I am also an educator in Middle Twp. and a Registered Investment Advisor in the State of NJ as well as a Registered Representative of Transamerica Financial Advisors, Inc. I have worked in both the public and private sector for my entire career, so I hope you take the time to read what I say here, because I think I have an understanding of the issue.

Educators are not your nemesis, and some of the ideas in the recently enacted legislation are not only palatable, but should have had the support of NJEA in 2006 when they were originally drafted by a Democratic Legislature, the chosen party of NJEA. This legislation is an acceptable compromise, because it is directed at new employees and will be the basis for bringing the pension system in line with that of the private sector. However, when you talk about how much teachers or other public employees have contributed to the pension plan, and how much of a benefit they reap upon retirement, you should also remember that some teachers, who are still working, went into education when the starting salary was $7,000.00 or less. The money contributed to the pension plan is supposed to go into an investment fund which is supposed to be PRUDENTLY invested. With the time value of money invested over a 30 - 40 year career, the actual dollar amount each individual teacher contributed to the plan is NOT the only money they have in the plan, as it is SUPPOSED to grow. I KNOW you understand this, so it is a bit of demagoguery to ask if it is fair for people to collect more than they contributed. I do agree there are some municipalities where individuals have gamed the system. Perhaps you should publically NAME a few of them.

I think you will find most educators don't want to pay for health benefits, because they feel it was a promise made to them by the state, and is considered by many to be compensation for services rendered. It is also true that NJEA’s position is that the union doesn't want to give up anything it has previously negotiated. However, with the current fiscal situation in this state, it is a bit like the position the United Auto Workers took with GM, so I think It is time for the name calling, whining and public bickering to end and for you to start negotiations with the union at the state level, and not ask individual districts to take pay freezes or act unilaterally. This is an extremely divisive tactic and will be seen for what it is, which is an attempt to break the union. If you spell out how much a 1.5% contribution equals, since many people don't actually do the math, it may be an easier sell. After all, $900 a year on a $60,000 salary is a reasonable compromise.

If you begin to educate, and not scapegoat people, you may start to get teachers to understand that the current system is unsustainable and must change. If you provide detailed analysis and realistic comparison of salary, benefits and pension as a total compensation package between the public sector and the private sector, I think people would understand that compensation in the public sector has begun to eclipse the compensation levels in the private sector. While many will argue this is a matter of the choices made by individuals, rational people will realize compromise must be made. After all, the public sector is funded by those paying taxes from the private sector, so the two systems MUST be in balance.

It is difficult to compare jobs in the public sector to jobs in the private sector, especially when you consider many employees in the private sector rely on a 401k or similar plan to fund their retirement. This equates to 10% - 15% of compensation being put into a retirement fund. If an employee managed to save $500,000 for retirement, took a retirement salary of $50,000 per year, and could continue to gain 8% on that investment while retired, the account would be DEPLETED in less than 20 years. Hence the private sector angst at the public sector’s lifetime pensions.

In my particular school district, we receive $55 per day for our unused sick leave when we retire. I have not abused my sick leave and yet my compensation upon retirement for sick time would be less than $10,000. Most school districts have similar limits on payments upon retirement for sick time. I do understand there are some municipalities where some public employees have outrageous compensation for sick time. This has to stop and I agree.

In this time of angry politics, it might be a good idea for you to not try to find scapegoats as you attempt to get this state’s fiscal house in order. There are actually some people who voted for you who are members of NJEA and would like to see the union be less beholding to the Democratic Party. Toning down the rhetoric, sitting down and actually talking respectfully to the professionals you’d like to make compromises might actually work.

Finally, you should look at dismantling the entire educational assessment juggernaut that has been created in this state. I have watched this bureaucracy grow over the years from one test at the end of 8th grade to the behemoth it is today. There are commercially available tests that would yield results that can be tracked year after year, without the cost of actually recreating the wheel. Perhaps this might be one very good act of privatization that could save quite a few dollars immediately.

I do hope you can help bring some semblance of fiscal responsibility back to this state, but as you know, any time you have to make cuts there is going to be pain. I don't envy you in your position. Just remember every cut has an impact on jobs, so wholesale cutting can be dangerous. Attrition, hiring freezes and eliminating much of the political patronage in this state would help a GREAT deal. Making certain employees scapegoats or demons is counterproductive and demoralizing. Pitting the private sector against the public sector is irresponsible and reprehensible.

John Kaighn
Middle Twp. School District
Jersey Benefits Advisors