Is New Jersey Really that Horrible? (Hoboken, Ridgewood: school district, voucher, floor)

[elflord1973]

Originally Posted by tahiti

is this a fact? by how many ppl has the state payroll grown since he took office?

"The size of government" is always a popular whipping boy, but it doesn't appear to hold up to much scrutiny as the cause of NJ state's budget woes.

Plenty of good budget information available at this website:

Federal State Local Government Spending in United States 2007 2008 2009 2010 2011 - Charts Tables

Basically, the increase in the state budget is largely due to increase in pension, education and health care spending. These make up about 80% of spending increases over the last 5 years.

Pensions are a fiscal train wreck that don't lend themselves to overnight fixes -- the consequences of today's policy are not felt until years later (which encourages bad policy). Defined benefits plans are a serious liability.

As you've already pointed out, the local budgets are dominated by education expenses.

[HeadedWest]

Originally Posted by BergenCountyJohnny

And who cares if old people have a hard time pumping gas? They're OLD! They don't even matter! We should be like the pump-yer-own-gas states, where there is theoretically a choice for "full service" but in reality you have to wait and hunt down the attendant and then wait for him to sell cigarettes and scratch-off lottery cards to a line of rednecks and then refill the coffee pots before he comes out to pump your gas (for a considerably higher price) with a grouchy attitude because you made him come out of his bullet-proof glass enclosed convenience store counter, but who cares?

That's a really impressive straw man you've created.

[HeadedWest]

Originally Posted by KathyA11

And just what would you cut? The schools?

That would be a good start. There is virtually zero correlation between the money spent on public schools and the results.

Start with the overhead (the superintendent's office is the best starting point).

[AnesthesiaMD]

Originally Posted by elflord1973

Emergency care doesn't readily lend itself to the application of market principles. The only check and balance to prevent you from getting completely screwed as a provider of emergency services, is for you to have the option of applying your skills elsewhere.

Do you have the option of charging whatever you want for non-emergency services ? Also, are you more or less required to be available to provide emergency services as a condition of working at a hospital ?

I suspect that the effect ultimately is that providers are paid well, but need to work long hours to meet whatever external mandates are imposed.

The only other option is to go to an outpatient surgery center. I dont want to do that, because I wish to help people that cant afford care too, as well as people who are in emergency situations, and outpatient surgery centers are exclusively insurance patients plus the minimum number of medicare patients allowed and exclusively scheduled cases, but yes, there is that option. It is tempting because it is a much better lifestyle. No nights, no weekends, 40 hours a week instead of 70 for the same amount of money. Of course, NJ added a 6% surgery center tax too, which they said cannot be passed on to the patient. Again, it is a shame the government is constantly trying to test us as to how much we will put up with. They force us to choose between monetary gain and helping people. I would make more money doing botox injections and laser hair removal than I do saving lives. AND that stuff is all cash. No insurance to worry about. If they keep lowering reimbursements, the choice wont be so difficult anymore.

In order to have hospital privileges one must take emergency call. Certain professions, like neurosurgeons have decided that they can do most of their stuff in an outpatient center. And when push comes to shove, the hospital will also let them keep their privileges even without taking emergency call, because neurosurgery operations are SO lucrative for the hospital. For neurosurgeons the malpractice insurance costs double if they take emergency call. We are talking 200K instead of 100K. This has created a real shortage of emergency neurosurgeons, which means if you or I fall and bang our head against a curb, it will take longer to get treatment, increasing our chance of death. This is a sneak preview of government run health care.

[KathyA11]

Originally Posted by elflord1973

Basically, the increase in the state budget is largely due to increase in pension, education and health care spending. These make up about 80% of spending increases over the last 5 years.

Pensions are a fiscal train wreck that don't lend themselves to overnight fixes -- the consequences of today's policy are not felt until years later (which encourages bad policy). Defined benefits plans are a serious liability.

And the people in those defined benefit plans/health benefit plans pay hefty contributions into them -- it's not a giveaway. Of course, the pension program is in trouble for several reasons -- the stock market crash, and Christie Whitman's reduction of the deduction rate (which should never have been lowered) when she was looking for votes several years ago.

And the state isn't paying for health benefits for the municipal retirees who are enrolled in the SHPB -- the premiums are deducted off the top of each check. NJ Direct 15 runs about $1500/month for member and spouse; family plans run more.

[elflord1973]

Originally Posted by KathyA11

And the people in those defined benefit plans/health benefit plans pay hefty contributions into them -- it's not a giveaway.

Hefty contributions are paid into them on their behalf. It is not clear to me how they pay into those plans. It may be true that if they didn't have such plans, their salaries would be be higher, so in that sense, they do pay into them.

On the other hand, the plans often either unfunded (social security) or underfunded (state plans), so these plans are actually an off-balance sheet liability.

Of course, the pension program is in trouble for several reasons -- the stock market crash, and Christie Whitman's reduction of the deduction rate (which should never have been lowered) when she was looking for votes several years ago.

I agree with your point about Whitman (who decided that the plans were "overfunded"). I think this is part of a larger problem though. Defined benefit plans are a promise politicians make, but don't fund properly.

The stock market crash itself should not put a defined benefit plan in trouble. The fact that this did happen indicates that the plan is not funded properly. Let me elaborate a little -- plans like this make assumptions about the returns that the fund will achieve, in order to meet funding targets. But there is no certainty that those returns will actually be realized. Promises that the stock market will make a certain return are actively traded on financial markets -- they are called put options (they allow the holder to sell the stock at a pre-determined strike price).

Now if the politicians make those promises without buying the underlying put options, then they are effectively writing a put option without accounting for it -- it's an off-balance sheet liability (and as long as the stock market performance is about average, no-one ever finds out)

If they did buy the underlying put options that they have effectively given away, then they would ultimately be doing more or less the equivalent of buying treasury bonds. But they won't just buy treasury bonds, because they need better returns to meet their targets.

The problem with these defined plans is that they encourage politicians to make lofty promises and impose the funding costs on future generations -- vote buying with other peoples money (as Whitman did). They need to be upfront about them. If they want to guarantee 100% that they will pay $(X) amount, then the plans should just buy US treasury bonds or TIPs, otherwise they should allow employees to decide what risk/return tradeoff they prefer. The current scheme creates the illusion that they can have the returns without the risk.

And the state isn't paying for health benefits for the municipal retirees who are enrolled in the SHPB -- the premiums are deducted off the top of each check. NJ Direct 15 runs about $1500/month for member and spouse; family plans run more.

Right, so these expenses really fall under the pensions items in the budget.

The main two health care items in the NJ state budget falls are public welfare (this is most of the budget) and government hospitals.

[KathyA11]

Originally Posted by elflord1973

Hefty contributions are paid into them on their behalf. It is not clear to me how they pay into those plans.

As a former municipal employee (I retired this past week with over 30 years of service), let me clear it up for you. It's a pre-tax payroll deduction (for years it was post-tax, which was then changed, which presents the state with a bookkeeping problem re withholding taxes -- they have to figure out how much of your pension each month should be taxed, and how much is exempt), which is then submitted to the state by the municipality.

It may be true that if they didn't have such plans, their salaries would be be higher, so in that sense, they do pay into them.

No, they definitely pay into them. It's a salary percentage -- the older you are when you enter the pension system, the more you pay.

On the other hand, the plans often either unfunded (social security) or underfunded (state plans), so these plans are actually an off-balance sheet liability.

I agree with your point about Whitman (who decided that the plans were "overfunded"). I think this is part of a larger problem though. Defined benefit plans are a promise politicians make, but don't fund properly.

They have that option -- the employees in it don't have the same choice.

The stock market crash itself should not put a defined benefit plan in trouble.

Of course it does -- where do you think the money was invested? When the market tanked, the pension funds tanked with it. I have no clue who was watching the investments, but they were asleep at the wheel. -

The Supplemental Annuity Collective Trust plan (a separate non-tax-sheltered plan for municipal/county/state workers) was wholly invested in the market, with no diversification into bond funds, either- and when the market fell, it was never rebalanced. I cringed when I opened my statement each quarter (and no, unlike the 453b plans we were allowed to contribute to), we had no say as to where the funds were invested, nor could we withdraw our contributions, even though they were taken out of our pay post-taxes.

[elflord1973]

No, they definitely pay into them. It's a salary percentage -- the older you are when you enter the pension system, the more you pay.

I take it from this that they pay you X amount of salary, but they take out whatever amount they think needs to be deducted to fund the plan.

What percentage do they deduct approximately ?

Originally Posted by KathyA11

Of course it does -- where do you think the money was invested? When the market tanked, the pension funds tanked with it. I have no clue who was watching the investments, but they were asleep at the wheel. -

I understand that -- my point was not that they do not have exposure to the market, my point was that the fact that they do have exposure to movements in the market means that they didn't fund their plans properly.

By making a promise that they will always have (X) amount for retirees, they are essentially writing (giving away) put options, but not expensing them. If they actually bought those options in the open market, they would be hedged (the drop in the stock market would be matched by an increase in option value). But if they did that, they'd have a risk free portfolio, and hence only earn the risk free rate of return.

It isn't a matter of someone paying attention or not paying attention to the investments -- the reason that all their funds are in risky investments, is that the risk free portfolio does not deliver the returns that they've promised.

Basically, they aren't funding the plans properly, and they are compensating for the lack of funds by gambling with taxpayer money, and hoping that no-one calls them on it.

There is nothing wrong per-se with their choice of risk-return tradeoff. The problem is that they are promising returns that depend on collecting a risk-premium, and then telling the beneficiaries that these returns are risk-free.

There are very serious problems with this. For one, I'd question the authority that the state has, to make promises on behalf of future generations. What happens if the future generations (who will be paying into defined contribution plans) decide that they don't want to bail out the previous generations ? Maybe the retirees should sue the Corzine and Whitman estates

The Supplemental Annuity Collective Trust plan (a separate non-tax-sheltered plan for municipal/county/state workers) was wholly invested in the market, with no diversification into bond funds, either- and when the market fell, it was never rebalanced. I cringed when I opened my statement each quarter (and no, unlike the 453b plans we were allowed to contribute to), we had no say as to where the funds were invested, nor could we withdraw our contributions, even though they were taken out of our pay post-taxes.

I understand that the employees have no say in how their money is (mis)managed, I don't think they're at fault (instead the blame lies with whichever authority is running this accounting scam)

The problem with these retirement plans (even assuming that they are well funded) is that they promise returns above the risk free rate, and try to pass off the plans as risk-free.

If they went with a defined contribution plan, employees could make whichever risk-return tradeoffs they preferred (and employers could design the plan appropriately to avoid having employees put all their money in Enron stock).

[ru848789]

Originally Posted by mrgrinch

I live in NC, originally from WI and there are a lot of NJ transplants here (as well as all over the country) Everybody I mean EVERYBODY from there says that its like a communist state with in the US. That taxes are ridiculous, that it is anti-business and hopelessly polluted. One lady told me it has worse roads than Somolia.

Is it true?

Instead of trolling to stir up the natives, which is what you're obviously doing, try reading a few threads on the board, most of which are pretty positive about life in NJ. I've lived in Jersey my whole life and would never live anywhere else. My sister and her family live in Charlotte, which is ok, but I couldn't imagine living there. Way too hot and it seems like the suburban areas are all replicas of each other with the same strip malls and chain restaurants/stores, while "downtown" Charlotte is lame compared to Philly and can't even be compared to NYC; I'd also easily take New Brunswick and Hoboken over Charlotte any day. And go 20 miles outside of Charlotte and you can hear the faint sound of dueling banjos almost everywhere. No thanks.

[Ninjahedge]

Originally Posted by elflord1973

If you don't have anything intelligent or thoughtful response, why post ? I thought it merited a better response than a flippant dismissal or a juvenile "you're an idiot" response.

Because your post was not realistic. It basically said "cut everything and let God sort it out".

No rich neighborhoods using public schools? Have you been to Ridgewood?

You asked how you could run a town on a much lower budget. I gave an answer.

You gave an off-the-cuff answer with no real practical thought. If you want to be taken seriously in a discussion, you can't start by proposing your most outrageous and impractical suggestions first.

It would require a very different approach, and a fundamentally different way of asking what you expect the local government to provide. I understand that what I mentioned would not be very popular here (which is why we pay high taxes instead), but it is possible.

It also would not work.

Plans that fail have a tendency to be unpopular.

If the problem were addressed at a state level, there are more incremental, less radical reforms one could make to the school system. For example, vouchers are an incremental step towards providing some incentives to all parties (the students and the schools) that one could provide not only on an all-or-nothing basis (e.g. students can choose any public school, or any private school that costs no more than the most expensive public school) but also an incremental basis (decide to what degree you're prepared to do this)

That never works. The problem is, it takes a certain amount of cash to make schools work efficiently. The school itself mind you , not the administration.

You start offering things like vouchers, you are pretty much cutting the hamstrings of the public school system. They will not have enough money to do anything besides the "3 R's", which will drive even more people out top the private schools, which can charge whatever they want with impunity depending on the demand (don't think so? Take, for example, Daycare, which is now going for UP TO $2000 a month in Hoboken!!!! Why? Demand).

Vouchers sound nice, but they are not a good workable SOLUTION.

Also, addressing at the State level only makes for funds to be shifted. They are already doing that now. I think i was maybe 20/25 years ago when the state removed most of its funding/support for schools that were "working" forcing them to pay more and more of their own way while other schools got funding.

Hell, I remember way back my middle school had to pay for its own facial tissues while places like Patterson got new computers!

The reason that this would need to be addressed at a state level is that you need some market dynamic, and many towns just aren't big enough for this to work (you'll always end up with winner-take-all and one dominant school emerging)

Schools do not work that way. You do not want to ship your kid to school 30 miles away. So the "dynamic" will stay local.

As for parks, charging for parks is possible, and it is potentially good for raising revenue. Depending on the geography and size of the park, this can be practical.

HA! OMG! Sorry JR, but you have to pay to get on that swingset??!?

Also, you think property value grows on trees? The better schools and better playgrounds a neighborhood has, the more likely people will WANT to live there, and property values reflect that.

You start charging for parks and watch the housing values dwindle in response...