Some of the budget problems faced by the Granite State are not so different from those of the Garden State. This week, the Concord (NH) Monitor reported that New Hampshire’s pension system has a shortfall of $3.4 billion on an asset base of $4.7 billion. That may be peanuts by New Jersey standards, but for a small state like NH, this shortfall represents a very low funding ratio of 59%.
Most New Hampshire state and local employees contribute 5% of payroll, while police and firefighters pay 9.3%. Any shortfall to the pension system is made up by NH cities and towns which are being stressed by the early 2009 drop in the stock market.
Unlike a 401K retirement plan, in which a participating employee assumes all risk for the ups and downs of the retirement portfolio, government pensions – like those in New Jersey – guarantee pension payments: No matter what happens to the value of the portfolio, the state, school boards, and local municipalities must ante up any deficit.
When it comes to the fiscal stability of its pension obligations, New Jersey has nothing to brag about. The State Management Report Card for 2008 by the Pew Center reports that “New Jersey faces a newly revealed $58 billion tab for post-employment retirement benefits – a whopper by anyone’s standards.”
The same performance report by the Pew Center gives New Jersey an overall evaluation of C. This grade is comprehensive and includes four components: Money, People, Infrastructure, and Information. The ‘People’ measurement received a grade of B. The other performance measurements pulled a C.
No comments:
Post a Comment