‘Protecting and enhancing members’ pensions and benefits has been Job No. 1 for NJEA since 1896,” New Jersey Education Association President Joyce Powell said in 2006. And the NJEA has lived up to those words. New Jersey has a severe pension crisis: Its unfunded pension liabilities are $95 billion. The state’s retiree health-care obligations add another $65 billion, for a total of $160 billion in unfunded liabilities (and this does not include another $40 billion for local government pensions). The entire state budget is $35 billion. New Jersey simply doesn’t have the money to pay for these pensions.
How did New Jersey get into this situation? The pension crisis is a direct consequence of NJEA’s enormous political power. By all conventional measures, the NJEA is the top political spender in the state by far. But that doesn’t even capture the true magnitude of its political operation: the thousands of “volunteers” who staff campaigns in every district; or UniServ, a statewide cadre of political professionals that helps local unions get out the vote to pass school budgets; or NJEA’s Communications and Government Relations divisions, which are heavily involved in political activities. Not to mention the annual Pride in Public Education campaign – a massive, statewide p.r. effort to give schools a positive image in their communities and thereby encourage “yes” votes on school budgets. From 1995 to 2015, the NJEA spent $802 million of taxpayer dollars on this array of political tools – that’s over $40 million a year – which is a better reflection of the union’s real political power. With that kind of money, it generally got what it wanted on pensions. In the early 1990s, after the Democrats crossed the NJEA by shifting pensions to local school districts, the union endorsed 46 Republicans and only three Democrats, and was credited with delivering the Legislature to a Republican majority. Neither party ever forgot it.
Predictably, pension enhancements passed with strong, bipartisan majorities. In 1997, the NJEA won the “non-forfeitable right” to pensions, which passed overwhelmingly. As a result, 89 percent of current teachers are protected from any pension cuts, vastly complicating reform efforts (including Gov. Chris Christie’s 2010 and 2011 reforms, which mostly affected new teachers). In 2001, the Legislature passed a 9 percent pension increase – even though pension assets were billions lower after the dot-com bust – with one dissenting vote. The union called this raid on pension assets “one of the most significant legislative accomplishments in NJEA history.”
Importantly, the NJEA kept teacher salaries negotiated at the local level and the pensions based on them with the state, because if pension costs went too high, it could trigger salary cuts or property-tax increases – neither of which NJEA wanted. At the state level, the union pushed for increasing pensions and benefits. Christie maintains that the average teacher contributes $195,000 over a 30-year career and gets back $2.6 million in benefits. The 2005 Benefits Review Task Force reached a similar conclusion. Tellingly, the union chose not to punish these lawmakers for not funding pensions: Incumbents and NJEA-endorsed candidates continued to be elected at very high rates.
Now, having used its political might to exploit the system, the NJEA wanted to stick taxpayers with the $95 billion consequences by enshrining this bankrupt pension system in stone with a constitutional amendment. Democratic state Sen. Steve Sweeney refused. So the NJEA vowed to get revenge by getting heavily involved in the 2017 Democratic gubernatorial primary, in which Sweeney was strongly considering running. The NJEA put an end to that by throwing its weight behind Sweeney’s prospective rival. Having withdrawn from the race, Sweeney is now an ex-gubernatorial hopeful, and the NJEA is free to elect a politician who will do its bidding, perfectly encapsulating the root cause of New Jersey’s pension crisis.