Opinion: Pensions, Politics and the New Jersey Education Association

"Ensuring the protection and improvement of our members’ pensions and benefits has been our top priority at NJEA since 1896," stated Joyce Powell, NJEA President in June 2006.

Over the past twenty years, the New Jersey Education Association has upheld Powell’s words, as exemplified by its influence on state senate president and former gubernatorial candidate, Steve Sweeney.

New Jersey is currently facing a severe pension crisis, with the state’s unfunded pension liabilities estimated at $95 billion under new accounting standards. Additionally, retiree health care obligations contribute an additional $65 billion, resulting in a total of $160 billion in liabilities. This figure does not even include an additional $40 billion for local government pensions. To put this in perspective, the entire state budget amounts to $35 billion.

Given this situation, it is evident that the state lacks the necessary funds to fulfill its pension obligations.

However, last year, NJEA attempted to pass a constitutional amendment that would solidify this bankrupt system within the state constitution, regardless of the devastating consequences on the state’s budget. Senator Sweeney refused to support this amendment, leading to a promise of revenge from NJEA and subsequent actions to fulfill it.

So, how did we reach this extreme situation?

The underfunding of state pensions is a direct result of NJEA’s significant political power. As former president Michael Johnson stated in 1998: "Our exceptional pension system is the outcome of hard-fought legislation and politics." Every aspect of public pensions is influenced by political decisions, and NJEA holds a dominant position of political influence within the state.

The union not only ranks as the top political spender in New Jersey but also boasts thousands of volunteers who actively engage in campaigns across all districts. Additionally, the UniServ program, a statewide group of political professionals, aids local unions in mobilizing voters. NJEA’s Communications and Government Relations divisions effectively shape and communicate its political agenda, further amplifying its influence.

Moreover, NJEA’s reported political spending does not factor in its annual Pride in Public Education campaign, which aims to promote a positive image of schools within local communities. However, the campaign also organizes efforts to secure "yes" votes for school budget elections, even if it may harm the district.

Between 1995 and 2015, NJEA has spent a staggering $756 million on building political influence, clearly reflecting its real-life impact.

With such immense financial power, NJEA has often achieved its desired outcomes regarding pension policies. This was evident in the early 1990s when NJEA supported 46 Republicans and 3 Democrats in state elections after Democrats made changes to pension distribution by shifting responsibilities to local school districts. The union’s support was instrumental in flipping the legislature to the GOP. The resulting bipartisan majorities in the legislature subsequently passed legislation that expanded pension benefits.

In 1997, NJEA successfully obtained the "non-forfeitable right" to pensions for its members, ensuring that 89% of today’s teachers are protected from any reductions. This has complicated future reform efforts significantly, such as Governor Chris Christie’s reforms in 2010 and 2011, which primarily affected new teachers.

In 2001, the legislature approved a 9% pension increase, despite a significant decrease in pension fund assets due to the dot-com bust. Only one legislator opposed the proposal. NJEA hailed this increase, which essentially raided the pension fund, as one of its most significant accomplishments.

Crucially, NJEA managed to keep teacher salaries negotiated at the local level separate from pension payouts negotiated with the state. This separation ensured that rising pension costs did not place additional strain on local education budgets or necessitate higher property taxes.

At the state level, NJEA actively advocated for improved pensions and benefits. Governor Christie expressed that the average teacher contributes $195,000 over a 30-year career but receives $2.6 million in benefits. The state’s Benefits Review Task Force reached a similar conclusion in 2005.

However, lawmakers, in an effort to please NJEA and prevent tax increases, further enhanced pensions without adequately funding them. Although the union had the political influence to press the legislature for sufficient funding, it instead worsened the problem by exerting its force only when increased benefits were threatened. Throughout this period of underfunding pensions, candidates endorsed by NJEA and incumbents supporting the current system continued to be elected at high rates.

When viewed within the historical context of NJEA’s strong influence over the legislature, we can understand its 2016 attempt to burden taxpayers with the $95 billion pension shortfall by constitutionally entrenching the bankrupt system. After Senator Sweeney declined to support NJEA’s amendment, the union pledged to support his potential opponents in the 2017 Democratic gubernatorial primary. Surprisingly, Sweeney withdrew from the race in October, causing a stir in the state’s political landscape.

Mike Lilley serves as an adjunct scholar at the esteemed American Enterprise Institute, while also holding the previous role of executive director for Better Education for New Jersey Kids. Sign up for Newsletter and receive fascinating stories, such as this one, directly to your email inbox.