TPAF trustees fail to seek own counsel

“What is your responsibility here?” asks NJEA President

Published on Thursday, June 5, 2014

TPAF Letters

“I would ask them: In your capacity as voting members of the board, what is your responsibility here? Is it to TPAF members and the health of the TPAF fund, or is it to the governor?”

– NJEA President Wendell Steinhauer

Ignoring the collective call of 23,000 members of the Teachers’ Pension and Annuity Fund (TPAF), the fund’s trustees today failed to pass a motion seeking independent counsel to advise them in the face of Gov. Christie’s illegal move to withhold the full required contribution to the fund this year.

A motion to seek independent counsel failed to pass following a 2-2 vote.  The TPAF board has seven members, four of whom were absent.  The state treasurer’s office assigned Deputy Director Janice Nelson of the Division of Pensions and Benefits to the meeting in order to have a quorum, and she joined trustee Paul C. Orihel in opposing the motion.

The maker of the motion, Erland Nordstrom, and board Chairperson James Joyner voted to support it.

“The TPAF trustees are customarily represented by attorneys from the staff of the state attorney general’s office, but given that the attorney general may have to defend the governor in a potential lawsuit, the trustees were being asked to retain outside counsel to advise them at this juncture,” said NJEA President Wendell Steinhauer.  Nelson and Orihel indicated they preferred to take the board’s concerns to the attorney general.

“I seriously question whether the attorney general’s office – which represents the governor – will take an objective view of the concerns of the TPAF membership,” Steinhauer said.  “For the life of me, I can’t understand why the deputy attorney general at the meeting couldn’t immediately acknowledge the obvious conflict of interest,” he said, referring to Senior Deputy Attorney General Eileen Den Bleyker.

“Ms. Nelson and Mr. Orihel failed to listen to the members of TPAF,” said NJEA President Wendell Steinhauer. “I would ask them: In your capacity as voting members of the board, what is your responsibility here?  Is it to TPAF members and the health of the TPAF fund, or is it to the governor?”

Yesterday, Steinhauer and other NJEA officers hand-delivered 23,000 letters from TPAF members – mostly current and retired teachers – urging the trustees to join NJEA and other unions in suing Christie for violating the 2011 law requiring full payments according to a specific schedule over a seven-year period.

Christie signed Chapter 78, which cut pensions for current and future retirees, raised their retirement age, and drastically increased their personal contributions to their pensions.  In return, the law requires the state to ramp up annual payments into the struggling system over seven years – from 1/7 of the required annual contribution to the full 7/7 in FY2018 – in order to ensure its future solvency. 

Chapter 78 explicitly gives members of TPAF and the other affected funds the right to sue the state if it fails to make those payments – which Christie is doing through his executive order.  It also gives the boards of trustees of those funds the right to sue, since they have a clear responsibility to ensure the future health of the funds.

“Today’s vote is unfortunate, because the TPAF Board of Trustees failed to exercise its statutory right to join its members in suing the governor, as clearly provided in Chapter 78,” said Steinhauer.  NJEA has already announced its intention to sue Christie.

“The TPAF is seriously underfunded,” said Steinhauer, “and TPAF members want to explore every legal avenue to ensure their pensions are secure. 

“Perhaps the boards of trustees of the other systems will show more independence and take up similar motions.”

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