From: Justin Escher Alpert To: "andrew.sidamon-eristoff@treas.state.nj.us" Cc: "jjh.info@gmail.com" ; "apostlew@econ.upenn.edu" ; "dautor@mit.edu" Bcc: mfriedman@njadvancemedia.com msymons@app.com Matt Katz pkrugman@princeton.edu Robert Reich Chris Porrino TCastano Serena Rice Julia Sass Rubin asmoscanlon@njleg.org senruiz@njleg.org Senator Jennifer Beck Sen. D.O. Allen senlesniak@njleg.org senkean@njleg.org sensweeney@njleg.org Sen Weinberg Sencodey senbateman@njleg.org sencruz-perez@njleg.org Senator Joe Kyrillos senoroho@njleg.org Sen. D.O. Whelan leslie brody Max Pizarro adam_clark@njadvancemedia.com gang@econ.rutgers.edu whiten@njpp.org goodjobs@goodjobsfirst.org info@j4jalliance.com Carolee Adams asmschaer@njleg.org bob@bobbraunsledger.com rscott@monmouth.edu Bob Ingle Jasey Asw. D. O. Kate Zernike Michael Barbaro Opinions@forbes.com zannymb@economist.com asmgusciora@njleg.org aswangelini@njleg.org ala@ala.org Valerie Strauss sbalakrishnan@ejb.rutgers.edu ray@dceo.rutgers.edu holcomb@rutgers.edu rlake@rutgers.edu stumeck@rutgers.edu Sent: Friday, February 27, 2015 12:13 PM Subject: Policy Paper: Fixing the Pension Dear Treasurer Sidamon-Eristoff: Here is something to think about over the weekend... When we speak of fixing the pension system, we have a tendency to think that it must be at the expense of mending the State economy when, in fact, nothing is further from the Truth. Postulate 1: There has never been a healthy society that has not been able to support the needs of its elders. As a corollary, The Land cannot be so valuable that the People living on it cannot afford to live on it. Postulate 2: The Pension Problem is an accounting problem... We have publicly accounted for the retirement of People who (supposedly) spent their careers in selfless Service to the needs of The People of The Garden State. If we begin to think of the Pension Problem as a nine-dots problem and pull back and look at the greater plane of the needs of The People of The Garden State, our Work load may increase substantially, but it will give us greater context to efficiently solving the overall socio-economic Problem. Fortunately, People are desirous to do The Work. Postulate 3: With Visionary Leadership, it should not take more than a season for The People of The Garden State to drink the wine crushed from the well-cultivated fruit of their labors. We are all on the same team. Here... Treasurer Sidamon-Eristoff, open this brand-new deck of playing cards. Get your thumbnail in there and unwrap the cellophane. Break the seal. Take out the Jokers and the extra cards. Fan the deck face-up and pick a card. Oh, good... The King of Hearts. Show The Office of The Governor to the audience. Now, stand The King of Hearts up on its edge on the table. * * * Yeah... that ain't gonna work all by itself. But if you pick other cards and begin to lean them into each other at perpendicular angles, we can begin to create Structure. With Trust, Faith, and education on how it is done, we can begin to construct a Structure that suits the moral, financial, and aesthetic needs of ALL of The People of The Garden State (and everyone can add their own card and take pride in the collective work).

Turn the deck over. Shuffle it. Pick a card... Card 1: The Queen of Diamonds. When we pay the pension of a pensioner who moves out of State, that money is lost forever from the State economy. If you drive up Rt. 23, we seem to be building retirement communities in old mining pits. 55+ housing seems to suck up most of the affordable apartments in many towns. Pensioners have the potential bring value and intelligence to any community because they are knowledgeable about how the systems work. When they move to retirement communities (or worse, when they move out-of-State), we lose the benefit of a big part of the Pension and community knowledge of the pensioner. As we begin to revitalize our urban districts culturally and economically, and as we begin to return local and responsible Control, we should be encouraging affordable housing... whether for retirement or growing families... to be woven into the tapestry of our vibrant and growing urban communities. This is important to get the economy flowing. Card 2: The Jack of Diamonds. Look at the places where the Pension is invested. (http://www.state.nj.us/treasury/pensions/annrpt2013/investment.pdf, page 195 to 199 in particular). Look at the Schedule of Fees on page 200. That's in thousands, right? I guess you take the $404,259 and you add another comma there and then add another three zeros, right? So, what is that? Four-hundred-four million, two-hundred-fifty-nine thousand dollars in Management Fees? Every year? Wow. If we brought that money in-house, we could put 4,255 accountable and well-paying fiduciary 40-hour per week jobs here in The Garden State. We are giving 54 basis points on every investment. We presently owe, what... $1.6 billion immediately to the Pension? That's $8.6 million in Management Fees right there... about another 90 well-paying fiduciary 40-hour per week jobs here in The Garden State. One point six BILLION dollars. That's a lot of money. How many workers across The Garden State can we responsibly put to work building affordable housing (real assets) at $95,000 per year?... the kind of housing that, say, someone earning $95,000 per year could live in and raise a family and spend that money locally in-State as part of a vibrant economy? That's 16,842 real living-wage jobs across The Garden State. The Problem is MINDSET. The Pension need not be a liability because it can be used as an asset... a real asset that is leveraged on behalf of The People of The Garden State. Card 3: The Four of Clubs: The Pension can be used to repurchase mortgages from the overhang of the financial crisis, acquire vacant property, invest in affordable housing starts, and put People to work at real living wages doing the all of the foregoing. With Visionary Leadership, the health of the State and the health of the Pension can be a function of symbiotic exercise. State-chartered, locally and publicly accountable investment banks (that pay employees real living wages for 40-hour work weeks Serving the banking needs of The People of The Community) would be an ideal vehicle. They could set the Standards of Excellence for living Life here in The Garden State. Note that The Pension does not need to be fully funded. The spread is a measure of the Trust between Government itself and the employees thereof. At whatever point we set the mark of 'fully-funded' (85% is a good approximation of the first two largest boxes in the division of a Fibonacci Spiral... which itself has a financial aesthetic that plays toward continued fulfillment), the remainder would inure to the benefit of the general funds of the State. This is how we pick ourselves up by our own bootstraps and drive the economy Forward. Take these three cards, Treasurer Sidamon-Eristoff, and... with the King of Hearts... carefully and attentively lean them up against each other in kinda like a box-like shape. Wow. Look at that. Now you have Structure. I betchya you could pick another card and safely lean it up against and grow the Structure. If we wish to make all of the real property in the State real valuable in ways that inure to the benefit of The People of The Garden State, THE STATE ITSELF might drop a billion dollars on regional public libraries (divided equally as investments in new architecture and support in Trenton, Camden, Newark, and Paterson... drawing in People from the surrounding communities). Te he... You might even be able to support a card on top... and maybe even build the whole Structure to up to the sky! Maybe The State would begin to invest in public hospitals that actually Serve the needs of their communities (with real living wages for People doing the work that needs to be done in maintaining a healthy community). We have a pretty good idea of the investments that need to be made in Public Schools across the State... what are we waiting for? There is Work to be done and there are People who

desire to do the Work, be responsible therefor, and participate in the benefits thereof. Let's craft Policy to make it happen. Know any good Politicians? As People are put to work to the best of their abilities, with Visionary Leadership, we can intelligently move workers around and challenge ourselves to identify and solve real-world problems as they arise. We could begin to address other concerns as well... like... maybe... developing the waterfront in ways that benefit the larger community. Between the State, the Pension, the Unions, and downstream vendors, we might begin to define real living wages and limit the incomes of families dependent upon government and union salaries, as well as those dependent upon The Pension and down-stream vendor contracts. The Standard of Excellence should be set for the occupant of the Office of The Governor (we might consider raising it to a family salary of $225,000... and if we ever get a governor with a large family or special needs circumstances, perhaps we might make adjustments based on the needs of the individual). That being said, it has become self-evident that the obscene near-$300,000 salaries coming out of the public sector should be regulated away because the recipients thereof seem to continually lose perspective of exactly whom it is that they Serve. The Purpose of Government is to make society work and grow and thrive by ensuring that everyone is actively engaged. Let's create the safe space to dream together and to define excellence together... and then let's work together to move The Garden State Forward in that direction. Thank you, Treasurer Sidamon-Eristoff, to you and everybody in the Christie Administration for your strong leadership. I can't wait to come back on Monday and get started! Very truly yours, Justin Escher Alpert Livingston New Jersey P.S. Check your pocket. That's the Ace of Spades. How'd ever that get in there?