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Experts React to Rhode Island Pension Reform Agreement

Monday, February 17, 2014

 

Following the announcement a pension settlement proposal has been reached, Governor Lincoln Chafee, General Treasurer Gina Raimondo and attorneys representing public employee unions and retiree coalitions issued a joint release in support of the result of the court-ordered mediation -- and leaders in the Rhode Island community are now weighing in as well.  

“This proposal should not be perceived as a victory by one side over another, rather it is a positive first step forward providing for the continued stability and predictability of the retirement system for decades to come. Crucially, this proposal does more than end the risks associated with a costly and protracted litigation. This settlement proposal would resolve six pending lawsuits contesting changes made in 2009, 2010 and 2011. It also demonstrates that our small state can lead the rest of the nation and come together to solve big problems," said Chafee and Raimondo.  

See full details of proposed changes -- and timeline -- here.

Initial Reactions from Rhode Island Leaders

Gary Sasse, former Director of Administration and head of the Rhode Island Public Expenditure Council, said, "Labor's ability to negotiate give-back is a victory for public employees. There are no free lunches so the settlement will add to the future cost of state and local government. Increasing the unfunded liability is in marked contrast to the policy goals of pension reform."

Executive Director of the Rhode Island League of Cities and Towns Dan Beardsley took issue with the not just the settlement but with Govenor Chafee's statements at the press conference.  

"First of all, I guess the Governor made a comment at the presser that "the lone dissenting vote by Dan Beardsley was probably coming from [Mayor] Fung's opposition" -- not only am I appalled that the Governor would stoop to such petty politics, as a former president of the League, he should be ashamed of himself for making such a comment," said Beardsley.  "I've never cast a vote on the whims or wishes of one of my members -- I represent all the cities and towns, I'm not at the whim of one employee, those I've worked with have trusted me for over 40 years."

Beardsley continued, "As a member of retirement board, I cast a vote in opposition because the local share of teacher contributions will increase $7.9M in FY16, the MERS will increase 2.6 M in 2016, police and fire MERS units will increase by $600K in FY16. In all, the total unfunded accrued liability will increase by $109M.

"Active retirees will now have weeks to review and vote, the GA will have weeks to review the proposed settlement -- and I had less than 3 hours to review over 100 pages of documents before my vote?" posed Beardsley.  "Do I acknowledge that it will secure 95%? I'll acknowledge that, but I'm someone who believes the state was justified by the Constitution to take the measures they did. Moreover, I'm astounded the General Assembly will have to swallow this in it's entirety -- they can't make even one change, I find that mind-boggling."

"For what it's worth, the total cost increase may seem inconsequentially small to the administration overseeing an $8B budget, but tell that to the distressed communities, rubbing pennies together, like Pawtucket, and Woonsocket -- try to explain to those communities that this is inconsequential," said Beardsley. 

Mayor Fung was vocal in his opposition following the settlement announcement.  "I'm going to reach out to GA members not to approve this -- the increased costs will be passed down to taxpayers in FY16, as well as an increased unfunded liability. That's a concern of mine.  I think once the taxpayers of Rhode Island start finding out what this bill could mean to them, they're doing to be concerned as well."

Taxpayers on Record

"My initial reaction, setting aside the details financially, it's a difficult pill to swallow," said Lisa Blais with Rhode Island taxpayer advocacy group OSTPA.  "And to hear the Governor and Treasurer to talk about certainty, and financial stability and the right thing to do for taxpayers and pensioners -- and this is exactly what were heard in [2011] when the reform was advocated for, and was passed."

Blais continued, "The bottom line is that they completely avoided dealing with the big question of that lawsuits were brought based on the constitutionally of the [General Assembly] passing the statute, changing the detail of how the pension law would work -- and yet in secret mediation, labor isn't crying foul over constitutionally issue, because they've now bargained increased benefits."

"From a taxpayer perspective, it leaves many people with the feeling we're at the whim unions and politicians, that we're their ATM," said Blais.  "We've got cities and towns teetering on the brink of bankruptcy, programs being cut, taxpayers who just recently had to deal with net property tax increases up until 20%, we're supposed to say, this isn't so bad?  It's a hard pill to swallow to watch the Governor and General Treasurer ignore separation of powers -- they left the General Assembly out of the room altogether.'

Former Congressional candidate and financial analyst Michael Riley added, "I have concerns on the added cost to the many vulnerable cities and towns as well as the extended nature of the process. We really need to address the cities before its too late."


 

 

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