EDITORIAL

Many questions on latest pension deal deserve answers

Posted 3/24/15

Since the failure last year of a proposed settlement to several legal challenges, the future of Rhode Island’s pension reforms has been in limbo.

The matter has now returned to the forefront, …

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EDITORIAL

Many questions on latest pension deal deserve answers

Posted

Since the failure last year of a proposed settlement to several legal challenges, the future of Rhode Island’s pension reforms has been in limbo.

The matter has now returned to the forefront, with a new settlement in the works. And while there’s been movement, exactly where it’s all heading continues to remain murky.

State leaders – including Gov. Gina Raimondo, the architect of the landmark 2011 pension reform law – have been largely mum since Superior Court Judge Sarah Taft-Carter issued a gag order earlier this month.

The case has been scheduled to go to trial April 20, following the court’s rejection of motions to delay that start date. Retired Rhode Island Supreme Court Chief Justice Frank Williams has been named special master in the case and has been working toward the new settlement. Were the matter to go to trial, its outcome would almost certainly be appealed to the Rhode Island Supreme Court, and then to the U.S. Supreme Court – a lengthy, costly and volatile road to go down.

The terms of the apparent deal, outlined in a document labeled “state’s final offer,” are largely similar to what was proposed last year, with some additional concessions to the unions. They include two one-time stipends of $500 for current retirees, along with slight changes to cost-of-living increases and retirement ages.

On Monday, public sector retirees reportedly approved the new settlement deal during a special gathering at Twin River Casino, although the turnout – a vote of 1,168 to 332 in favor of the deal, retirees on hand told members of the media – represents a small fraction of the more than 27,000 retired public employees in the state.

Other state unions representing thousands of retirees and employees were apparently also gearing up for votes on the deal in the days ahead, but the nature of those ballots was unclear.

Last year’s settlement, which Raimondo and state leaders said would preserve 95 percent of the savings realized under the 2011 law, totaling approximately $4 billion over 20 years for the state’s taxpayers, failed as a result of a much-maligned voting procedure. Six “blocks” of public employees and retirees voted on that agreement through an “opt-in to opt-out” process, and it was the smallest of those groups, representing police officers, that scuttled the deal and sent the matter back to litigation.

It is certainly in the best interest of Rhode Island and its people to find some resolution in the pension dispute. The financial implications are immense in both the short and long term.

Last year’s settlement would have resulted in approximately $232 million in additional unfunded pension liability for both the state and its municipalities, including $24 million for fiscal year 2016. Roughly $10.6 million of that figure would have fallen to cities and towns.

The deal currently under discussion could reportedly result in an additional $13.7 million tab for cities and towns in its first year, including as much as $1.3 million for Cranston, up to $855,000 for Warwick and as much as $325,000 for Johnston. The prospect of “re-amortization” – stretching out payments – to lower or eliminate that impact has been raised, but whether such action is being seriously entertained is unclear. Municipal leaders have said little – also citing the gag order following a recent briefing – but have already expressed some frustration at facing significant additional costs in a difficult budget year without having been involved in the process.

That feeling of exclusion – of closed doors, backroom negotiations and lingering uncertainty – has gone far beyond mayors and town administrators, permeating the entire situation since word of the new settlement proposal started trickling out in recent weeks. The issue is obviously highly emotional, and the nature of the legal process extremely sensitive. The need for discretion and confidentiality clearly exists, to a degree.

But given the aforementioned implications for every Rhode Islander – taxpayers, public workers and retirees alike – more transparency and clarity is needed. Too many vital questions have gone unanswered, and the public has thus far been left too much in the dark.

Comments

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  • davebarry109

    I cannot see how any member of any union would trust any government authority. They have shown that their word is meaningless. Unions should get as much as they possibly can from cities, towns, and the state NOW as opposed to promises in the future. This would do two things: force union members to better prepare for retirement now and force governments to shave employees to save money.

    Tuesday, March 24, 2015 Report this

  • patientman

    Not to mention bring transparency to the cost of services. The employees deserve to get what they're promised. The residents deserve to know the true costs of the high level of services we receive. We're paying for the mistakes of city government from 30 years ago.

    Friday, March 27, 2015 Report this