Last week, in a Providence courtroom, an agreement was formally announced that would settle the majority of legal challenges to the state’s landmark 2011 pension reform law and other pension system changes in recent years.
The matter had been set to go to trial this month. The parties involved now have a 45-day window in which to implement the settlement. Approval from the General Assembly will also ultimately be required.
The terms of the latest agreement are apparently not radically different from those of the first settlement proposal, which was unveiled – and ultimately fell short – last year. Unions will receive some additional concessions, while the state will preserve the lion’s share of the approximately $4 billion in savings the 2011 law provided over a 20-year period.
Some cases were excluded from the settlement – those involving police officers in the state-run pension system, as well as Cranston’s police and fire unions. Cranston Mayor Allan Fung, who was a strong critic of last year’s deal, has thus spoken out against the latest agreement, which he says will put his city in a uniquely strained position of bearing further legal fees while facing increased pension costs.
This leads to perhaps the most essential underlying question concerning the pension cases and the settlement proposal: the question of constitutionality.
The union challenges to the 2011 law and other reforms have been predicated upon the idea that changes to pension benefits constitute the unlawful alteration of existing contracts.
The state, meanwhile, has defended its authority in the matter. Gov. Gina Raimondo, who, as general treasurer, was the architect of the 2011 law, has maintained her belief in the law’s constitutionality, even as she has endorsed the latest settlement as a means of eliminating uncertainty and defining costs.
The Rhode Island Center for Freedom and Prosperity, a conservative think tank, pointedly raised the issue of constitutionality in a statement issued last week. The center asserts that a settlement serves essentially to reinforce the “status quo” without clarifying whether the state and its municipalities have the ability to undertake additional reforms in the future.
“We don’t need a backward looking pension deal, we need a forward looking pension ruling on its constitutionality,” Mike Stenhouse, the center’s CEO, said in the statement.
We support the aims of the settlement and the practical benefits it helps secure. Certainty is best for all involved: retirees, public employees, taxpayers, state and municipal leaders. Demonstrating stability for those who would invest in Rhode Island is also a key consideration.
Yet, we agree that the question of constitutionality is likely to loom even once the settlement is finalized, particularly with some of the litigation apparently set to continue on. Getting an answer would be a lengthy, costly and uncertain process, likely leading all the way to the U.S. Supreme Court. The concern is whether we will end up going down that road anyway, despite all the work to bring the matter to resolution.