NEW: Raimondo Failed to Comply with State Divestment Law
Thursday, October 24, 2013
GoLocalProv News Team
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A RI law enacted in 2007 requires the State report annually on its efforts to make sure its investments do not have ties to Sudan.
Rhode Island General Treasurer Gina Raimondo announced that she was pushing Rhode Island’s pension system to divest from a gun manufacturer, but a GoLocalProv investigation finds that Raimondo’s office has failed implement an existing state law requiring that Rhode Island show it is divesting from companies with ties to Sudan due to human rights violations, which was enacted in 2007 by the Rhode Island General Assembly.
As part of the 2007 Sudan divestiture law, the General Treasurer of the State of Rhode Island is required to file annual reports with the Rhode Island Attorney General and Rhode Island General Assembly.
See copy of law HERE
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When asked for the reports on Wednesday, Treasury spokesperson Joy Fox said that she was "looking into it", but she didn't "think there was anything to pick up." When further asked by GoLocal if there were publicly available reports as required by Section Five of the law, Fox did not respond for comment.
Tom Evans, the State Librarian, said the last report he had on file from the General Treasurer's office referencing Sudan investments was from Fiscal Year 2008, and had nothing on file since then. Raimondo was elected to the General Treasurers office in 2010 and was sworn in in January 2011.
Attorney General Office Tasked With Oversight
In the law, the Attorney General's Office is tasked with "enforcing the provision of this act, and through any lawful designee, may bring such actions in court as are necessary to do so."
The Spokesperson for the Attorney General claims the General Treasurer has never filed the reports. Amy Kempe told GoLocalProv that no reports are on file and that none have been transmitted.
Kempe, in response, said, "The statute does not prescribe any penalties for failure to comply with the law, and therefore does not prescribe what action the Office of Attorney General may take for failure to comply with the law."
Law Requires Annual Reports
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Public annual reports are required to be filed with the Attorney General's office and General Assembly - but were not on file at either location on Wednesday.
According to the Rhode Island state law, both the Attorney General's Office and Rhode Island General Assembly are required to receive annual "publicly available reports" that include a scrutinized companies list -- but as reported by Go Local, neither had reports on file, when specifically asked for the years 2010, 2011, and 2012 on Wednesday.
See law requirement below:
Section 5. Reporting.—
(a) The public fund shall file a publicly-available report to the Rhode Island general assembly and office of the attorney general that includes the scrutinized companies list within thirty (30) days after the list is created.
(b) Annually thereafter, the public fund shall file a publicly-available report to the Rhode Island general assembly and the office of the attorney general and send a copy of that report to the United States Presidential Special Envoy to Sudan (or an appropriate designee or successor) that includes:
(1) A summary of correspondence with companies engaged by the public fund under subdivisions 4(a)(2) and (a)(3);
(2) All investments sold, redeemed, divested, or withdrawn in compliance with subsection 4(b);
(3) All prohibited investments under subsection 4(c); and
(4) Any progress made under subsection 4(e).
Related Slideshow: Timeline - Rhode Island Pension Reform
GoLocalProv breaks down the sequence of events that have played out during Rhode Island's State Employee Pension Fund reform.
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2005-2010
In the five years before Raimondo was elected, pension changes included a decrease in established retirement age from 65 to 62, increased eligibility to retire, and modified COLA adjustments.
Read the Senate Fiscal Office's Brief
here.
(Photo: 401(k) 2013, Flickr)
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January 2009
Governor Don Carcieri makes pension reform a top priority in his emergency budget plan. His three-point plan included:
1. An established minimum retirment age of 59 for all state and municipal employees.
2. Elimination of cost-of-living increases.
3. Conversion of new hires into a 401(k) style plan.
See WPRI's coverage of Carcieri's proposal here.
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2009
Rhode Island increased mandatory employee contributions for new and current employees. New Mexico was the only other state to mandate current employees to increase their contributions.
Read the NCSL report here
(Photo: FutUndBeidl, Flickr)
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2010
Rhode Island's state administered public employee pension system only held 48% of the assets to cover future payments to its emplyees.
"This system as designed today is fundamentally unsustainable, and it is in your best interest to fix it" - Gina Raimondo
Check out Wall Street Journal's coverage here.
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November 2010
Gina Raimondo defeats opponent Kernan King in the election for General Treasurer of Rhode Island using her platform to reform the structure of Rhode Island's public employee pension system. She received 201,625 votes, more than any other politician on the 2010 Rhode Island ballot.
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April 2011
Raimondo leads effort to reduce the state’s assumed rate of return on pension investments from 8.25 to 7.5%.
Her proposal includes plans to suspend the Cost of Living Adjustment (which allows for raises corresponding with rates of inflation for retirees), changing the retirement age to match Social Security ages, and adding a defined contribution plan.
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May 2011
Raimondo releases “Truth in Numbers”, a report detailing the pension crisis and offering possible solutions. She continues to work to raise public support for her proposal.
"Decades of ignoring actuarial assumptions led to lower taxpayer & employee contributions being made into the system." - Gina Raimondo (Truth in Numbers)
Read GoLocalProv's analysis of the report here.
Read the Truth in Numbers report here.
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October 2011
Governor Lincoln Chafee and General Treasurer Gina Raimondo present their pension reform legislation proposal before a joint session of the General Assembly.
“Our fundamental goal throughout this process has been to provide retirement security through reforms that are fair to the three main interested parties: retirees, current employees and the taxpayer…I join the General Treasurer in urging the General Assembly to take decisive action and adopt these reforms.”- Gov. Lincoln Chafee
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October 2011
Head of Rhode Island firefighters’ union accuses Raimondo of “cooking the books” to create a pension problem where one did not exist. Paul Valletta Jr. states that Raimondo raised Rhode Islanders’ assumed mortality rate to increase liability to the state, using data from 1994 instead of updated information from 2008, and lowered the anticipated rate of return on state investments.
“You’re going after the retirees! In this economic time, how could you possibly take a pension away?” Paul Valletta Jr (Head of RI Firefighters' Union)
Read more from the firefighters' battle with Raimondo here.
Check out the New York Times' take on RI's pension crisis here.
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November 17, 2011
The Rhode Island Retirement Security Act (RIRSA) is enacted by the General Assembly with bipartisan support in both chambers. RIRSA’s passing is slated to reduce the unfunded liability of RI’s pension system and increase its funding status by $3 billion and 60% respectively, level contributions to the pension system by taxpayers, save municipalities $100 million through lessened contributions to teacher and MERS pension systems, and lower the cost of borrowing.
Read more from GoLocalProv here.
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November 18, 2011
Governor Lincoln Chafee signs RIRSA into law. According to a December 2011 Brown University poll, 60% of Rhode Island residents support the reform. Following its enactment, Raimondo holds regional sessions to educate public employees on the effects of the legislation on their retirement benefits.
Read about how Rhode Islanders react to RIRSA here.
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January 2012
Raimondo hosts local workshops to explain the pension reforms across Rhode Island. She also receives national attention for her contributions to the state’s pension reforms. The reforms are given praise and many believe Rhode Island will serve as a template for other States’ future pension reforms.
Read about the pension workshop here.
Read Raimondo's feature in Institutional Investor here.
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March - April 2012
Raimondo opposes Governor Chafee’s proposal to cut pension-funded deposits. She continued to provide workshops on the pension reforms.
“The present law is sound fiscal policy and should remain unchanged.” -George Nee (Rhode Island AFL-CIO President)
See WPRI's coverage of Chafee's attempt to cut pension fund deposits
here.
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March 2013
Led by the Rhode Island State Association of Fire Fighters, unions protest the 2011 pension reform outside of the Omni Providence where Governor Lincoln Chafee and General Treasurer Gina Raimondo conduct a national conference of bond investors.
Read about Raimondo's discussion of distressed municipalities here.
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April 2013
The pension plan comes under increased scrutiny as a result of the involvement of hedge funds and private equity firms. Reports show that $200 million of the state pension fund was lost in 2012.
"In short, impressive educational credentials and limited knowledge of investment industry realities made Raimondo ideally suited to champion private equity’s public pension money grab." - Ted Seidle (Forbes)
Read GoLocalProv's coverage of the State Pension Fund's losses here.
Read Ted Seidle's criticism of Raimondo in Forbes.
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June 2013
Reports show that the State’s retirement system increased in 2013 by $20 million despite the reforms being put into effect the previous year.
Read GoLocalProv's investigation into the rising pension costs here.
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September 2013
Matt Taibbi publishes an article in Rolling Stone detailing Raimondo’s use of hedge funds as a questionably ethical tool to aid with pension reform.
Read Taibbi's article in Rolling Stone.
Read GoLocalProv's response to Taibbi here.
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October 2013
As Raimondo eyes the role of Governor of Rhode Island in 2014, more behind-the-curtain information about the 2011 pension reform comes to light.
Read more from GoLocalProv about the players in the pension battle here.
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