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Official Statement: Governor, Treasurer, Plaintiffs Issue Joint Statement Regarding Pension Lawsuit

Friday, February 14, 2014

 

OFFICIAL STATEMENT: Governor Lincoln D. Chafee, General Treasurer Gina M. Raimondo and plaintiffs challenging changes to Rhode Island’s state-administered pension system today issued the following joint statement:

“More than one year ago, Superior Court Judge Sarah Taft-Carter ordered the parties involved in numerous pension lawsuits into mediation. With the help of the Federal Mediation and Conciliation Service, the parties to this litigation have worked collaboratively on a proposed resolution.

“The settlement agreement marks an important first step forward, and the beginning of a process that will benefit all Rhode Islanders. It is a proposal that we all support and jointly offer to the General Assembly, members of the retirement system, and to the public.

“Government cannot work without committed and dedicated public servants. Whether they serve our state by keeping us safe, teaching our children, repairing our roads, or in so many of the unheralded roles that keep our government running, they command our respect, and deserve a dignified and secure retirement. At the same time, too many of our cities and towns continue to face financial challenges. The proposal we jointly offer provides certainty and predictability for our public servants and municipalities to appropriately plan for the future.

“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.

“We believe this proposal is fair for our public employees, retirees, taxpayers and cities and towns. We look forward to working together with all concerned as we begin this process.

“We would like to thank the Court and the Federal Mediation and Conciliation Service for all their efforts in helping the parties to achieve this result.”

 

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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December 5, 2012

Raimondo publicly opposes Governor Chafee’s meetings with union leaders in an effort to avoid judicial rulings on the pension reform package.  In response, Chafee issues a statement supporting the negotiations.

 

Read more about Raimondo's opposition here.

Read about Chafee's statement http://www.golocalprov.com/news/new-chafee-issues-statement-supporting-pension-negotiations/">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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Comments:

Congratulations Gina! You've almost completed pulling off the biggest scam in the history of Rhode Island politics. Wall Street is thrilled as you have drained all the pension money out of the pockets of hard working middle class people and stuffed the pockets of your Wall Street hedge fund managers. The so-called powerful unions are relishing there 5% of crumbs you threw them on your way to the governorship. 95% of your scam remains intact as I'm sure you knew from day one. John Arnold and his wife are toasting your success on their yacht as this unfolds. The baggers as usual were exploited by you in classic fashion not realizing they were mere tools in your grand scheme. Your campaign managers at the Projo are hoping this will save their pathetic excuse for a newspaper. Goodbye what's left of the middle class....I knew thee well.

Comment #1 by Jonathan Bainsworth on 2014 02 14

One more thing. Does this mean I don't have to honor any of my contracts either? Why bother paying your rent or mortgage or credit cards for that matter since contracts are now arbitrary agreements that you can either honor or not. What a country!!!!

Comment #2 by Jonathan Bainsworth on 2014 02 14

I am so glad the "parties worked collaboratively", that this is "an important first step" and a "positive first step forward".

Wait a minute... "first step" after more than a year? Now you think "our small state can lead the rest of the nation ... to solve big problems"?
I've got news I wouldn't trust you to lead a kindergarten class around the playground. It would take you a year to get to the swing.

You're saying the deal is fair now to all involved? Does everyone involved share your opinion? I doubt it. I can tell Jonathan Bainsworth isn't happy.
Wasn't it fair before? Oops maybe not, by your own admission 'cause it's fair now.

When this legislation first went through it felt like a train wreck. Too many, pushing too hard and too many questions unanswered, reminded me of the way the ACA was passed.
Both should be solved the same way scrape them and start over.

Comment #3 by Wuggly Ump on 2014 02 15

Government should be required to honor the contracts it made with its unions. Instead of planning for commitments made at each contract our elected officials just went along willy nilly ignoring the need to set aside and safely invest the monies taken from people's pay checks, they squandered it on jobs for their own family members, boon doggle projects, pay raises for themselves, and the special interest constituents. If taxes need to be raised to rectify the situation, then so be it. It really is criminal that they can now get away with the money after decades of government waste. I guess they have to do this slowly so that the whole debacle isn't known at once and the people won't rise up against them.

Comment #4 by Joan Overcash on 2014 02 15

Jonathan Bainsworth, Joan Overcash, and Wuggly Ump -

Agree. Well said. Thank you for stating the truth.


Notice the press isn't talking about the pension shortfall created by DEPCO's failure to repay the credit union bail out money borrowed from the pension?

This is all wrong on so many fronts, and yet so many, including conservatives, have allowed themselves to be cynically manipulated into believing it's all about 'taxpayers versus evil, bad, retirees'.

No, it isn't. It's about ENRON thugs, ex-NYC mayors and their cronies, and wall street hedge fund operators raiding Rhode Island via their proxy politicians, the truculent one foremost among them.

Thank you all for eloquently stating the truth.

Comment #5 by paul zecchino on 2014 02 15

Clearly, the union lawyers didn't feel they had a very strong case. The rank and file won't ratify this deal. Its still going to court.

Comment #6 by Redd Ratt on 2014 02 15

I'm a state retiree and there is no way in hell that I'm going along with this bogus deal. I don't like being told that the party who stole my money is now willing to give me back a little bit just to shut me up. See you in court, you pack of crooks!

Comment #7 by William Berube on 2014 02 15

As soon as Gina the fraud said this was a great day for Rhode Island, I knew we were screwed.

Comment #8 by Jonathan Bainsworth on 2014 02 15

"Credit Union bail out borrowed from the 'pension'"? I'd like to see some documentation, or it's just another urban myth.

Comment #9 by G Godot on 2014 02 15

And that myth is usually perpetuated by cigar smoking, pinky ring wearing union "bosses" who sat on their fat behinds for DECADES watching the various plans be "underfunded" without tipping off the "membership" because it was more important to stay on good terms with the legislature...more important for their OWN good fortune. THey employed the famous Obama excuse of "we didn't know" long before he did.

Comment #10 by G Godot on 2014 02 15

No myth, facts. Another fact you seem woefully ignorant of - No one sat on their ass without tipping off the membership while the plan was being underfunded. Union membership filed suit many years ago in an attempt to force the state and municipalities to start making all their required payments - look it up, unless you're more comfortable wallowing in ignorance while spewing your stupidity.

Comment #11 by William Berube on 2014 02 15

G Godot -

Well, we're all waiting for you, Godot. You're so smart? Go get the answers yourself.

There's not urban myth, itself yet another tiresome slogan from the 90s.

Do some research. Learn about Constructed Frauds, how they're set up years in advance, how they use government auspices to reduce the wealth of citizens by pitting family against family, 'taxpayers' against 'bad, bad, eviw retirees', as the Elites who perp these schemes walk off with your hard earned dough.

How'd I learn this? I had a fine education as the son of a mother murdered, poisoned, so that Lifespan and the thugs behind the CEO's who profit by it could raid our family's assets thru an elderly relative whose judgement was long known to be failing.

Once you know the moves, once you see how these designs work, it's impossible to blind oneself to them.

Take a long look at DEPCO. Take a deeper look the RIHMFC scandal before it. Check out the name "Scott W. Rothstein", a figure peripherally related to present day money troubles. Take a look at the places where some of his investors resided.

You've some research ahead of you. Many of us may even be inclined to assist and encourage you. But you've got to do the leg work yourself.

Your vitriolic, gusty, denials of reality alter the facts not one whit.

By your next post, those of us who post here expect to see some improvement both in your attitude and statements.

Get busy.

Comment #12 by paul zecchino on 2014 02 16

Godot,
The State floated bonds to repay the credit union depositors,with no pesky $100k limit either,(too many politically connected w/more than that on deposit),and the interest on those bonds were paid from pension funds.
Further State employees lost a day's pay every 2 wks.which was finally restored to them a few days later.

Comment #13 by mark malachi on 2014 02 16

Labinger, the perennial judicial applicant,will finally get to wear the black robe she so desperately wants.
The Arnolds and their hedge fund BBs are breaking out the Louis Roederer and salivating over the additional funds, from the 10.75% forced contribution of those w/20 yrs.or more,their pal Gina will be funnelling to them.

Comment #14 by mark malachi on 2014 02 16

mark malachi -

Thank you for providing yet more facts to refute the bluster. Agree. Completely.

As you say, The Arnolds, their ENRON pals, hedge fund cronies, and the little ex-mayor who fancies himself a god are breaking out the bubbly, laughing themselves silly.

Comment #15 by paul zecchino on 2014 02 16

Godot -

While we're waiting here so enjoyably for your next learned post, here's a chew-toy for you: the treasurer handed two billion dollars to hedge fund cronies who are under no obligation to return the public funds or even to provide an accounting.

For all you know, two billion dollars of citizens money is being laundered to political cronies as well as into deep and smelly pockets.

You OK with that? Or will you breezily dismiss that as another 'urban myth'?

The only urban myth here is that you can trust this bunch, and the tragedy of the naïve individuals who do.

Comment #16 by paul zecchino on 2014 02 16

In the case that William Berube was speaking of... The judgement came down "that as long as the pensioners are getting their pensions there wasn't a case."

They're not getting their due pension payments. They have a case.

Did anyone notice the article in ProJo about the State not releasing how much taxpayer money this case has already cost? Thanks for nothing Gina Raimondo.

Comment #17 by Wuggly Ump on 2014 02 19

Sorry,a meant a few YEARS later.

Comment #18 by mark malachi on 2014 02 24

11% forced contribution- just read new Pension Act.
I should stop relying on the Journal's reporters when I want accuracy.

Comment #19 by mark malachi on 2014 02 24




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