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Donna Perry: Don’t Ruin the RI Pension Reform Law

Thursday, May 03, 2012

 

If ever there was a state capable of bringing the movie plot “Back to the Future” to life, it would be Rhode Island. As if $100 million in projected savings to cities and towns; rare national salutes for our public policy; a yearlong painstakingly researched and actuarial studied overhaul plan; and a colossal step forward in the state’s central fiscal debt problem were insignificant, there is actually momentum of sorts underway right now by some legislators in the General Assembly to go forward---and thus send us back--- to the state’s pre-pension reform law fiscal conditions.

The key provisions of the nationally recognized RI Retirement Security Act of 2011 are scheduled to go into effect just two months from now. But different from the fictional 1980’s film, there’s nothing romantic about the campaign that’s now underway to water down, undermine, and basically ruin the sweeping reforms in the new law before it even takes effect. The House has three bills and the Senate has one bill that would all serve to undermine the major reform law in a variety of ways, including exempting groups of retirees from the centerpiece reform, the COLA suspension.

Let’s be clear here: though backers of these efforts are trying to portray the proposed changes as “modest adjustments”, they are not. If these were to gain steam, they would turn the clock back on the state’s nationally hailed reform law and hand cities and towns an insurmountable pension bill that puts the state right back in the dangerous debt problem where all this began.

State Treasurer Gina Raimondo, the architect and driving force behind last year’s landmark legislation has not surprisingly raised the red flag and has characterized the “roll back bills” as a dangerous attempt to ruin the state’s pension reform progress. Furthermore, she is correctly warning that the authors of the bills could send state and local finances reeling into a new level of treacherous territory if their bills were allowed to advance through the Legislature. The runaway obligation to the state pension system from taxpayers in every city and town was at least slowed from hitting stratospheric levels due to the many reforms and new formulas that the law produced.

Any attempt to start exempting multiple categories of retirees from the COLA suspension, start rolling back new requirements on years of service and age eligibility provisions will only serve to undermine the formulas that need to hold firm for the intended savings targets to be reached. In other words, attempts to pull it apart piece by piece could cause the whole foundation to crash in. But make no mistake about it—this “campaign” to undermine the reform law is all about a campaign. Actually it’s about many campaigns, especially the ones that will be underway this summer and next fall in re-election or election races for General Assembly. Lawmakers who do the bidding of unions representing police, firefighters and teachers, see this undermining effort as a way not only to reinstate long cherished pension provisions but also as a means of “making up” to the unions for last fall’s vote.

The authors of this current crop of bills, though most were among the minority who voted against the reform law in the first place (Senate Majority Leader Dominic Ruggerio, who is now a co-sponsor of the Senate effort to change COLAs, notably voted in favor of the sweeping law last fall) may view their efforts as providing a “make-up vote” of sorts, so that other lawmakers who may have felt compelled to go along with the reform law during the heavily media scrutinized vote last November, can now have a perhaps less scrutinized vehicle to repair their alliance with the unions in advance of an election season.

Here is a rundown of the bills and the sponsors:

H- 7711: Rep. John Carnevale (Providence): Would exempt police and firefighters from COLA freeze; dismantle age 55 requirement for retirement for all police and firefighters;

H – 7731: Rep. Patrick O’Neill (Pawtucket): would allow state workers who are court sheriffs, Capitol Police, and DEM Police to be allowed to roll back retirement requirements to match those of correctional officers—meaning can retire after 20 years only or at age 55-and not be subject to higher eligibility ages in new law;

H- 7418 : Scott Guthrie (Coventry) : would limit cities and towns subjected to the new law to be only those who participate in the MERS system which do not have any other type of plans;

S-2552: Juan Pichardo (Providence): wants lowest pensioners to be exempted from COLA freeze—but his approach for retirees whose pension is at or below 150% of federal poverty level—would end up exempting many comfortable retirees because of way the formula can be manipulated.(Sen. Majority leader Dominic Ruggerio and Senate Whip Maryellen Goodwin among co-sponsors)

RISC and other government reform groups are opposed to this undermining effort as not only representing a colossal step backwards, but also because this effort poses a direct threat to the increasingly troubled finances to the state’s cities and towns at a time when they need the reform law’s projected savings the most.

In other words, there are about 100 million good reasons why it’s important this effort does not succeed.

 

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