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Michael Riley: Analysing A Crisis

Tuesday, February 11, 2014


Municipal pension reform has become a big issue for Rhode Island, but do we really understand the problem?

Now that we have all the media talking about municipal pensions (which is great) let’s try to produce a set of consistent comparable numbers that fairly describe the crisis. Make no mistake; this is a Rhode Island crisis. Unfortunately, there is a widespread lack of understanding of the real numbers and in Rhode Island, most of us have a healthy skepticism about “spin”. I have sought to standardize the numbers so we can make ”apples to apples“ comparisons among the towns in Rhode Island and across the country.

Despite some recent media gaffes and confusion about pensions and proper accounting, it is still possible to correctly frame this critically important debate. The municipal pension issue is by far the biggest factor in Rhode Island today. It is threatening our lifestyle, town by town, city by city—potentially devastating our citizen’s finances and the next generation. This crisis and finding working solutions will be a central political issue this year.

Level the playing field

Not only have I already created a recognized report and template for analyzing Providence by utilizing Stanford GSB metrics, but I have conformed all my findings to the criteria Moody’s will be choosing to rate municipal debt. I am using this template for every town. Rhode Island officials have been notified by Moody’s that the ratings agency has doubled their emphasis on pension under funding and established a variable discount rate assumption ranging from 3% to 6%—not a ridiculously high 8.25% like Providence uses, or 8% for West Warwick and Fireman Doughty, or SEIU 9%, or even the 7.5% the state uses. Every town will be adjusted to Moody’s 6%. Additionally no more “smoothing assets” like Providence has done. All town officials should know the market value of plan assets at all times. Many other cities have violated this obvious GASB change as well and the accounting profession is banning this practice of smoothing.

If the RI Municipal Pension Study Commission were actually fulfilling its function, we would know all the industry changes and acceptable accounting. Cities would be warned to comply. Instead, it’s become another commission boondoggle covering up pension disasters like Johnston, West Warwick, and Coventry. I thought the Pension Commission's main purpose was to shed light on the condition of RI towns. Why then, do they not standardize terms? Why don’t they draw attention to sloppy or unlawful accounting employed by “critical status” towns? Did you know, for example, that Commissioner Polisena’s town of Johnston (which is deep in critical status and less than 20% funded, and where he has been mayor since 2006 and a former fireman) includes the following extras in determining the pensionable salary of a fireman in Johnston?

  • Salary/wages
  • Unused sick time (added to salary to calculate pensionable salary)
  • Unused vacation pay (same as sick time)
  • Overtime (75% of overtime pay added to salary for pension calculation)
  • Longevity pay (added to salary)
  • Clothing allowance (added to pay and taxpayers will pay for next 25 years even though retired)
  • Maintenance pay (Possibly; maybe citizens of Johnston can figure this one out)


This form of pension spiking must go...

The higher the pensionable salary definition, the higher the retirement benefit and the higher the cost to taxpayers. So what has Polisena done since his 2006 election?

Mr. Polisena is heard constantly complaining that it's not municipal-defined benefits that are the problem, but rather it's lack of state funding. Here’s a quote reported by WPRI at the very first Commission meeting: “We inherited a lot of bad decisions in the past. We have to live with it,” Polisena said. But Carcieri “did not help.” The mayor suggested that Central Falls and East Providence might not have their finances under state oversight today if the cuts hadn’t been made. He says it is the “state taxpayers “ who should help him pick up the costs of Johnston’s pension plan. Why? Perhaps some benefit cutbacks make more sense. Just review the fireman example above. How can other towns listen to this whining and witness lack of local action among commission members, sitting there right next to union reps, and then take this commission seriously? Taxpayers from other cities and town shouldn’t have to subsidize Johnston’s corrupt practices such as pension spiking.

In addition to a commission that is stacked against taxpayers, there is the ineffective leadership of Chair Gallogly. Some towns that have been “called on the carpet“ have become rebellious. At least two towns have openly mocked Gallogly‘s authority. Coventry has threatened to sue the commission, and West Warwick has smirkingly missed deadline after deadline for 2 years. The commission has lost significant importance and respect and we can expect that they will continue to drag their heels until Governor Chafee and all his appointees leave at year's end. This may unclog the process, but we’ve wasted 2 years of the so-called “Year of the Cities and Towns” under the Chafee administration as unfunded liabilities compound dramatically.

So because the commission is failing in even a basic way, I have instituted a ratings system that I believe the public can understand. I will review the true condition of localities like Coventry and Johnston. They will be compared to bankrupt cities in America and to average cities. It is quite possible that several Rhode Island towns will be in receivership before we’ve had time to dissect all the issues. I will attempt to review the Auditor General's list of critical plans first.

For towns that are rated terminal, and there are some, it’s game over. Only receivership can help the town turn the corner to sustainability. Let's start with two new towns for our rating system: Coventry is rated terminal and Johnston is rated critical.

Michael G. Riley is vice chair at Rhode Island Center for Freedom and Prosperity, and is managing member and founder of Coastal Management Group, LLC. Riley has 35 years of experience in the financial industry, having managed divisions of PaineWebber, LETCO, and TD Securities (TD Bank). He has been quoted in Barron’s, Wall Street Transcript, NY Post, and various other print media and also appeared on NBC news, Yahoo TV, and CNBC.


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Privatize those defined-benefit pension plans, and switch to 401(K)s. Mike Riley will be happy to invest your money for you and grab about one-third of your pension assets for himself and the other Wall Street parasites.
The sky is falling, chicken little, and only Mikey can save us.

Comment #1 by Johnny cakes on 2014 02 11

Privatize those defined-benefit pension plans, and switch to 401(K)s. Mike Riley will be happy to invest your money for you and grab about one-third of your pension assets for himself and the other Wall Street parasites.
The sky is falling, chicken little, and only Mikey can save us.

Comment #2 by Johnny cakes on 2014 02 11

Make fun of him all you want, Johnny cakes, but the numbers are frightening, at least in the opinion of this CPA. There simply is not a sufficient tax base in the entire state to support the level of pension outlays called for under the current make-up of all these plans.

Do you really believe a plan such as Johnston's is fair to the taxpayers who support it?

Comment #3 by Ben Algeo on 2014 02 11

Citizens should ask their town officials about my figures and get their response on the record. Remember they are not questing me they are questioning Moodys' and Morningstar.I'm saying the towns aren't revealing the real status of pensions and OPEB to taxpayers, even through their actuaries, and are understating the problem yet again. I think its criminal. Reality is painful sometimes. Its time for towns and taxpayers to recognize much higher taxes and unions need to negotiate significant reductions. Plans need to be closed or merged.

Comment #4 by michael riley on 2014 02 11

O.K. Mr. Riley.... Where are the results for your hometown? Why didn't any of this get dealt with when you were on the Pension Board here. Yes, you make a lot of noise later, but the local politicians never dealt with the problem. At least they kept the tax rate lower than it should have been for more than a decade. How much did that save you with your Ocean Road digs?

Comment #5 by Gansett Proud on 2014 02 11

Ben: You and Mike cherry-pick some sweetheart deal and then you generalize to all Johnston pensioners, as if this is the norm and responsible for the unfunded liability. Pensions throughout this country are underfunded, is it because of sweetheart deals?

When Bush cut taxes for the wealthy, the shortfall should have been made up by raising not lowering the top RI tax bracket - as was done. The shortfall was not only not made up it was added to.

When the GA gives tax cuts and credits to the anointed ones, someone has to make up for these lost revenues. Workers made their pension contributions, but the state, cities and towns - whose revenue sharing was cut - balanced their budgets by not making the required pension payments. This is Polisena’s augument as to why the state should pay.

Trying to pit working people against one another is not going to cut it with me. Firefighters are not the enemy.

Using the argument that pensions were overly generous (across the board) is bullshit and subterfuge. The benefit structure to pensioners - minus the sweetheart deals - were unchanged for fifty years. The only thing that kept changing was how much the employees had to contribute.

This is a variation on the argument being used to go after the Social Security pensions of working people by the vultures and parasites - and their accomplices in Washington. How many times have they raised payroll taxes - look at what we pay into FICA? Yet they say there is not enough money, as if working people are gaming the system. There are only IOUs because the gangsters and thieves in suits, who live lives of luxury and privilege - on the backs of working people - are helping themselves and those they represent to the wealth that we produce.

Comment #6 by Johnny cakes on 2014 02 11

Thank you Mr Proud for your interest. My History with trying to get Narragansett to fund their pension plan goes back 8 years.Unfortunately my warnings to the town and the Pension Board went unheeded. That pension board , like many others in the State, has no power and is dominated by union reps.I was appointed mid term and asked to not be considered for another term in November 2008.So I made noise before , then and now. Thank you for paying attention some of the time. To answer as the results here i have updated the blog for you Narragansett is at the bottom of the chart in Green...it has not been updated for the FIP plans recently negotiated or for Moody s 6% criteria and assets smoothing issues. I have included a link to my blog, a link to the FIP Narrgansett had to produce as it is in Critical Status.



Comment #7 by michael riley on 2014 02 11

Johnny cakes you are wrong and yet you expound upon it and resort to George Bush...i am happy to respond to any question of facts

Comment #8 by michael riley on 2014 02 11

Okay, Mike
As a question of fact: Why are so many pension plans across this country underfunded? You cannot explain or reduce social behavior to individual motivation. The administrators of these pension plans are not all crooks and shysters giving away the store to “greedy unions?” Are they?

What does the pension board in Narragansett - "dominated by union reps" - have anything to do with anything? As you said, it has no power.

Was the amount of money taken from Narragansett workers’ paychecks ever reduced? Were the benefit structures ever lowered, to where people could retire at a younger age with a higher percentage than it was 40 years ago? You and The Journal can spin this any way you like, but facts are stubborn things.

Why is it that public employee pension benefits that have been sustainable since the ‘50s, are no longer sustainable? Why is the Social Security system, that has been around since the ‘30s, no longer sustainable - as they tell us? Explain this to me. With close to a 15 trillion-dollar GDP, we are richer than ever. So what gives?

This is not about Bush. This is about his class of bloodsuckers and thieves who roam the world stealing the labor and resources of other countries in search of evermore wealth and profits - while they expect working people to not only finance it - but fight and die for them. But it is not enough for them to pick the carcasses of the people of the world, they are now coming to steal what people have worked a lifetime for.

Comment #9 by Johnny cakes on 2014 02 11

Your opening sentence premise is vague and incorrect the top 25 most populous cities in america including detroit and chigao are 76% funded Providence is 21 % the worst in the country of any city with 50,000 residents or more.

2) composition and power of pension Board- just plain bad governance to have the chicken guarding the hen-house.Where are the taxpayers represented that you want to pay this bill?

3) dont know what you mean by "administrators of pension board". please clarify.

4) when you issue facts i will respond to them

5)the question of the difference between the 30"s and the 50's shows a real deficit in economic knowledge...let s just say this in 1982 with mortgages at 17% and treasuries yielding 12% it was easy to fund a pension plan committed to employees 8% returns. However its 2014 the investments are 3%...its called reality.

6)i see the elite in this case being public employees retiring with millions making

Comment #10 by michael riley on 2014 02 11

The 25 cities included in the analysis have more than $125 billion of unfunded pension liabilities. Among them, 22 have pension liabilities that will have to be funded either solely or mainly by the city. Morningstar reported that about 50% of the cities contributed the full annual required contribution (ARC) to fund employee benefits earned in the last fiscal year. In aggregate, the cities’ pension plans are 66.4% funded with an average unfunded liability of $3,776 per capita, although these varied widely among the cities. The study also reports that the median funded ratio is markedly better at 76.0%, with an average unfunded liability of $1,556 per capita. For comparison, Morningstar recently published a companion report, State of the State Pension Plans 2013, which found that state pension plans have an aggregate funding ratio of 72.6%, with a UAAL per capita of about $2,600.


Comment #11 by michael riley on 2014 02 11

Mr. Riley: thanks for the links to the work of fiction that Mr. Kerbel sent to the state with their actuary in tow. Thanks also for the stale information regarding the pension fund in Narragansett. Those changes are more than 6 months old and the Finance Committee has more information than yourself. Chickens guarding the henhouse? Perhaps that would be the Finance Directors who sit on the pension board and the Town Managers who created this mess in the last 10 years or so. How does a plan go from 102% funded to critical status with the employees paying every dime required by them. You walked away. Was that due to Board members or the Finance Director "cooking the books"?

Johnny Cake made some good points. Besides, the Pension Board does not negotiate contracts or set budgets. The current council slashed Mr. Kerbel's pension contributions. So who is fooling who?

Comment #12 by Gansett Proud on 2014 02 11

Gansett proud you are truly clueless. accusing people of things behind a phony screen name feels .....creepy...not proud

Comment #13 by michael riley on 2014 02 11

Mr. Riley: You've made a lot of noise, but in Narragansett you walked away while Krugman, Loontjens, Cesarine, and multiple Councils underfunded the plans with their paygo scheme relying on investments to hide the truth. Worked until the markets went south. They still seem to want that model to work instead of funding their share. They have 2 contracts to negotiate this year plus one they have no control over. As for the retirees, how do you deal with them? So why did you bail out of the Narragansett Pension Board?

Comment #14 by Gansett Proud on 2014 02 11

Just like all your other numbers, where did you get your statistics on Chicago and Detroit.

“Altogether, Chicago’s four pension accounts were just 36 percent funded at the end of 2012.” (The roots of Chicago’s $19.5 billion public pension crisis | WBEZ 91.5 Chicago)

“The actuaries hired by the city’s emergency manager [Detroit] say that the pensions are underfunded by 40 percent to 50 percent” ( How Underfunded Are Detroit's Pension Plans? - Bloomberg)

Figures lie and liars figure! The truth is I wouldn’t pay much attention to any of these figures, your’s or mine. The people commissioning these studies want to privatize and steal the defined benefit pensions of working people and they will use any statistics they need to support it - just like you.

You and Raimondo - and your “studies” - along with the gangsters, lackeys and stooges on Capitol Hill, are greasing the skids for a complete takeover of the economic and political system by finance capital - which means serfdom and perpetual debt - and penury in old age, for the great unwashed.

Frankly, I think we have both had our say. Let the readers decide how credible our arguments are.

Comment #15 by Johnny cakes on 2014 02 11

so again ... if you need hand holding detroit numbers are from the morningstar numbers linked ...chicago and detroit are both in the top 25 cities ...the top 25 cities had median figures exactly as i said and also in the link.... not sure why this is confusing to you? Are you trying to make it out that Providence is only second worse? is that your goal.? ...if so that is downright missing the point..... Providence at 21% funded which is less than is less than 36% funded of Chicago... facts are facts and you are lacking facts...i have pointed you to studies i have given you Moodys criteria.....readers will decide but Moodys doesnt care what either of us say..they will rate towns based on more stringent criteria that neither you or the towns decided to reveal to taxpayers and some one will end up footing the bill..while you claim there is no problem or fight for second to last instead of last place
so enough of this thanks for caring

Comment #16 by michael riley on 2014 02 11


You are putting words in my mouth. True, I cited Johnston as an example, but yes, to the extent any of these municipal plans deducts a percentage of a participant's salary based on a certain salary base and uses a separate and higher salary base for purposes of calculating the future benefits, there will be a growing unfunded gap. Couple that with an assumed return on assets invested in the plan being significantly higher that the actual returns generated and you have a serious math problem.

I don't follow how Bush tax cuts have anything to do with municipal pension plans.

I never said firefighters were the enemy, but I do think public pension plans are overly generous. As much as I highly respect those positions of public service, I do think the public pays significantly more than market-value for them.

Comment #17 by Ben Algeo on 2014 02 11

Ben, Bush’s tax cuts transferred a trillion-dollars worth of wealth upward. Someone had to pay for it - along with 2 unfunded wars. Federal and State revenue sharing was cut. Reread what I wrote and try to figure it out. How is it that we are in a Great Recession - for us - and yet we have record corporate profits -and the stashing of billions of dollars offshore - and the DOW Jones is at an all-time high. Yet Soc Sec and DB pensions are “unsustainable”? We are broke but they are wealthier than ever. How did this happen? Our labor created this wealth - how did they get it all?

Mike, I shouldn’t be going on like this but……….. Moody’s, Fitch and Standard & Poor rated junk mortgage-backed securities as triple A rated bonds for investment purposes. These crooks were beholden to those who were selling these MBSs around the globe to pension funds and investors. the only place they belong is in prison with the likes of Goldman, JP Morgan, Citi, BOA, Wells Fargo, AIG and so many others.

The employees and owners at these rating agencies have about as much credibility as you and other Wall Street shills who are pimping for these big-time gangster/parasites and gamblers - who create no wealth - but live off the labor of others. We don’t need pension reform, we need prosecutions for the devastation they wrought, and a confiscatory wealth tax on what they stole.

Comment #18 by Johnny cakes on 2014 02 12

Johnny Cakes i agree with you on the wall street conflict of interest with ratings the agencies that they hired but the exact same conflict exists with town officials and their actuaries. I analyzed the lies in 2006 subprime bundled issuance and the same thing is happening with Town officials and the actuaries they hire.
I am not a wall street shill, i worked for myself and small firms for 30 years...my hedge fund was formed in Rhode Island...but i think blaming wall street is often a cop out...takes two to tango ...

Comment #19 by michael riley on 2014 02 12

Mike, I hope you didn't write that title. Analysing??? In North America we use Analyzing. BTW for everyones figures, Providence does not include overtime or clothing allowance or mantaince in our retirement. Just pay and longevity, which we pay fully towards our pension. http://www.salon.com/2013/10/10/the_rights_sinister_new_plot_against_pensions/ This makes an interesting read. Look at some of the names associated with the pension grab. Some of them donated to our fair Treasurer.

Comment #20 by Stephen DeNinno on 2014 02 12

thanks for all the data mr riley.

my only comment is that if I was a providence employee or retiree, I would be plenty worried. there is just no way that providence can possibly make up for that pension deficit.

and there is no way all these employees and retirees are getting their pensions as it stands now. people wake up. there is no money left.

where is the money going to come from?

Comment #21 by john paycheck on 2014 02 12

Johnny Cakes and Stephen,

Mike Riley is pointing out a serious problem in a pretty factual way and all you can do is rant and make personal attacks. Oh and blame Bush. OMG

Comment #22 by Michael Byrnes on 2014 02 12

Gentlemen: I know how hard it is for you to see beyond your nose, or think critically - but try.

Cities and towns are in trouble with their pension plans because they didn’t always make the required contributions. The State cut revenue sharing and aid to education, and the cities and towns had to figure out a way to balance their budgets without raising the already sky high local property taxes. One way they did it was by not fully funding their contributions to the pension system. It’s called kicking the can down the road.

The City of Providence simply does not have the revenue to support the services they provide, despite exorbitant property taxes. There are too many non-profits, tax treaties, and not a large enough tax base to support the services needed in a city its size. It is no coincidence that many classrooms in the schools share textbooks, buildings are in disrepair and that teacher’s buy needed supplies.


It is not about mismanagement or greedy unions, although that is what they want you to believe.

Comment #23 by Johnny cakes on 2014 02 12

Michael, personal attacks? I am a retired Providence fire captain. After 27 years I was caught in a building collapse. I fractured two vertebrae in my neck. I have lost some use of my right are and am in constant pain. The fact that I may not have my pension $44,000 btw. Keeps me up at night. The city's proposal will cost me hundreds of thousands of dollars in my lifetime. I cannot work, nor can I collect SS. I don't blame bush, but I do blame Don Carcieri. He knew the cities and towns couldn't make up the deep cuts to state aid. I do blame congress for cutting discretionary spending. As far as Mike Riley, I was one of his only defenders, when others took advantage of his private problem.

Comment #24 by Stephen DeNinno on 2014 02 12

Mr DeNinno,
I don't think anyone is talking about taking away your disability claim.I would certainly not support such a policy. Secondly, as I have said a few times before I greatly respect Firefighters and policemen.I personally witnessed NYC firefighters rushing past me right into the burning World Trade Center minutes before it collapsed.

Comment #25 by michael riley on 2014 02 12

Here's a perspective from an ordinary, middle-class (on the low side) family:

Budgets keep rising because of pressure from all who receive money from them -- from social service agencies to unionized public employees to school administrators. It's natural that people want more and more and that they vote for people who will give them more and more.

However, that's the fundamental, reality-based problem. Budgets (with pensions being a huge part of them) have risen beyond what people like me can afford to pay. The people who I pay through my taxes are going to have to live with what I can afford. We're at the limit. If it becomes a matter of scaling back public services vs. tax increases, I will take a decrease in service any day. That's reality.

Comment #26 by Art West on 2014 02 12

Art, pensions are a big part of the budget, not because they always were....Instead the chickens (past under or no funding)to roost. If the collapse of the market never occurred, or Don Carcieri did not gut spending to cities and towns, and if we didn't have the Carulo act which states cities and towns have to spend the same amount on education. So where did they cut? Public safety, pensions This brings me to the point. Buddy Cianci was THE major reason why Providence is underfunded. Plus the fact of those 6% COLA, BTW was a political move by connected retirees, not a negotiation. But Gary Sasse, and even you Michael, continue to go on his show and talk about something that HE is responsible for. Sasse and you don't have the balls to ask him why, even after we took him to court twice, he refused to fully fund the pension. The supreme court said, and Flanders wrote the decision, there is no ordinance that requires the city to fully fund the pension, besides no one has been hurt. When they cut the pensions then you can come back. Well we are back. Lets see how they rule on our suit. I know one thing, any mayor, at any time can say they didn't make this deal, and cut pensions further. This is why we have to fight. The current union will not fight, and will pay. Every lawyer we spoke to said that the COLA is gone for ever. Well can I survive on 44K in 20 years? I doubt it. Thats if it is there at all!

Comment #27 by Stephen DeNinno on 2014 02 12

Stephen you make a good point..Buddy has a history of not dealing with the pension issue. that being said , I like Buddy he's a good interviewer , he knows a lot. He gives me air time. When i ran for Congress some networks in Rhode Island didn't interview me once.Insane!! The pension underfunding issue is inextricably intertwined with local politics and corruption especially in Rhode Island. Im not going to accuse Buddy of that even if he runs for office. But facts are facts and Buddy running will expose him to criticism from people like me,especially if he doesn't address the current problems forcefully.

Comment #28 by michael riley on 2014 02 12

Michael, Has a history of not dealing with the pension issue? He is the MAIN reason Providence is in trouble. By saying he was not dealing with it, you are in fact NOT telling the people that read your article the truth, and you are propagating the lie that continues to be told here and everywhere. That employees are the reason for the collapse. Now I want you to answer a couple of questions. It may take some time.

1. Is the average age of death of a Rhode Islander 78.6 as the CDC states, or 85 as Gina Raimondo states. And how much more did that phony figure add to the unfunded liability?

2. The rate of return was lowered. What was the rate of return for the last 30 years, or are only using the 10 years that included the crash? And how much did lowering the rate of return add to the unfunded pension?

3. The State pension system, which includes State workers state police,judges, and teachers was underfunded by how much?

4. What was the municipal pension system administered by the state funded to? And since it was funded 80% why were they included in pension reform, since they already met the minimum funding level until Gina raised the age and cut the assumptions?

This is where the cook the books saying came from, and lastly, how did Gina figure out in less than a year that all this needed to be done to "save" the pensions of state workers? Or as I contend, this scheme was already written by Mr Arnold and the Pew foundation, just like ALEC writes legislation.

Comment #29 by Stephen DeNinno on 2014 02 12

Mr. DeNinno: Thank you for your service and I am embarrassed that disability pensions are included in these "sweeping reforms" of the pension systems. They should not be included in any modifications. More of the political "what have you done for me lately and do you vote in my district". It is amazing that employees are being scapegoated while the very people who made these decisions, not to pay what was owed to the system skate off free. Heck, in Narragansett one of the main conspirators now has a library named after him. For years, the town politicians boasted about the low tax rate and the Finance Director won accounting awards. Their own administrators ignored Council votes to pay some money back into the plans and Mr. Riley can verify that. Like you said, the chickens have come home to roost.

Comment #30 by Gansett Proud on 2014 02 12

Mr DeNinno im not sure where you get this stuff but its pretty far out there. first i've read thousands of audits and actuarial reports, and though i have never quite focused on the mortality tables I dont think the CDC is relevant. for a good estimate at life expectancy you could use what the federal government uses/

This shows a 30 year old today is expected to live to 85 not 78.

Second your point about rate of return ..Here is a thought experiment shouldn't everyone"s rate be the same? if not why not? or is Providence special? The simple truth is It doesnt matter what you think it should be or even what the Providence actuaries from last year think. From now on its 6% or lower. that guidance was issued to every town in rhode island. So from now on Moody will use 6% or lower ..you can live in fantasy land if you want to....but you can not find 1 finance guy to say it should be 8% in America.Its downright insane to think that's an appropriate rate so ive actually put alot of work into determining a proper rate but for now and to keep it simple i'll just ignore you and go with Warren Buffet who says 6%.

The State Pension system was stated as 48% funded before reforms and is now 58%...both funding levels are overstated because they are using 7.5% instead of 6%.

let me say this again...doesnt matter what economic theory you have or what kind of genius runs the pension plan they are all going to be rated by the rating agency Moody's using 6% or lower

As far as Mers, ALEC paranoia and Gina s thought process , why would you ask me that stuff?..just tell us and make your point..How do I know what anyone was thinking? Im here to give the facts, to paint the real picture..Your here to defend bad numbers bad facts and bad policy so you can keep your cola...

Comment #31 by michael riley on 2014 02 12

Gansett Proud i agree with all of your last comment.

Comment #32 by michael riley on 2014 02 12

Mike, first, if the problem is the 30 year old living to 85, they are not even going to be included in the COLA freeze, so using a 30 year old for cutting pensions today is irrelivent. In fact most retired now will never recieve a COLA, they will be dead. Why am I asking you about Mr Arnold, and The Pew foundation? Well I guess the financial industry has always been so straighforward with us. You personally may have financial gain by switching to a defined contribution plan. Again, since you are studying the systems, please tell me what the rate of return has been for the last 30 years. I know Providence has been WAY over the 8.25% mark. In fact it is not us that sets that number, its the city's actuary and we have nothing to say. So again, underfunding is not the fault of the workers, but the State and cities, in collusion with the financial services industry, that screws the little guy. BTW I would not trust a "Financial advisor" as far as I could throw them.

Comment #33 by Stephen DeNinno on 2014 02 13

Steve the idea of this column is to inform people. It was misinformation when you claimed the use of the CDC for actuarial calculation, it was misinformation in the last comment that the actuary chooses the discount rate. That is most emphatically wrong. Why do you present these as facts when you clearly dont know?

Comment #34 by michael riley on 2014 02 13

Overgenerous pensions for many with unrealistic COLAS that compounded the problem in the past, underfunded pension accounts because the state's spending priorities lean to supporting the unproductive rather than the workers (and taxes are already too high)--all covered up on the book with an unrealistic rate of return. What's not to love?

Comment #35 by Jimmy LaRouche on 2014 02 13

Fitch confirms my analysis Opeb 1.2 billion ..outlook negative


OPEB contributions were $36 million for fiscal 2013, equivalent to 49% of the ARC. The city's OPEB liability was a very high $1.2 billion (11% of AV) as of July 1, 2012, based on a 4% rate of return. Combined debt service, pension, and OPEB pay-as-you-go payments made up a slightly high 24% of total governmental spending.

Comment #36 by michael riley on 2014 02 13

Michael, The CDC IS the way to go if you are going to screw people that are already retired and elderly out of their COLA. If you want to do away with the COLA for 30 year olds, well have at it. They have plenty of time to make up for lost money. The poor retired cooks helper making 17K is out of luck because a 30 year old today is going to live to 85? Yup that makes sense. Mike I did not say the city didn't have a hand in setting the return, but Buck consultants, at least while I was working approved it. The unions had NO say in returns. Back to the 30 year old...By the time he retires, the COLA is back and life goes on for those people. This is why I couldn't let the city get away with changing my contract. BTW my Cola and health care is written into the contract. How was it fair, having fire and police, many that this freeze will not affect, vote on that settlement? I got 2 COLAs and have to wait 10 years? I already waited four years for my first one. Even someone that retires right after the settlement,since they have to wait 4 years anyway, will only be effected by 6 years. Sound fair and balanced? what about the guys that received COLAs for 20 years? They don't need the money. But the city had to rush this through, and right after, Tavares went back on his word and took 20 million out of the retirement payment.

Comment #37 by Stephen DeNinno on 2014 02 13

we agree on so many things i dont know why you fight me....my main point is math...i know you hate to hear that ..but someones taking a hit ..and its cant possibly be "fair" to everyone...what do you say to the new resident who thought his taxes were 6000 and they change to 15000...nothing was taken from him..just jammed into him...

Taveras and every town should come clean using real numbers...our Pension Commission should expose problems not delay discovery and fixes...20 years to get to 60% funded is there solution ? please!!
treat us all like adults ... and we will find solutions . they may hurt but they will be solutions

Comment #38 by michael riley on 2014 02 13

Connecting the dots of R.I.pension crisis

Public employees are allowed to unionize...Union leadership collects dues from said employees...Over many years unions start to finance politicians through campaign funding... Private sector union leadership teams up with public sector union leadership...Union leadership then starts fielding and electing union employees and
union leaders as candidates...They then get elected because of massive funding and organization…Union leadership then aligns with poverty advocates...They take over the General Assembly…Union-controlled politicians start passing unrealistic andunaffordable laws and rules that benefit themselves...Poverty advocates demand
more...Union leaders give more to poverty advocates...Union leaders pass even more smoke and mirrors legislation to the detriment of private sector taxpayers...Suddenly HHS grows at an unsustainable rate...Pension funds get misused to meet demands of poverty advocates by union leaders with fake promises by elected union politicians...Unfunded pension liabilities grow at an unsustainable rate...Rhode Island becomes uninhabitable by businesses because union rules and the resulting taxes and regulations make R.I. the worst place in America to do business...R.I. loses business tax
base...Union-financed politicians start raising tax rates at an unsustainable pace on citizens while not providing real reform or relief...Citizens start to leave in droves...R.I. has the second lowest population growth in the country for the last decade as a
result...Less taxpayers, less businesses, most generous benefits, highest unfunded pensions...Third highest unemployment...Even more producers leave...Home values crash...Suddenly the emperor has no clothes...Union leadership then starts to violate the law to help win elections...Union leadership starts to threaten violence on elected
officials and private citizens...R.I. goes bankrupt...The people that the union leadership say they care about and defend have their retirement and future destroyed by their leadership…The only people left in organized labor that have 90 percent funded
pensions, great benefits and outrageous salaries are those in leadership and their family members.

Comment #39 by Sean GATELY on 2014 02 13

We are going to cover this Saturday at 11 A.M on the "Mic" Gardiner Show 990WBOB.com listen in. We'll try to get to at least two of the critical comments. http://www.990wbob.com/

Comment #40 by Michael Gardiner on 2014 02 14

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