Bankruptcy looming without municipal pension reform

When the Rhode Island Retirement Security Act of 2011 (RIRSA) was being debated on the House floor last November, I sat in the gallery with many other Rhode Islanders watching the proceedings. The discussion was spirited, but somber, and as I left the building on that cold and damp evening, I had no desire to celebrate the passage of this important legislation, only to reflect upon what Rhode Island’s future could now hold.
With the passage of RIRSA that night, Rhode Island’s unfunded liability for the state-administered pension system was slashed by $3 billion and went from being 48 percent funded to more than 60 percent funded – a tremendous improvement by any standard. RIRSA represented a shared responsibility between taxpayers, employees and retirees and is now being viewed as a national model for addressing pension crises across the country. And, for the first time in recent memory, Rhode Island is being hailed as a leader and has been featured in numerous national media pieces.
But there is still much to do – and much at stake – as we all look ahead to a day when Rhode Island has a strong education system, stable property taxes, sound infrastructure, plentiful jobs and the ability to support those among us who need an extra hand.
EngageRI is committed to support RIRSA as enacted. We believe that the courageous legislators who voted “yes” did so with a thorough understanding of the dire circumstances that we faced without reform. They understood that this was an issue that affected all of us as they heard from Rhode Islanders across every age and income level who pressed for reform to preserve funding for schools, social services and infrastructure. They heard from struggling small-business owners who can’t afford to pay more taxes and won’t survive another year in a terrible business climate.
They heard from young teachers who worried that without reform, they would have no retirement security. These legislators went out on a limb and voted “yes” and we must not let their hard work be rolled back.
As many of our cities and towns face municipal finance crises, it’s clear that the non-MERS pension plans need to be addressed, or more cities and towns could face a painful bankruptcy like Central Falls. EngageRI supports the efforts of cities and towns to implement comprehensive pension reform. We encourage the cities and towns to take the same approach to pension reform as the state did when implementing RIRSA by doing the “number-crunching” and the legal work to design a plan for comprehensive and sustainable reform. It is clear that suspending cost-of-living increases is essential to ensuring the long-term viability of pension funds, but it is only one step and may not be appropriate for every municipality. Most importantly, the municipalities must follow the law, as defined by RIRSA.
The first step is the experience study that was due to the Department of Administration on April 1 and then those with critical status must create a plan for implementing reform as outlined in the legislation. Changing benefits for only select groups will not work. Comprehensive pension reform must address benefit levels, benefit structure, risk sharing and adjust – or freeze – COLAs.
Without comprehensive reform, we are likely to see more Rhode Island municipalities fall into bankruptcy. Most importantly, comprehensive, municipal pension reform could provide retirement security for employees and retirees, stabilize the property tax rate for taxpayers, and allow us to invest more funds for schools and social services. EngageRI will follow the progress made by the cities and towns closely and will share information about which municipalities are – and are not – actively following a path to reform.
We all must support those leaders who are doing the hard work and putting their retirement systems on a healthy path.
EngageRI will continue to be a positive voice for pension reform and will continue to educate the public about what’s at stake for all of us. As we’ve said from the beginning, this is an issue affecting every Rhode Islander from every walk of life and our collective future is too important to “kick the can” down the road.
We hope that more Rhode Islanders will engage and help us continue to make Rhode Island the national model for pension reform, as we glance back to remind us of what we need to protect and move ahead to tackle the challenges in front of us. •


Edward J. Cooney is co-chairman of both Engage Rhode Island and the Greater Providence Chamber of Commerce board of trustees.

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