R.I. GENERAL TREASURER Gina M. Raimondo has been leading the charge to get the state’s pension funding crisis under control. Coming soon is a special session of the legislature to enact changes that should solve the problem.
The last time the General Assembly met in the fall, lawmakers gathered for a single day. This time around, lawmakers may want to block off more of their calendars, much more.
In an unprecedented move, legislative leaders have beckoned their members back to Smith Hill to hold a session exclusively on pensions.
“To come back and just deal with one issue like this is extremely rare,” said Larry Berman, a spokesman for House Democratic leadership.
Lawmakers appear to have little choice. Ballooning pension costs, including $9 billion in unfunded liabilities, pressure the very foundation of Rhode Island’s economy, said Laurie White, president of the Greater Providence Chamber of Commerce.
“It’s an issue that morally threatens our economy going forward and that sweeps everyone into the mix,” White said.
Lawmakers are now paying attention, especially after General Treasurer Gina M. Raimondo released a report in May. The report, “Truth in Numbers,” painted a precarious picture of the state pension system. The report charged that for years politicians of all stripes underfunded the system and relied on overly optimistic, projected investment rates of return.
“I think we’re finally at a crisis point and I’m hopeful that … is going to cause people to act,” Raimondo told Providence Business News last week.
The treasurer said she is not prepared to share specific recommendations yet. However, she said it’s fair to assume that some recommendations may stem from changes outlined in her report.
Among the concepts were boosting the retirement age to 67 and eliminating annual cost-of-living adjustments. Another idea would move state employees to a plan with a mix of defined benefits and investments managed by the employee, similar to a 401(k) in the private sector. Raimondo also has said publicly that retirees may need to see their benefits reduced.
The concepts have stirred controversy and opposition from labor unions, which recently won a court case contesting changes to pensions that the Assembly enacted in 2009 and 2010. After the ruling, Gov. Lincoln D. Chafee and Raimondo said they planned to appeal and push on with pension reform.