WARWICK – State General Treasurer Gina M. Raimondo will submit what she called a “comprehensive legislative pension reform package” to the General Assembly at its special October session, she told a group of community leaders Wednesday morning, and she asked for their support to fix the state’s woefully underfunded retirement systems.
At the session at Warwick City Hall, organized by the R.I. League of Cities and Towns and attended by about 50 representatives, Raimondo once again, since taking office in January, painted a grim picture of the state’s future without immediate pension reform.
“We’re fighting for the future of our state,” she said. She predicted more municipal bankruptcies, such as Central Falls, that would diminish the quality of life throughout the state, threatening public schools, parks, libraries, recreation programs and even routine trash pickups, if nothing is done. “The consequences will be devastating,” she said.
She is grappling with what are four separate pension systems: one for state workers; two administered by the state to which cities and towns contribute to cover municipal employees in one case and, in the other, police and fire employees; and the state teachers retirement system.
Also at play, in a fifth category, are locally administered pension plans funded and operated entirely by cities and towns, which cover both municipal and police/fire employees in some communities including Providence and Warwick.
Using figures supplied by the R.I. League of Cities and Towns, Raimondo distributed fact sheets showing what the financial impact would be on cities and towns in fiscal year 2013, starting July 1, 2012, if reform of the state-administered local plans is not undertaken in the current year.
For instance, the City of Providence in fiscal year 2012 faces a bill of $16.7 million for contributions to the state-run teachers’ retirement system, a bill that would rise to $26.6 million – a $9.8 million, 59 percent increase in 2013.
Warwick’s bill, also just for the teachers’ system, would rise from $11.1 million to $17.6 million, also a 59 percent increase.
In Cranston, which contributes to municipal, police/fire and teacher pension plans, the fiscal year 2012 bill at $14.2 million would climb to $24.6 million, a $10 million or 73 percent increase.
Pawtucket, which contributes to the municipal state-administered plan as well as the teachers’ system, the bill would go from $8.9 million to $14.9 million, a 68 percent hike.
After the session, Raimondo told Providence Business News that the work done so far by her pension reform advisory board indicates that the four state plans will see changes in minimum retirement age, cost-of-living increases and benefits level.
When the state’s pension reform is done, Raimondo suggested putting a giant sign on Interstate Route 95 announcing that “Rhode Island is open for business.”
“I want Rhode Island to lead the country in the way we come out of this pension crisis,” she said, because a successful conclusion will show investors and businesses that “we’re willing to make the tough fiscal decisions.”
Regarding the locally administered pension plans, Raimondo said she is studying solutions, but it is not clear what role the state can play.
The state-run plans were created by statute, which can be changed, she said, but most local plans are the result of collective bargaining or binding arbitration. “We are looking into what the General Assembly can do” to help them, she said.