2011-12-15 / Editorial

From the State House


BY DEB RUGGIERO BY DEB RUGGIERO Season’s greetings, friends and neighbors. Thank you for your calls and emails regarding pension reform. I value your input.

What Rhode Island did was the most extensive public pension reform in United States history, according to the Pew Center on the States. Treasurer Gina Raimondo did a masterful job educating people about the unfunded liabilities and cost-of-living increases. She said it’s not about politics – it’s about the math.

Pension reform would only happen if there were a majority vote in both the House and Senate. It was the leadership and collaboration of House Speaker Gordon Fox and Sen. President M. Teresa Paiva Weed ensuring the train didn’t derail. The vote wasn’t even close – 57 to 15 in the House (I voted “yes”), and 35 to 2 in the Senate.

Although not an easy decision, it was a necessary one. As I’ve said to many of you, an insolvent pension system hurts everyone – the retirees, the employees and the taxpayers. The economic future of our state hangs in the balance.

Here’s why it’s a game changer: The Rhode Island Retirement Security Act of 2011 will save the state’s cities and towns at least $100 million next year and $3 billion over the next two decades. That’s because the pension changes lessened the amount that municipalities and school districts would have had to contribute into the pension system.

Jamestown will save over $650,000; Middletown saves over $2 million. Providence saves over $13 million in pension costs next year. As a result, the state pension system will be 60 percent funded – it was 48 percent funded prior to pension reform. The state-run Municipal Employee Retirement System (MERS) will be more than 85 percent funded.

However, the real concern is the non-MERS cities and towns that have negotiated private pension plans. They are not part of the state-run pension system.

There are 24 communities with 36 different local pension plans for fire, police and municipal workers. They are collectively bargained by those local officials, not the state. They’re all very different and woefully under-funded at 40 percent. Cranston police and fire are only 16 percent funded; Coventry is only 25 percent funded. Because they are all individually negotiated, the state cannot pass “one size fits all” legislation. By comparison, Jamestown’s police plan is 99 percent funded and Middletown’s MERS pension plan is 80 percent funded. It’s an honor to serve as state representative for Jamestown and Middletown. Both towns are well managed and fiscally sound.

What the General Assembly can do next legislative session is pass enabling legislation to empower local cities and towns to open discussions and bring everyone to the table. We can only hope that mayors and municipal leaders will embrace the challenge of making the necessary reforms. As trustees of the state, we must ensure there is a pension system for future retirees.

You should read Time Magazine’s article “The Little State That Could ” in the December issue. It suggests that difficult, selfsacrifi cing decisions are possible for the future of the entire state – Washington should pay attention.

Rep. Deb Ruggiero serves District 74 (Jamestown and Middletown) in the state House of Representatives. She can be reached at rep-ruggiero@rilin.state.ri.us or 423-0444.

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