Notes from the first FinCom hearing on the pension billOctober 24th, 2011 at 5:29 pm by Ted Nesi under Nesi's Notes
These are cross-posted from Twitter, hence brevity and abbreviations. Check back for more.
• Judges and state police *won’t* have COLAs suspended (!) because their pension fund didn’t get saddled with an unfunded liability. Optics bad there. Projo’s Kathy Gregg notes the COLA that they do get will be the new formula that only kicks in when pension fund earns 5.5% or more.
• COLAs projected to come back in 2025-6 for low-income teachers & 2029-30 for all teachers; back in 2027-8 for low-income state emps, 2031-32 for all.
• More than 24 of the roughly 100 state-managed muni pension plans will have COLAs suspended at least partly b/c they’re under 80% funded.
• Wow: 77% of the $2.9B drop in the pension shortfall under Raimondo-Chafee bill is from COLA suspension/changes. 13% from retirement age increase; 10% “other.”
• Without changes, Rhode Island’s annual pension contributions will take up 10% of all general revenue by 2015-16. Bill would keep it about steady.
• The average age of a retired teacher getting a pension in RI is 63.7 years old. Avg age for a retired state worker much higher, at 71.7 years old.
• More than half of retired teachers (58%) and nearly half of state employees (48%) earn more from their pensions than they did working, the treasurer’s office says. Those numbers do not include Social Security benefits; all state retirees and half of retired teachers get Social Security.
• Pension withholding for teachers *not* enrolled in Social Security will actually go up from 9.5% to 10.75% to put more in their 401kish account. For teachers in Social Security, drops from 9.5% to 8.75%, same as state workers.
• RI-employed nurses and correctional officers get the same new pension rules as everyone else except retirement age; theirs goes to 55.
• No hybrid plan for judges, state police, correctional officers and police and fire in state-run Municipal Employees Retirement System (MERS). There would be an extra individual account for police and fire whose communities don’t offer Social Security. Only about 15% of MERS police and fire are *not* in Social Security, “which is a good thing,” Dingley says.
• The legislation would save taxpayers approximately $4 billion over the next 24 yearns, “enabling investment in Rhode Island’s future,” Treasurer Raimondo’s office said.
• Without changes, RI municipalities’ pension contributions to the state-run system would go from $176m in ’12 to $287m in ’13. Under Raimondo-Chafee bill, municipalities’ total contributions *fall* from $176m to $167m. (That includes MERS and their 60% share of teachers’ pension deposits.) “Immediate and significant savings,” Raimondo says.
• Part-time state employees will no longer be allowed to earn a pension if hired after 6/30/12; must work full-time, which is defined as 35 hrs/wk. Teachers must work 180 days or more to be eligible if hired after 6/30/12.
• Raimondo is proud of the “Pension Protection Act” section of the bill, which isn’t getting much attention but has various requirements to keep an eye on the pension fund’s health. Notification required if Retirement Board votes against actuary, for example.
• The Raimondo-Chafee bill would create an 11-member study commission to look at ways of dealing with cities and towns’ $3.6B liability for retiree health care.