Op-ed asks, Why can’t California be more like Rhode Island?
December 3rd, 2011 at 12:28 pm by Ted Nesi under Nesi's Notes, On the Main Site
Time magazine’s “Little State That Could” article about Rhode Island’s pension overhaul continues to reverberate around the country. This time it’s in an Orange County Register op-ed by Steven Greenhut, who gloomily contrasts his state’s approach to the issue with ours:
As the public employee pension and health care benefit crisis sweeps across the nation, some states are dealing seriously with these multibillion-dollar threats to public services and treasuries. And other states remain in deep denial. California, to no one’s surprise, is moving stridently in the wrong direction. …
[Rhode Island's] sweeping reforms were passed in a union-dominated state, where Democrats control even bigger legislative majorities than in California. Time magazine called Rhode Island “The Little State That Could.”
By contrast, California is “The Big State That Can’t.” Or maybe the right word is “won’t,” given that there is no real reason that California leaders can’t adopt similar reforms if they had the desire to do so. …
Wouldn’t it be nice if California’s legislators, governor and courts rolled up their sleeves and behaved like their counterparts in Rhode Island? Then again that would take a level of political maturity not seen in this state for a long time.
If it’s any consolation to Mr. Greenhut, as I write this the temperature in Orange County is 60 degrees, compared with a brisk 45 here in Rhode Island.
Tags: california, pensions, raimondo-chafee, state government, steven greenhut
Nesi's Notes covers politics and the economy in and around Rhode Island for WPRI.com. (Twitter: 
California is like RI both states cater to illegals
Perhaps because California still wants to attract businesses to relocate there. Think about this: You’re a business and two or three states are offering you multi-year concessions to relocate — tax incentives and the like. Would you come to Rhode Island? The state has just proved that a contract with them is meaningless. If the state could take away the value (the COLAs) from its retired workers and teachers’ pensions any time it felt like it after a state law guaranteeing it for almost 30 years and celebrate with a party including fist-pumping (or overly enthusiastic thumbs up), then would you trust them? You’d run to one of the other states. Our contracts are now trash. Nothing like not thinking beyond your nose, Rhode Island.
Also California workers didn’t contribute to their pension plans unlike Rhode Island workers who contributed about 9% of their gross pay annually (slightly more for teachers, slightly less for state employees). Rhode Island workers didn’t have a choice — the plan was mandatory and now they are left wondering how they will pay their bills in a few years as their income erodes year after years. California has worse problems than we do but it’s not taking it out on its elderly; it honors its contract. We should be “so very proud” of ourselves for grabbing money away from our middle class and working class workers to spend on what — don’t expect your taxes are going to go down.
THEFT OF LABOR . . . A MODERN AMERICAN ECHO OF SLAVERY.
FDE, government sponsored theft of labor is celebrated in 2011. It occurred to me that our nation was built on the theft of labor. Thomas Jefferson embraced the theft of labor, his qualms about slavery easily rationalized. In a similar vein Raimondo (America’s best and brightest) rationalizes her theft of labor. We should stop kidding ourselves about American exceptionalism. Humanity has not advanced since the Middle Ages, we continue to live in a primitive society.
YAWN. Tell us Moncrief – Cecily – whatever other names you use – which union do you actually work for? Inquiring minds want to know.
Quoting …”Rhode Island workers didn’t have a choice — the plan was mandatory and now they are left wondering how they will pay their bills in a few years as their income erodes year after years. ”
Since almost no Private Sector Plans include an annual COLA, why should yours … primarily at Taxpayer expense ?
Are Public Sector workers “special” and deserving of MORE (bigger pensions and better benefits) than those that pay their way ?
Most, if not all, private sector pensions are non-contributory on the part of the employee. As a result, these employees have available to them the 8.75 percent of their gross salary that state employees were required to put in the pension fund to save or invest so as to augment their non-contributory private sector pension. Thus, even though a private sector pension does not have a COLA the private sector employee is able to offset the lack of a COLA in retirement with additional retirement savings made possible by the fact they were not required to contribute to the pension provided by their employer.
Ace, While you are correct that most private sector Plans are non-contributory, that does not balance it out.
The total of all your contributions accumulated WITH interest to retirement age will buy 10-20% of your pension depending on how rich the formula …so call it the 15% (the middle of the range). Adding a COLA to an otherwise equal non-COLA Plan increases it’s value by 1/3 … more than double the offset from your contributions.
And let’s not forget the myriad of other provisions ONLY available to Public Sector Plans … all adding to the Plan’s cost:
(1) the very early full retirement ages
(2) the very liberal definition of “pensionable compensation” often including such items as overtime, “allowances” (uniform, paring, car, being bilingual), etc.
(3) the pattern of end-of-career promotions and larger than normal raises to goose the pension.
(4) the incredibly loose definition of disability …. routinely abused.
(5) cash payout at retirement for unused sick days
None of this ever happens in Private Sector Plans because the employers would not be so foolish as to spend corporate funds this way. In the Public Sector, it Taxpayers’ money, so the politicians don’t give a damn.
Ace in the Car you need to put the crack pipe down. In the private secotr the EMPLOYER is the oen that contributes NOTHING. The employee at a GREAT Fortune 50 company MAY receive a 3% match, but 90% receive no match at all.
Public sector pays more, retirees earlier and has retirements 2-10 times the value of the private sector, plus they have rock solid job security.
So your comments are bunk buddy-and just more spin. I am very happy you had your scam pensions cut in half, especially the cops who took a 55% haircut. You didn’t earn it and don’t deserve it.
Perhaps the real question is: why can’t RI be more like California when it comes to total pension debt per household?
Using Pew Center pension numbers, California’s per household pension debt is $4923, and RI’s is $10,771. But household income is higher by 10.76% in California so adjusting for that difference, the RI per house pension debt is almost 2.42 times the Calfornia per household liability.
It should be noted that these pension numbers are actually worse (for both) since these older Pew numbers were calculated before the assumption changes (as recommended by Treas Raimondo). But the scope of difference (i.e. 2.42 times greater than Ca) should be the same even with similar assumption changes.
http://www.pewcenteronthestates.org/report_detail.aspx?id=57264
Pew Center pension liability by state lists Ca at $60 billion and RI at $4.354 billion (note, both are assumed equally higher when similar assumption changes are used to recalculate)
http://quickfacts.census.gov/qfd/states/00000.html
Total households
Ca – 12,187,191 with $58,925 median income per household
RI – 404,227 with $53,243 median income per household