pension advisory group

Quick hits from the final pension advisory group meeting

September 12th, 2011 at 1:40 pm by under Nesi's Notes

a protestor at Monday's meeting

Members of the Chafee-Raimondo pension advisory group took the gloves off – briefly – at their fourth and final meeting on Monday, in another sign the pension debate is shifting from a wonky academic discussion to a fierce political fight. But it didn’t last long.

“I have never been in a group that has had such disagreements and been so civil,” marveled Richard Licht, Governor Chafee’s director of administration and proxy on the pension group.

As planned, the 12-member panel finished their work without taking any specific action – they didn’t issue a final report or take a vote on specific recommendations. But they did spend a few months analyzing and debating a huge amount of information on retirement financing.

A number of people have dismissed the group’s work as smoke and mirrors, but it’s important to remember who was taking part in (and learning from) those discussions – notably Licht and Deputy Treasurer Mark Dingley, Treasurer Raimondo’s proxy. Their views are likely to play a pivotal role in shaping the legislation the governor and treasurer submit to lawmakers before their special session next month.

What’s next? Raimondo will brief state senators on the pension issue this afternoon, and the House and Senate finance committee will kick off a series of three joint hearings about the problem this Wednesday. There’s no timeline yet for the unveiling of the Raimondo-Chafee bill, but it should happen by early next month.

In the meantime, here are some highlights from today’s meeting:

(more…)


The Alexander Hamilton solution to RI’s local pension crisis

August 18th, 2011 at 1:43 pm by under Nesi's Notes

The Wall Street Journal’s David Wessel has a fascinating column today about the lessons Europe can learn from how the U.S. and Brazil dealt with “tensions between sharing a currency and a central bank while pursuing largely independent fiscal policies” – basically, the Greece vs. Germany problem:

For months, Europe has been hamstrung by what one seasoned observer of the global economy describes as three “No’s:”

• No devaluations, meaning neither Greece nor Portugal can leave the euro to depreciate their currencies to regain competitiveness.

• No defaults, meaning holders of government debts must be paid in full.

• No transfers, meaning taxpayers in rich countries like Germany and France won’t bail out southern European spendthrifts.

Wessel’s solution: the European Union should use “the restructuring of state government debts to impose a measure of fiscal discipline and to bolster the power of the central government.” He points to two examples: Alexander Hamilton’s decision in 1790 to have the United States assume the states’ $25 million in Revolutionary War debts, and Brazilian President Fernando Henrique Cardoso’s similar move in that country a decade ago.

Reading this led my thoughts back to Rhode Island. Could something like that be part of the solution to the crisis in many of the state’s locally-run pension plans?

There are 23 plans run by 18 municipalities – about half the 39 cities and towns – that “are considered at-risk” because of underfunding, former Auditor General Ernest Almonte told the pension advisory group Wednesday. They include Providence, Warwick, Cranston, Pawtucket and East Providence – the state’s five largest communities and key parts of its economic engine.

This fall’s special legislative session on pensions is unlikely to do anything to address those local plans, focusing instead on the ones run by the state. But Almonte and Cranston Mayor Allan Fung warned of dire consequences if the independent plans’ problems aren’t addressed soon, and Governor Chafee proposed the MAST Fund partly due to those concerns.

Almonte and Fung suggested the plans could be moved into the state system “on a go-forward basis,” meaning just for new workers. But you have to wonder whether the day will come when the state government is forced to assume some responsibility for the local pension liabilities, as a way to avoid more situations like Central Falls. Most of the locally run plans are more poorly funded than the state one.

Almonte and Fung offered other suggestions, as well: requiring benefit cuts until a local plan’s funding level improves; establishing permanent limits on the generosity of benefits that mirror the state rules; abolishing double-dipping, the purchase of service credits, and benefit enhancers; auditing each independent plan; and exploring the possibility of buying out pensioners in troubled plans with a lump sum payment.

Forcing Barrington taxpayers to bail out Pawtucket retirees would be an unpopular move, to say the least – tough measures, including benefit reductions, would probably have to be a part of any deal. Yet it’s hard to see how Providence, for example, will ever be able to cover the retirement promises it’s made without assistance.

(photo: Wikipedia)


A 15-year freeze on COLAs and other pension panel tidbits

August 17th, 2011 at 1:37 pm by under Nesi's Notes

Director of Administration Richard Licht won’t like it, but the big headline out of Wednesday’s third meeting of the Chafee-Raimondo pension advisory group was undoubtedly actuary Joe Newton’s suggestion that the state may need to suspend cost-of-living increases for 15 years to get the pension system 80% funded.

“Wait, what are you doing?” a man called out from the back of the room after Newton showed a slide containing that idea.

True, that was just one piece of a proposal by Newton that would also re-amortize the state’s $7.3 billion unfunded pension liability over 25 years; reduce benefits not yet earned; and require taxpayers to continue making large annual deposits into the pension fund, among other things. But the COLA freeze was a dramatic demonstration of what painful choices Governor Chafee, Treasurer Raimondo and the General Assembly face over the next two months.

The advisory group has one meeting left – on Sept. 12 – and won’t be producing a final report or taking a vote on any specific recommendations. Here are some other highlights from today’s jam-packed meeting:

The mood today seemed more tense than at the first two meetings. There were signs on trees outside East Providence’s Weaver Library that said: “Keep the promise. We did.” The room was full of attendees, many of them retirees, and there were a few outbursts despite a ban on comments or questions from the public. Council 94′s Mike Downey expressed disappointment that the voices of average state workers haven’t been heard much.

• An asset infusion, a preferred policy of NEARI’s Bob Walsh, looks less likely after First Southwest banker Maureen Gurghigian poured cold water on the idea of giving the pension fund T.F. Green Airport, the Lottery, the Convention Center or Twin River. Walsh told me after the meeting the one idea that survives is the potential of pledging the state’s future income from an expanded Twin River to the pension fund instead of the budget.

• A hybrid plan, which would combine a limited defined-benefit pension with a 401(k)-style defined-contribution account, was discussed by BC’s Alicia Munnell. She suggested a “stacked” plan, which would guarantee a pension benefit of up to $50,000 but switch to a defined-contribution for income above that. She said both are needed because individuals are bad at managing 401(k)-type accounts; Cranston Mayor Allan Fung responded that governments are bad at funding pension plans adequately.

• The value of a pension is significant, Newton’s presentation showed. Under the current system, for a 36-year-old new hire starting out at $34,000 a year, about $284,536 will be contributed to the pension fund on his behalf (out of his own paycheck and by the state). If he retires at age 65, he could get $2 million out of the fund.

• Not everyone in state government wants a pension. HR reps have told the group the option isn’t particularly appetizing to IT professionals and attorneys, which makes it harder to recruit them. If they worked for the state for eight years, all they’d get at the end of that time is an interest-free check for their pension contributions, since they’re not eligible for one.

• Massachusetts’ cost-of-living adjustments are much less generous than Rhode Island’s. The Bay State indexes only the first $12,000 of a pension to inflation and caps the annual increase at $360. For newer pensions, Rhode Island indexes the first $35,000 of a pension based on the CPI and caps it at 3%.

Locally-run pension plans like Providence’s and Coventry’s are a real concern and seem unlikely to be addressed comprehensively by this group. But former Auditor General Ernest Almonte characterized them as a ticking time bomb that must be dealt with to avoid more situations like Central Falls. He said no local pension plan should be more generous than the state’s, and they should all be run out of the treasurer’s office (as many already are). But what to do about the huge funding shortfalls those plans have already built up?

• Richard Licht, Governor Chafee’s director of administration and a panel member, is very engaged in the discussions and clearly listening closely. The governor will probably pay close attention to Licht as he weighs what changes to propose, just as Treasurer Raimondo is likely to listen to Deputy Treasurer Mark Dingley. But aides say the two elected officials will make the final calls about what to include in their draft legislation.

• There is one thing the governor, the treasurer, the House speaker, the Senate president and every member of the General Assembly all agree on when it comes to pension reform, Licht said: “They don’t want to be discussing this again.”

More pension coverage on Nesi’s Notes:

(photo: Ted Nesi/WPRI)

An earlier version of this post gave an incorrect title for Deputy Treasurer Mark Dingley.


Can RI officials fix the pension problem before Halloween?

August 1st, 2011 at 7:00 am by under Nesi's Notes

Rhode Island’s pension problem has been building up for 75 years, but state leaders are hoping they’ll be finished fixing it just three months from now.

The aggressiveness of the pension timeline raises questions about whether it’s truly feasible. But officials maintain they are committed to the tight schedule put forward by General Treasurer Gina Raimondo and backed by Gov. Lincoln Chafee, House Speaker Gordon Fox and Senate President M. Teresa Paiva Weed.

“Nothing like a good deadline,” Chafee said during a taping of WPRI 12′s “Newsmakers” last week.

The 12-member pension advisory group Chafee and Raimondo appointed in May began meeting publicly June 27, though much of its work is taking place behind the scenes. The panel’s final meeting is tentatively scheduled for Sept. 12, after which the group is supposed to present recommendations to the governor and treasurer.

Once the advisory group finishes its work, Chafee and Raimondo say their offices will weigh its ideas and write actual legislation for stabilizing Rhode Island’s pension system. That will likely mean a mix of changes, possibly including a reduction in benefits and “re-amortization” of the state’s liabilities.

With Fox and Paiva Weed planning to bring back lawmakers in October, however, that leaves limited time between the end of the advisory group’s work and the special session. Will Chafee and Raimondo have enough time to craft their legislation? And when will the finance committees meet to vet it?

“We’re going to make it work,” Raimondo spokeswoman Joy Fox said. “The treasurer’s office is committed to submitting the proposal come the fall. In terms of the exact dates, we’re still working out those details.”

“It will be tight, but we definitely feel we can get the work done,” House spokesman Larry Berman said. “It can be done. We’re confident it will be.”

Raimondo met separately with Paiva Weed and Fox last week to start putting together a road map. They will continue to hold regularly scheduled meetings throughout the summer, Joy Fox said.

Speaker Fox wants the House and Senate finance committees to hold multiple public hearings on the pension issue before the full chambers reconvene, and they don’t need to wait until the full legislation is finished to do so, Berman said.

The speaker “feels this is a complex issue, and he wants everybody to have the opportunity to be heard and come testify, because this is an emotional issue that affects a lot of people,” Berman said. “We assume that retirees will want to come and talk about it, labor, average citizens.”

The committees hope to receive actuarial information from the treasurer’s office next month, and they could hold their first hearings even before the last advisory group meeting on Sept. 12, Berman said. The full House and Senate would reconvene in mid-October, after Columbus Day.

“There’s a lot of logistics to be worked on but everybody’s on the same page as far as moving forward,” he said. The speaker is “more confident than he was last week that it’s all going to get done by late October.”

WPRI 12′s Tim White contributed to this report.


Quick hits from the pension panel’s second big meeting

July 18th, 2011 at 1:54 pm by under Nesi's Notes

The Chafee-Raimondo pension advisory group dove deep into the weeds at the second of its five public meetings on Monday, with phrases like “average accruals,” “multipliers” and “final averaging periods” all getting thrown around in a Warwick Public Library conference room.

The discussion may have gotten mind-numbing at times, but don’t let that fool you – the consequences of what the group discussed would be dramatic. Just one example: if the state opted to keep its annual pension contribution at the same level as it is now going forward, pensions would need to be cut by 25% to 30% to get rid of the unfunded liability on the current schedule. That was just a hypothetical, but it illustrated the stakes.

The group’s next public meeting is Aug. 17, with an agenda of: “Scenario review, legal, financing, municipalities.” In the meantime, here are a few quick thoughts from today’s meeting:

• The National Education Association Rhode Island’s Bob Walsh and Cranston Mayor Allan Fung seemed to represent the two boundaries of opinion among the panel members. They clashed a few times, notably over the question of whether changes in private-sector retirement benefits should be a part of the discussion here.

Fung argued that the group needs to take into account the rise of 401(k)s and the fact that few taxpayers will receive anything like a government pension from their employers; Walsh countered that a decision to provide skimpier retirement benefits by private companies is no reason for the government to do the same. “Welcome to the private sector,” Fung said. “Not a good model,” Walsh shot back.

Later, Fung asked the state’s actuaries to run the numbers for switching entirely to a defined-contribution plan.

• Speaking of Walsh, retirees and current workers have a powerful advocate by having him on the panel. He knows these issues backwards and forwards, and jumped in regularly to take issue with points made by others. He’s also one of two panelists assigned to look at alternative financing sources for the pension plan – which could include borrowing, reamortization, or transferring the Lottery or Twin River to the pension fund.

• Richard Licht, Chafee’s director of administration, is relentlessly practical, always seeking to bring the discussion back to ground level. “If we didn’t have an unfunded liability and we were starting all over again, we wouldn’t be here,” he reminded the others after a lengthy discussion about the cost of current employees’ pensions.

• Simplicity masking complexity? For all the confusing terms thrown around today, actuary Joe Newton offered a reminder of how simple the state’s problem is when he put an equation up on the screen:

C + I = B

… meaning Contributions to the pension fund (from workers and taxpayers) + Investment returns = Benefits.

• The broader question of “retirement security” continues to be a flash point. The meeting started with a debate over how much of a retiree’s income a pension should replace, which led to a discussion of whether Americans in general can be expected to save enough money to supplement the pension. Others said it wasn’t this group’s responsibility to solve a more general U.S. retirement-financing crisis.

• A key theme for Raimondo since she kicked off this debate has been the question of priorities, and the way high pension costs crowd out spending on other government priorities. That’s why she said she unveiled her “Truth in Numbers” report at the homeless shelter Crossroads Rhode Island, “and that’s why we’re meeting in this public library,” she said Monday. Fung warned there would be “an uproar and a riot” if he has to raise taxes or cut services to the extent required by the new pension contribution estimates.

• A significant amount of the pension panel’s work is happening behind the scenes. RISD Professor Bill Foulkes, who’s leading the group, referenced the results of an informal survey he conducted among the members to discuss their thoughts about retirement security. Conference calls and other communication is also happening outside these meetings.


Nesi’s Nightcap for Thursday, June 30

June 30th, 2011 at 4:30 pm by under Nesi's Notes, The Saturday Morning Post

Anchor Rising’s team and G.B. Short have both expressed dismay at some of the comments made during the first pension advisory group meeting this week. Here’s how I interpret them.

Treasurer Raimondo and BC’s Alicia Munnell both say they think defined-contribution retirement plans like 401(k)s aren’t working, at least if the goal is “retirement security,” as Raimondo puts it. As The Wall Street Journal reported earlier this year, baby boomers are finding they weren’t able to save nearly as much as they needed in the accounts. And individual accounts can cost more in investment fees than pension systems because the money isn’t pooled.

Raimondo appears far from convinced that defined-benefit retirement systems like the state pension plan should be jettisoned, and has consistently said her goal is to reform the system to make it affordable, not scrap it.

That view has critics – Josh Barro, for example, who told me state lawmakers just can’t be trusted with a defined-benefit system. But it sounds like most members of the Chafee-Raimondo panel are inclined toward finding a way to salvage the system as it exists.

What I’ve always wondered, though, is whether having defined-benefit plans for government retirees but defined-contribution plans for private-sector ones is really tenable in the long run. It’s easy to see why taxpayers would envy public-sector workers’ guaranteed pension payments (regardless of how generous they are) when their own dwindling 401(k) accounts make retirement seem like a distant dream.

Today on Nesi’s Notes:

> Providence’s pension fund is banking on earning the highest investment return in the state

> It could be worse, RI – we could be Connecticut. What’s wrong with Southern New England?

> As Chafee signs the budget, a reminder he’s among the few governors without a line-item veto

> Langevin is pressuring House Republicans to put him on their all-GOP cybersecurity panel

from Tim White:

> A federal judge tosses the 1995 case against Whitey, but he still faces 19 murder charges

(photo: Wikipedia/Dennis Mojado)


Providence’s rosy return rate may mask $1.46B pension gap

June 30th, 2011 at 7:00 am by under Nesi's Notes

Providence’s pension plan could be in far worse shape than the official figures show.

The city-run system was only 34% funded as of June 30, 2010, with $428 million in assets saved to cover $1.3 billion in future pension payments, leaving an unfunded liability of $829 million, according to Buck Consultants, the city’s actuaries.

But those numbers assume the city pension fund’s investments will grow an average of 8.5% a year over the coming decades, the highest figure used by any Rhode Island government. Only two other cities – East Providence and Smithfield – also assume an 8.5% return, according to the auditor general’s office.

There is a heated debate right now among experts about what represents an appropriate investment return forecast for pension funds. The answer matters because using a lower number would force taxpayers to put more money into their pension systems, leaving less to spend on other priorities like roads and schools.

Providence Mayor Angel Taveras’ office, the Retirement Board and Buck Consultants are discussing whether they should lower the city’s rate of return from 8.5% to 8.25% going forward, as well as change the salary scale and mortality assumptions they use, said David Ortiz, a spokesman for the mayor.

“According to Buck, these changes would not substantially alter the city’s required contribution to the pension system or its liabilities,” Ortiz said.

That’s a key concern for the Taveras administration. Providence spent $70 million on pension contributions in 2009-10, amounting to about 18% of the total city budget. The cash-strapped capital would struggle to find more money for pensions if technical changes make the required deposits jump.

That hasn’t stopped officials at the state level. In April, General Treasurer Gina Raimondo pushed through a dramatic change by getting the Retirement Board to reduce its return forecast from 8.25% to 7.5%. That and other adjustments made Rhode Island’s unfunded pension liability balloon from $4.9 billion to $7.3 billion.

“It was a very difficult vote,” Raimondo, who describes her philosophy as one embracing “truth in numbers,” said at the time. The April vote put Providence’s hoped-for investment return a full percentage point above the state’s.

Raimondo’s office declined to comment on what the Taveras administration should do. The 12-member pension advisory group appointed by Raimondo and Gov. Lincoln Chafee, which began meeting this week, will examine locally run pension plans like Providence’s in addition to the state system.

Providence taxpayers contribute to three pension funds: the city’s locally run system for most municipal employees, including police and fire personnel; the state-run system for teachers; and a union-administered system for members of Local 1033 that supplements their city pension.

The city has made its full required deposit to the locally run pension fund only three times since 1995-96, once during the Cianci administration and twice during the Cicilline administration, according to Buck Consultants. The taxpayer contribution to that fund is projected to rise from $56 million in 2010-11 to $90 million in 2020-21 and $210 million in 2039-40 if nothing changes.

The investment forecast for Providence’s locally run system has been set at 8.5% since at least 1995, and over the last few decades the fund’s returns have met or exceeded that figure, according to Ortiz.

“In comparing Providence’s pension system to the state’s it is important to not just look at the assumed rates of return in a vacuum,” he said. “The return is driven by the asset mix. You have to look at where the money is being invested in each system.”

Providence’s pension liability would grow to $1.46 billion if its investment return forecast was 7%, according to an estimate prepared by Fitch Ratings in New York obtained by WPRI.com.

Fitch analyst Kevin Dolan cautioned that the $1.46 billion figure is “an approximate valuation” based on a formula his agency uses to compare different governments’ pension liabilities.

The liability estimate for Providence’s pension system does not include an additional $1.5 billion in health benefits the city has promised retirees. The city currently pays medical claims as they come in rather than pre-funding them.

Fitch downgraded Providence’s bond rating in March, citing its “severely underfunded and growing” liabilities for “onerous” pensions and retiree health benefits, though the agency did say the city “prudently funds” nearly its entire pension contribution annually.

“The poorly funded status of the [city's pension] plan is the result of inadequate funding in prior years … generous benefits and cost-of-living increases, liberal disability pension provisions and the ability to collect benefits at an early age,” according to a March report by a fiscal review panel Taveras appointed.

The panel’s report also suggested the city should “revisit” the 8.5% return assumption to see whether its pension liabilities “are appropriately valued based on realistic long-term investment return expectations.”

A recent Congressional Budget Office report suggested governments could compromise by estimating their liabilities twice, using more conservative assumptions for informational purposes but more aggressive ones to determine how much taxpayer money a pension fund needs annually.

The city’s locally run pension system provided pensions to 2,929 retirees and other beneficiaries in 2009-10, according to Buck Consultants. The average annual payment was $26,968.

(photo: Bruce Morin/WPRI)


Pension group must help RI atone for the sins of the past

June 28th, 2011 at 7:00 am by under Nesi's Notes

Let’s say the State of Rhode Island was founded today: June 28, 2011. And let’s say we decided to start up a pension system so the new state’s workers would receive checks once they retire. The state could probably afford to offer the same pension benefits it already does right now without a problem.

Trouble is, Rhode Island was not founded today. The state’s pension system was created in 1936, and the real challenge facing the pension advisory group that first met yesterday is dealing with the cost of 79 years of promises already made.

That point was made over and over during yesterday’s meeting. Rhode Island has a particularly “mature” pension system, actuaries have told Raimondo – it currently has a lot more retirees collecting than workers paying in. Pension benefits for new hires have been thoroughly overhauled in recent years, but Raimondo keeps emphasizing that future changes won’t do enough to bring down the system’s $7 billion unfunded liability.

It wasn’t just the treasurer who said that, either; the National Education Association’s Bob Walsh, who served on the last two pension commissions in Rhode Island and knows the issue’s intricacies as well as anybody, kept reminding his fellow panelists that the system as currently structured for new hires is affordable.

It was hard not to hear those comments as an effort to lay the groundwork for cutting retirees’ pensions; current workers can only be asked to contribute so much to fund the more generous benefits of the past, which they will never receive but which weren’t paid for at the time.

How big a cut could be coming? One indication of what Treasury staffers are thinking was buried in this chart shown yesterday, which has six metrics they came up with to look at the pension system’s health – notice the last metric, “Retiree contribution,” which is currently 0% and for the sake of argument could max out at 10%:

Correction: An earlier version of this post said Rhode Island’s pension system was established in 1932.


Tough task for pension group to wield Raimondo’s scalpel

June 27th, 2011 at 12:35 pm by under Nesi's Notes

The pension advisory group sure has its work cut out for it.

Governor Chafee and Treasurer Raimondo’s 12-member volunteer panel met for the first time Monday for introductions, an overview of the problem, and a discussion of how the process will proceed.

It’s a formidable group. Alicia Munnell is a nationally known recognized expert on retirement issues. Harry Wilson oversaw the restructuring of General Motors for President Obama. Richard Licht, Bob Walsh and Mike Downey are political heavy hitters. Ernie Almonte and the General Assembly’s two fiscal advisors are trusted on numbers. And on and on.

They dove right into the weeds within an hour of the meeting’s start, too. How much of an employee’s pre-retirement income should a pension replace? 30%? 80%? 100%? More for lower-income workers? What the right “normal cost”? How about the legal questions? And how do you deal with the underfunding when most of it represents future benefits for retirees and veteran workers, who are harder to touch?

The group will need all its intellectual firepower to achieve the goal set out for it by RISD Professor Bill Foulkes, who’s leading its work. Their last meeting is scheduled for late September, about three months from now; by then, they are supposed to send Chafee and Raimondo a “final list of prioritized solutions” to the pension problem so the two of them can then write formal legislation for the General Assembly to take up this fall.

Foulkes may also find it challenging to corral the stronger personalities among the 12, though that would make having everyone on board for the final product an even bigger achievement. ”It’s a really complicated problem, but there’s only a finite set of solutions,” he said.

One thing Chafee and Raimondo have in common is their catch-more-flies-with-honey strategy. The treasurer bent over backward again Monday to praise everyone for agreeing to tackle this issue – she called the General Assembly’s fall special session “an extraordinary step” – and expressed concern about how any reforms will impact state employees who played by the rules.

“I was here as a state senator in the ’70s, probably causing the problem,” joked Director of Administration Richard Licht at one point. Raimondo smiled and shot back: “We’re not placing blame.” More seriously, Licht argued the support of two general officers, both General Assembly leaders and organized labor bodes well.

There’s a philosophical debate here, too. Raimondo has made retirement security a core part of her pension reform approach – meaning the final product has to provide a reasonable retirement benefit, however that gets defined. She wants to cut into the unfunded liability with a scalpel, not a chainsaw. And Munnell said she doubts retirement security can be provided by a system that expects workers to save on their own, because they won’t. “I don’t think the private sector is what we want to emulate,” she said.

A lot of people have pointed out that this is hardly the first time a high-powered group has gathered to fix Rhode Island’s pension system. (Chafee recalled two previous attempts, quoting a 2005 Projo article that began: “This appears to be the year for pension reform.”) Can this group find a way forward that the others didn’t, something politically achievable and financially sound, by September?

That said, the 12 don’t have to reach a consensus. In the end, Raimondo said after the meeting, it will be up to her and Governor Chafee to figure out what conclusions to draw from the group’s work and what proposal to put forward for lawmakers to consider.

(photo: Ted Nesi/WPRI)


Raimondo-Chafee pension panel schedules first meeting

June 21st, 2011 at 10:39 am by under Nesi's Notes

The advisory group on pensions put together by Governor Chafee and Treasurer Raimondo will gather for the first time next week.

The 12-member volunteer panel is set to meet next Monday, June 27, at 10 a.m., Raimondo spokeswoman Joy Fox said. The meeting’s location and agenda are still being finalized, but it will be open to the press, she said.

“The charge of the group is to vet and organize information for the Governor and Treasurer as they work to develop a comprehensive solution to submit to the General Assembly in October for the special session on pension reform,” according to the official announcement.

Raimondo’s office is asking members of the public to submit their ideas for changing the pension system at this website.

Update: The advisory group will hold its meeting at URI’s College of Continuous Learning in Providence. If you want to attend, it’s 80 Washington St., Room 242.


Fung a surprise addition to Chafee-Raimondo pension panel

June 16th, 2011 at 7:00 am by under Nesi's Notes

Chafee, left, and Cranston's Fung read Raimondo's report

When Governor Chafee and Treasurer Raimondo released the names of the 12 members of their pension advisory group on Wednesday, it was a bit of a surprise to see that one of them was Cranston Mayor Allan Fung, who in recent months has criticized both Chafee and Raimondo for their handling of the pension issue.

In an interview, Fung told WPRI.com he was “honored” when Raimondo called and asked him to be on the panel. He is the only municipal official in the group. Fung, Raimondo and former Auditor General Ernie Almonte – another panel member – all spoke at a URI forum on pensions last month.

“It’s so critically important to have a voice to make sure that these reforms, first of all, include the municipalities, and second of all, that it is the right type of reform to get us on the right track going forward,” Fung said. “I’m going to make sure that when they do the comprehensive reform, that the local piece has to be included, as well.”

The mayor repeated the concern he’s expressed in the past that discussion of the pension issue in Rhode Island frequently ignores the problems of 36 locally administered pension plans in cities like Cranston, Providence and Warwick. They’re “the ones that are really struggling with paying the bills,” and the 36 plans’ benefit structures cannot be changed without state legislation, Fung said.

One reason Raimondo asked Fung to join the panel may be because his city has both locally administered plans and others that are part of the state-run MERS system, the mayor said. He also negotiated an agreement with the city’s Teamsters to switch new employees to a 401(k)-style plan.

After speaking with the treasurer, Fung said he’s “hopeful” she and the governor will pay attention to the advisory group’s suggestions. He also said he’s “cautiously optimistic” that labor leaders on the panel will be on the same page as him.

“I hope union members are more willing to come to the table to provide real solutions and are not there to block or obstruct them,” Fung said.

You can hear more about the mayor’s thoughts on the pension issue in this March interview.

(photo: Ted Nesi/WPRI)