Hours before firefighters planned to picket her fundraiser, Treasurer Gina Raimondo reminded them that she opposed efforts last year by Governor Chafee, Providence Mayor Angel Taveras and others to pass legislation suspending pension cost-of-living adjustments in their contracts.

“I do think it’s important to point out I was a staunch advocate in support of protecting and respecting collectively bargained-for agreements for those firefighters, and I still stand by that,” Raimondo told WPRI 12′s Nicole Estaphan on Monday at the State House.

Raimondo also took the opportunity to defend “the long process” that led to the pension law, and suggested Chafee is going the wrong way by holding closed-door talks with union leaders to discuss a possible settlement to end their lawsuit against it.

“Before the General Assembly passed this historic legislation they had dozens of hours of hearings and give and take and a lot of back and forth and negotiation at the time that led to the final passage of the bill,” she said. “Having said that, at some point as part of this process if the courts asks the parties to sit down and mediate we will do that in good faith.”

“I don’t know if [lawmakers] have ever spent more time on any other piece of legislation,” Raimondo added. “They held a special session. They looked at every possible scenario. The labor leaders were present for every part of the discussion.”

• Related: Firefighters organizing pension protest at Raimondo fundraiser (Dec. 10)

• Update: Raimondo says she respects union pacts

Treasurer Gina Raimondo will have some uninvited guests at her fundraiser in Providence tonight.

Paul Valletta, president of the Cranston firefighters union, confirmed to WPRI 12′s Tim White that his members will be picketing outside a campaign fundraiser Raimondo is holding Monday night at Rick’s Roadhouse to coincide with the Patriots’ appearance on Monday Night Football.

“It’s just our way to say that we haven’t forgotten what the general treasurer did to many state workers, police officers, teachers and firefighters,” Valletta told White on Monday. “It hasn’t been forgotten that people’s lives have been changed negatively when they didn’t have to be.”

Valletta famously argued during last fall’s debate over the new pension law that Raimondo had “cooked the books” by getting the Retirement Board to change investment and actuarial forecasts in ways that worsened the pension fund’s finances. Raimondo said the new numbers were more accurate.

The R.I. State Association of Fire Fighters has asked all off-duty members to join the protest, writing in an email that it’s “very likely that she will be making a run for the governor’s seat next election.” Valletta said some police officers may show up, as well, but they don’t want to cause “a mess on the street.”

“One of the issues we are focusing on is the age issue: with the change to the pension you are going to have firefighters stay into their 60s and 70s to get a full pension,” he said.

Echoing an argument gaining steam of late, Valletta said Raimondo should have negotiated changes to the pension system at the bargaining table with organized labor rather than having state lawmakers approve the changes unilaterally.

​(photo: ProvidencesRestaurant.com)

​By Ted Nesi

PROVIDENCE, R.I. (WPRI) – R.I. Superior Court Judge Sarah Taft-Carter on Friday again refused to step aside and stop hearing a union lawsuit challenging last year’s pension law, dismissing the state’s argument that too many of her family members are part of the pension system for her to be impartial.

Read the rest of this story »

• Related: Q&A: Bush vs. Gore lawyer Boies on the RI pension lawsuit (Dec. 6)

Super-lawyer David Boies has been at the center of some of the biggest legal battles in recent American history, including ​Bush vs. Gore, U.S. vs. Microsoft and the fight about California’s Proposition 8 and gay marriage.

Now Treasurer Gina Raimondo has lured Boies to Rhode Island to join the legal team defending the state’s landmark pension overhaul; he’s even cut his fee from $1,250 an hour to just $50. The first major hearing before R.I. Superior Court Judge Sarah Taft-Carter is scheduled for Friday morning.

​Boies is chairman of the law firm Boies, Schiller and Flexner LLP. He sat down Thursday with WPRI.com to discuss the reason he took the case, how he views the legal arguments, and why he thinks liberal Democrats should support the pension law. The transcript has been lightly edited for clarity.

Let’s dive right in on the legal issues. Judge Taft-Carter says employees and retirees have an implied contract right to their promised pension benefits. You think she’s wrong.

Yes. I think there’s a difference between a statute and a contract. But obviously my view doesn’t control; I’m just an advocate for one particular party. What matters is what the courts ultimately decide. And so what we’ll be doing in the course of the proceeding is each side will have an opportunity to set forth their arguments for why this is or is not a contract.

Do you think it’s already too far gone at the Superior Court level because of Taft-Carter’s decision about the implied contract, and it will have to go to a higher court?

(more…)

The prominent Harvard Law School professor Noah Feldman is weighing in on the side of Treasurer Gina Raimondo and super-lawyer David Boies, urging Superior Court Judge Sarah Taft-Carter to uphold the constitutionality of last year’s landmark pension law.

“The Rhode Island courts should respect the law, restrain themselves, and make sure that their state continues to be seen as a leader in fiscal reform, not in judicial backlash,” Feldman wrote Thursday in a Bloomberg View column. It’s the second major national press the pension suit has gotten this week following Wednesday’s front-page New York Times story.

Feldman and Raimondo have nearly identical academic pedigrees: Harvard College, Rhodes Scholars at Oxford University, and Yale Law School. Raimondo’s office confirms the pair know each other from school, though Feldman was a year ahead of her.

Feldman’s legal reasoning, though, doesn’t rest on personal friendship. Instead he argues that Raimondo and her allies are correct that the state can cut pensions legally to serve the broader public interest:

Striking down reform would be a disastrous move — not only for budgets but also for constitutional governance itself. …

[T]he equation of benefits with inviolable contractual rights is too hasty, both legally and morally. As a legal matter, many public-pension plans are in fact created by statute, and it is well established that what a legislature may do by law, it may also undo. …

Even when benefits are created by contract, the states’ obligation to respect those contracts has long been interpreted to allow for them to be altered or even eliminated when public necessity demands it and the modification is deemed reasonable. The looming fiscal crisis in Rhode Island – and in many other states and cities – certainly satisfies the condition of necessity. …

In a pinch, the government may curtail some property rights to preserve the health of the whole system. No one ever likes it – and everyone, regardless of political preferences, makes the same conservative property argument against it.

Read Feldman’s full op-ed here. And speaking of pension arguments, to get a sense of what sort of deal the unions might try to drive in negotiations, read NEARI chief Bob Walsh’s comments from last year.

Gina Raimondo is out of town, but her allies are still here to defend the pension law.

Engage Rhode Island, the deep-pocketed advocacy group that helped Raimondo pass the pension changes, issued a statement Wednesday afternoon criticizing Governor Chafee for talking with union leaders Tuesday about a potential settlement of their lawsuit challenging the law.

The unsigned statement said EngageRI is “concerned” by Chafee’s “apparent change of heart” on “a bill he signed into law just a year ago,” and is “saddened to hear of his desire to give away the retirement security of thousands of Rhode Islanders behind closed doors.”

EngageRI’s statement pushed back at the idea that unions weren’t given a chance to influence the process, and said it’s “unfortunate that Governor Chafee would want to subvert this open and public process by talking with union leadership behind closed doors.”

Raimondo released a statement shortly afterwards that, unlike EngageRI’s, only referenced the governor indirectly. “It is not the time for closed-door meetings. This is not a time for politics,” she said.

“If at some point the court asks the state to sit down to try and reach a settlement, we will do so in good faith,” Raimondo said. “In the meantime, Treasury will continue to work diligently to defend the important work done by the General Assembly.”

House Speaker Gordon Fox also weighed in against Chafee’s initiative. “It is not appropriate for me to negotiate legislation that was passed by the General Assembly and signed by the governor,” he said. “The time to negotiate was during the 30 hours of public hearings that were conducted by the legislature.”

In response, Chafee issued a statement of his own: “I have confidence in the state’s legal case. But a strong case does not guarantee a win.” The governor also said, “I have been disappointed that state leaders in a position to engage in reasonable discussions have chosen not to do so.”

Senate President M. Teresa Paiva Weed, the last of the four principals in the pension drama, opted to stay out of the fray on Wednesday. “She is going to decline comment at this point in time,” Senate spokesman Greg Pare told WPRI.com.

Full statements from all parties after the jump.

• Related: Barro: RI came closer than most but didn’t fix pension problem (Dec. 4)

This post has been updated.

(more…)

Should R.I. Superior Court Judge Sarah Taft-Carter even be handling the pension lawsuit?

It’s the key question in the case right now, with Treasurer Gina Raimondo and the state’s legal team arguing Taft-Carter is too conflicted to adjudicate because her mother gets a pension, her uncle gets a pension, her state-trooper son will get a pension, and eventually she herself will get one, too.

The issue is such a big deal that The New York Times’ Mary Williams Walsh – who lionized Raimondo in a profile last year – is giving it front-page coverage in tomorrow’s newspaper. A few excerpts from her article:

[Attorney David] Boies, who at $50 an hour is working for a small fraction of his ordinary fee, is seeking a less conflicted judge, and could even ask to move the case into federal court. …

In an interview, Mr. Boies said that challenging Judge Taft-Carter’s impartiality was just “the first step,” and the bigger issue was whether any judges in Rhode Island could handle the case, given their personal stakes. Companies routinely have their pension disputes decided by federal courts, which grant more leeway in changing pension plans.

“The plaintiffs brought this case the way they did to try to avoid federal jurisdiction,” Mr. Boies said. …

Cities, states and their lawyers around the country are following the case avidly, said Amy B. Monahan, a law professor at the University of Minnesota who has written extensively on legal aspects of employee benefits.

The participation of Boies, who famously represented the losing side in Bush v. Gore, brings even more national attention to this case, adding to the spotlight on Rhode Island’s judicial branch. Monahan, the academic quoted by Walsh, last year offered a detailed examination of why the pension law could be legal after all.

A little-discussed part of last year’s landmark pension law was a section called the Rhode Island Pension Protection Act, which aimed to tackle the concerns highlighted by defined-benefit critics such as Josh Barro, and which won praise from Rhode Island AFL-CIO President George Nee.

The Pension Protection Act says the state Retirement Board or its actuary cannot “change actuarial methods for the sole purpose of achieving a more favorable funding or fiscal result” – as happened in 1990, when former House Speaker Joseph DeAngelis pressured the Retirement Board into raising its investment return forecast so lawmakers could balance the budget with a smaller pension contribution.

“Politics hasn’t been good for the pension fund,” Treasurer Raimondo said at a RIPEC forum in October 2011. “I can’t redo the past. I can make it better going forward. The bill we provide fundamentally restructures it. It puts self-correcting mechanisms into the plan.”

In an effort to prevent future lawmakers from allowing a funding gap to grow, the act says that if a pension plan’s funding level falls below 50.1% or declines for five years in a row the actuary must provide the Retirement Board with five to 10 options for getting it back on track. The General Assembly must choose one of them by June 30; if lawmakers don’t act, the default option will take effect automatically.

(more…)

There’s been a lot of pension triumphalism in Rhode Island since the overhaul of the state system masterminded by Treasurer Gina Raimondo was enacted by Governor Chafee and the General Assembly.

Josh Barro, a policy analyst at Bloomberg View, acknowledges that Rhode Island’s pension law is “the most aggressive reform of recent years.” But in a recent National Affairs article, he argues that even its “bold” changes “will not do enough to place the state’s pension system on sound financial footing.”

“Rhode Island still hasn’t been able to overcome the fundamental problems plaguing its pension system,” Barro writes, arguing that the Ocean State “came closer than any other state to success, and yet still couldn’t quite manage it.”

The heart of Barro’s critique is this: by keeping part of the pension plan as a defined benefit – a fixed annuity that’s paid regardless of actual investment returns – the new law still leaves taxpayers facing a significant risk if lawmakers don’t fund the system.

That critique would apply not only to Raimondo’s hybrid system but also to Providence Mayor Angel Taveras’s settlement, which keeps the traditional defined-benefit system in full and counts on future mayors and city councils to act responsibly if the city is to avoid another solvency crisis someday.

(more…)

By Tim White

PROVIDENCE, R.I. (WPRI) – Governor Lincoln Chafee is calling for both sides in the pension reform lawsuit to come to the table and negotiate as the case moves through the courts.

“In any litigation it’s common practice to have negotiations,” Chafee said. “I’m in favor of that: of having negotiation as litigation goes forward.”

Read the rest of this story »

Fixing Rhode Island’s local pension plans is going to make the state overhaul look like a cakewalk.

The 36 locally run pension plans, many of them underfunded, have become a growing burden on municipal taxpayers and a source of concern for retirees thanks to years of shoddy management. Last fall the General Assembly ordered the communities to study the problem and deliver solutions to a new commission, but Democratic state legislators have refused to sign off on cost-of-living freezes, citing labor contracts.

The towns’ solutions were due last week, and all but six communities complied. But the commission members don’t sound confident that real progress is in sight, Randy Edgar reports for the Projo:

In the long run, shifting troubled locally run plans into the state system would address many of the issues that got the plans into trouble in the first place. Retiree benefits would have to match those of other cities and towns in the state-run system, and cities and towns would have to make full “annual required contributions” each year to replenish low fund balances and keep up with annual payouts.

But as some members of the Locally Administered Pension Plans Study Commission noted Monday, forcing such moves would raise a host of potential problems. …

[T]he prospects for getting all of those plans adopted, and in some cases negotiating concessions from local unions, is far from certain.

“What we’re trying to figure out is what happens if that doesn’t work,” [commission Chairman Rosemary Booth Gallogly, director of the state Department of Revenue,] said. “Are we just going to keep meeting for the next five years and saying, ‘Well now you’re not 30 percent funded you’re only 22 percent funded, well now you’re not 22 percent funded you’re only 16?’ At some point we have to make people do something.”

To understand why Gallogly is concerned, look no further than Cranston, where Mayor Allan Fung wants the City Council to reduce benefits before its 18% funded pension plan runs out of money; Treasurer Gina Raimondo has suggested he should consider “a buyout scheme.” Yet lawyers for the retirees say the city can’t do what Fung is proposing, Mark Schieldrop reports for Patch:

The City Council met behind closed doors last night to talk with city lawyers about the mayor’s plan to cut pension benefits for police and fire retirees. …

The plan offers four possible options to save the failing pension plan, each recommending a freeze on cost of living adjustments (COLAs) for 10- to 15-years or a permanent freeze.

James E. Kelleher, a lawyer representing the retirees, told the council that the situation has echos of a legal dispute in 2003 that began when the city arbitrarily changed COLAs and other benefits for retired firefighters without going through the collective bargaining process. The city was taken to court and lost, Kelleher said. And the city did not appeal, which made the ruling a “final judgement,” he said. …

If the council acts, Kelleher warned, retirees would seek a Superior Court injunction ruling the City Council was in violation of a court order based on the Judge Daniel Procaccini’s ruling earlier in the decade that states any change to retiree benefits must be accompanied by collective bargaining.

Rhode Island’s early November deadline for cities and towns with underfunded local pension plans to file proposals for shoring them up has come and gone, but six municipalities failed to comply with the deadline.

The six stragglers: Cumberland, Johnston, Narragansett, North Providence, Pawtucket and West Warwick.

The places with punctual pension plans: Bristol, Coventry, Cranston, East Providence, Newport, Portsmouth, Providence, Scituate, Smithfield, Tiverton and Warwick. You can download the PDFs of their funding improvement plans from this Web page. Seven others didn’t have to file a plan.

All these funding-improvement plans, and the earlier actuarial studies, were required under last year’s state pension law, which was signed a year ago Sunday. Governor Chafee’s office says state officials continue to work with the municipalities who haven’t produced a plan yet.

• Related: 13 local pension plans worse than RI’s; Cranston, Scituate lag (Dec. 5)

Treasurer Raimondo’s office confirmed Thursday that super-lawyer David Boies has agreed to join the state’s defense team for the big pension lawsuit at a knockdown hourly rate of $50 – quite a bargain considering the famed Bush vs. Gore attorney usually charges $960 (!) an hour.

Boies explained his reasons for taking on the case in an interview with Reuters’ Alison Frankel:

“This is a $5 trillion issue,” Boies told me in a phone interview Wednesday. “Unless we solve this problem, everyone is in jeopardy — cities and states, those who depend on their services, even employees of cities and states.” Boies predicts an unprecedented wave of government bankruptcies if elected officials don’t take action. …

Raimondo … approached Boies several weeks ago, after deciding the state needed a constitutional law expert. “The enormity of the consequences of this case is hard to overstate,” Raimondo said. …

Boies was intrigued by the national implications and constitutional considerations of pension reform. He also admired the way Rhode Island accomplished its overhaul. … “This was a bipartisan effort, led by Democrats, attempting to reform state finances in a way that will benefit everyone,” Boies said. “It doesn’t help employees to have an employer that’s insolvent.” …

“This is not just a legal question,” he said. “It’s a political question, a question of how we’re going to reform the finances of city and state governments.” If other states see that Rhode Island has succeeded in passing an overhaul and turning back a court challenge, he said, they may follow.

But the best quote in the piece may be from Council 94′s Michael Downey, who dismisses Frankel’s suggestion he and his union allies should be more worried now: “Boies didn’t do much good for Al Gore.”

What does Gina Raimondo have in common with New York City Mayor Michael Bloomberg, U.S. Chief Justice John Roberts and the Russian protest group Pussy Riot? They’re all on The Atlantic magazine’s 2012 list of Brave Thinkers.

The Atlantic’s Don Peck says generations of politicians promised plush pensions to win support from public employees without setting money aside to pay the bills, leaving current leaders with the bill. “Raimondo is one of the first to perform that necessary reckoning,” he writes.

The Atlantic apparently has a soft spot for Rhode Island’s top female policymakers: Education Commissioner Deborah Gist made its 2010 list of Brave Thinkers, too.

Update: Newark, N.J., Mayor Cory Booker highlighted Raimondo’s honor in a Facebook post Thursday morning. “I’m so proud of my friend and former classmate Gina Raimondo,” Booker wrote. “She is showing great leadership in tough times – I hope she eventually becomes the Governor of her state.”

Booker, a rising star in the Democratic Party and potential 2013 candidate for New Jersey governor, roomed with Raimondo’s husband at Yale Law School and donated $1,000 to her campaign last March. Of course, Booker also gets along with Raimondo rival Providence Mayor Angel Taveras, so Rhode Island’s 2014 gubernatorial campaign could leave him with a smorgasbord of options.

(h/t: Ian Donnis)

Via Ian Donnis, relentlessly centrist Washington Post editorial page editor Fred Hiatt is the latest big media type to heap praise on Treasurer Gina Raimondo for shepherding through last year’s pension law:

At the Democratic convention in Charlotte last week, a delegate from Rhode Island walked up to Gina Raimondo and said, “You cost me $300,000.”

Raimondo, the state treasurer who had quarterbacked a major pension reform, steeled herself for abuse. Instead, the delegate, a retired schoolteacher and wife of another retired schoolteacher, thanked Raimondo and gave her a big hug.

“This system was going to blow up,” she said. “Thank God you fixed it.”

These days it sometimes seems that the only alternative to the paralysis that blocks entitlement reform in Washington is the kind of all-out war waged by Republican Gov. Scott Walker of Wisconsin. If you find both extremes depressing, the story of Gina Raimondo may cheer you — to a point.

Read the rest here. Hiatt gets a few thoughts out of the treasurer that we hear less often, such as why she pushed for a hybrid pension plan (“important to me as a Democrat, because retirement is about security”) and why Rhode Island needs to on faster economic growth. As Ian pointed out, though, Hiatt also flatly labels her “the most popular politician in Rhode Island” – a questionable assertion considering the high approval of Angel Taveras, her rival pension reformer.

• Related: Raimondomania spreads to Europe: FT calls her ‘extraordinary’ (April 4)

Engage Rhode Island’s leaders were serious about sticking around.

The deep-pocketed 501(c)4 advocacy group that helped pass last year’s pension overhaul sent out campaign fliers this month in three districts with closely contested Democratic primary races for General Assembly.

Two of the mailers attack incumbent Reps. Spencer Dickinson of South Kingstown and Rene Menard of Lincoln for voting against the law. Dickinson’s opponent is South Kingstown Councilwoman Kathleen Fogarty, who backed the law, and Menard’s is Cumberland Councilwoman Mia Ackerman, a staunch supporter of the changes whose website specifically links her candidacy with Treasurer Gina Raimondo’s policies.

(The two women use almost identical language on their respective campaign sites, telling voters they’ll work for “your interests” rather than “special interests.”)

(more…)

Michael McDonald reports for Bloomberg News:

While the court action may take months or years, it’s being closely watched as it may provide guidance in other states where similar legal battles have arisen, said Amy Monahan, who teaches law at the University of Minnesota in Minneapolis. Rhode Island is also unusual because, unlike in California, where court rulings have sided with labor to protect benefits, there is little precedent to guide the outcome, she said.

“Other state courts will watch because they’d love to come up with a way to address this area that makes sense,” Monahan said, calling it “a compelling case.”

“Rhode Island has it all: a poorly funded plan and really widespread changes,” she said. …

The law provided “a dramatic punctuation” to efforts by U.S. state and local governments seeking to control retiree costs as pension-plan losses drained assets, said Ronald Snell, a senior fellow at the National Conference of State Legislatures in Denver. …

“[Raimondo] deserves credit along with others,” said David Walker, president of the Comeback America Initiative, a nonprofit public-policy group in Bridgeport, Connecticut. “She had the courage to campaign on the need for pension reform and to make tough choices, even in the face of significant union opposition.”

Read the rest here. The Newsmakers episode that the article references is online here.

• Related: Study: RI pension bill ‘a good approach’ – and it may be legal (Nov. 4)

(photo: Ted Nesi/WPRI)

DaSilva

DaPonte

Two East Providence lawmakers are set to square off at the ballot box in a referendum on the new pension law.

State Rep. Roberto DaSilva filed paperwork on Monday to run against incumbent state Sen. Dan DaPonte in the Democratic primary for Senate District 14, DaPonte told WPRI.com in an interview.

The two East Providence Democrats took starkly different positions on the pension law last fall. DaPonte played a pivotal role in pushing the legislation through as chairman of the Senate Finance Committee, while DaSilva supported amendments to change the committee bill and voted against the final version.

DaPonte noted that DaSilva is a public employee who works for the Pawtucket Police Department, and said his wife works for the government, too. “He’s obviously concerned about his pocketbook and wallet,” DaPonte said. DaSilva did not return a phone call after business hours.

(more…)

• Related: RI unions file suit challenging landmark pension overhaul (June 22)

By Ted Nesi

PROVIDENCE, R.I. (WPRI) – Rhode Island’s government unions are going to court to challenge the landmark pension law championed by Treasurer Gina Raimondo and signed by Governor Chafee in November.

Read the rest of this story »

Update: The story has been updated with expensive expansive comments from NEARI’s Bob Walsh explaining the unions’ case against the pension law. A full video of the interview will be posted soon.

The State Legislative Leaders Foundation held a closed-door conference at Brown University last month where one of the major discussions was a panel about how last year’s state pension overhaul got passed.

As part of the effort, the foundation put together a 14-page case study on last year’s events, and the PDF is now on its website if you want to read it for yourself. (Full disclosure: I was one of the people interviewed for the study.) This passage is funny:

When asked why he took on pension reform, [Speaker] Fox pointed at Raimondo and said “She made me do it!”

Senate President M. Teresa Paiva Weed and Treasurer Gina Raimondo are pouring cold water on two retiring Senate Democrats’ separate suggestions that Rhode Island should increase state workers’ pension benefits, saying it’s too soon to revise the new law passed last November.

“The Senate President does not support these proposals,” spokesman Greg Paré told WPRI.com. “Speaking generally, we will monitor implementation of the pension changes made in the fall, but it is too early to consider changes.”

One proposal by state Sen. John Tassoni, D-Smithfield, would create a special pension benefit for employees in two departments, while another by state Sen. Bea Lanzi, D-Cranston, would scrap the requirement that municipal police officers and firefighters wait until age 55 to become eligible for a pension.

Raimondo spokeswoman Joy Fox told WPRI.com the new pension law “was developed after thoughtful analysis and designed to enact a fair and lasting reform,” and said the treasurer “encourages a similar comprehensive approach for subsequent legislation affecting the retirement system.”

“As chief fiduciary of the retirement system, she urges the General Assembly to give [the pension law] a chance to work before considering changes that might weaken its impact,” Fox added.

Tassoni and Lanzi, who aren’t running for reelection, did not return phone calls seeking more information about their proposals. The lawmakers didn’t issue press releases publicizing and explaining their bills, either.

Engage Rhode Island, the deep-pocketed group that successfully pushed passage of the new pension law, raised $12,650 for its new political action committee and made no contributions during the first three months of this year.

EngageRI PAC had $14,069 on hand as of March 31, according to a report filed with the R.I. Board of Elections. The group donated $6,000 to the General Assembly’s top six Democrats last year and organizers have said it will provide support for legislators who voted for the pension overhaul.

EngageRI PAC’s first-quarter donors included Bernard Buonanno Jr., a senior partner at Riparian Partners, which was purchased last year by Oppenheimer & Co.; Ted Long, a lawyer and former top aide to U.S. Sen. Jack Reed; Terrence Murray, the former chairman of FleetBoston bank; and a number of others who supported Engage RI’s original 501(c)4.

• Related: EngageRI donates $1,000 each to top six in General Assembly (Feb. 1)

An earlier version of this post incorrectly said the EngageRI PAC donor is Bernard Buonanno III, a managing director at private-equity firm Nautic Partners; his father, Bernard Buonanno Jr., is the donor.

By Tim White

EAST PROVIDENCE, R.I. (WPRI) - General Treasurer Gina Raimondo says it would be “devastating” if the Rhode Island courts strike down the landmark pension reform legislation that was passed last year.

Read the rest of this story »

Raimondo and Deputy Treasurer Mark Dingley

Could this be a bad sign for Treasurer Raimondo and others who say last year’s sweeping pension law will hold up in court? Hal Weitzman and Nicole Bullock report in this morning’s FT:

US states are increasingly being blocked from changing public employees’ retirement benefits as the fight over shoring up chronically underfunded public pension systems moves from state legislatures to the courts.

While some states have successfully altered terms for future employees, plans to force all current public workers to contribute more to state pensions have been ruled unconstitutional in Florida, Arizona and New Hampshire in recent weeks, a significant victory for public sector employee unions. …

“With public employee pension plans, it is state law that governs,” said Amy Monahan, associate professor at the University of Minnesota Law School. “Every state goes into this with a different set of legal rules.”

Mark Dingley, Raimondo’s general counsel, emphasized during Tuesday’s municipal pension workshop that the jurisprudence on pensions is a “developing” area of the law, which is why they have made such a big deal out of the need to show courts a methodical approach was taken in crafting pension changes.

“If you make changes to pension benefits, you’re going to be violating a contract,” Dingley said. “You’re not just violating ordinary law, you’re violating a provision of both the U.S. and the state constitution, and courts take that very seriously. There are no shortcuts here. You have to go through the process … so that the court will take seriously the changes you make.”

In terms of what courts will allow, Dingley said, “There aren’t any hard-and-fast rules. There’s new court decisions coming out all the time. … The law looks at keeping order, but it also looks at fairness.” NEARI’s Bob Walsh, however, argues the unsettled nature of the law is a reason why the state should start negotiating with the unions.

We’re still a long way from having a court take up last year’s Rhode Island Retirement Security Act; it doesn’t take effect until July 1, and it hasn’t been challenged yet. But an older lawsuit challenging cost-of-living adjustment (COLA) cutbacks made in 2009 and 2010 is slowly moving toward a trial before Judge Taft-Carter.

• Related: Study: RI pension bill ‘a good approach’ – and it may be legal (Nov. 4)

(photo: Ted Nesi/WPRI)

By Ted Nesi

WARWICK, R.I. (WPRI) – Rhode Island’s bondholders are nervous about Providence’s shaky finances and the wider municipal financial crisis roiling the state, Treasurer Gina Raimondo said Tuesday.

“They all ask about the capital city,” Raimondo told WPRI.com. “There’s concern of course. … I don’t sugarcoat it. There are a lot of municipal problems. So I say, you’re right, we have them, but I believe we’re going to make them better.”

Raimondo’s comments came as she left a meeting at CCRI’s Warwick campus where Treasury staffers offered guidance to leaders from the municipalities that operate the state’s 36 locally run pension plans.

Read the rest of this story »

Remember those 36 locally run pension plans with the $2.1 billion funding gap? The shortfall is now nearly $2.3 billion and may get bigger, the Projo’s Randy Edgar reports:

The overall health of 36 pension plans managed by individual cities and towns is worse than previously thought — about $170 million worse, members of the state’s Locally Administered Pension Plans Study Commission learned Monday.

The spread between assets and liabilities for those plans, reported by the state auditor general last year to be $2.1 billion, is now thought to be about $2.3 billion, Susanne Greschner, chief of the state Division of Municipal Finance, told the commission.

And the spread could grow as cities and towns revise the assumptions they use to project long-term pension costs, based on a new set of state-mandated studies. Among the assumptions that could change are those for investment returns and longevity. …

Greschner said all but 4 of 24 cities and towns that have locally managed plans submitted the required studies. The state is still waiting for one or more studies from Cumberland, Little Compton, Narragansett and the Warwick School Department, she said.

If you want to find out how your town is doing, all the new studies are posted here. A quick perusal shows Coventry’s police plan [pdf] is just 11% funded, with less than $8 million saved to pay $67 million in benefits.

• Related: 13 local pension plans worse than RI’s; Cranston, Scituate lag (Dec. 5)

Treasurer Raimondo met with the Chicago Tribune’s editorial board recently, and it seems they came away impressed – so much so they want President Obama’s former chief of staff to create an “Engage Illinois” group modeled on Engage Rhode Island.

“Governor Quinn, Mayor Emanuel: Engage Illinois,” the Trib wrote in an editorial Friday. (That would be recently elected Chicago Mayor Rahm Emanuel, who was Obama’s right-hand man.) ”For our part, we will keep trying to help.”

Illinois’ pension system is the worst-funded in the country and a big source of angst in the Land of Lincoln. At a Tribune forum on Wednesday, “Emanuel raised, and Quinn discussed, the best idea of the night: that Illinois consider pension changes that the similarly Democratic state of Rhode Island adopted in November,” the editorialists said.

Here’s the lesson the Trib took from Raimondo’s work last year:

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Raimondomania has officially jumped the pond.

The big media’s increasingly familiar narrative of how Treasurer Gina Raimondo single-handedly fixed Rhode Island’s pension system (and, judging by the coverage, barely broke a sweat) will be read Thursday at high-powered breakfast tables across Europe thanks to the Financial Times.

The FT’s Gillian Tett – who’s become one of the world’s most influential journalists thanks to her savvy pre-crisis coverage of the credit bubble – does the honors this time in a piece headlined “Raimondo offers vision for pension crisis.”

Just a few years ago, Tett explains, “the iconic north eastern US state” of Rhode Island “epitomised everything wrong with American state finances.” Not anymore:

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