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Op-Ed: Municipal Pension Reform is the Next Step

By Senator Nick Kettle

 

An historic, yet ironic and tragic, vote occurred this past November with the passage of the pension reform bill; Historic because it put our state on a path towards fiscal stability; Ironic because some of the very same crooked politicians in leadership at the General Assembly, whose malfeasance and inattention helped create this crisis in the first place, are now being hailed as heroes; and, Tragic because those who ultimately got hurt are state and local employees who were promised a certain pension package and faithfully paid into the system while double-dealing politicians played with their money, betrayed their trust and jeopardized their futures. 

In the end, we members of the General Assembly, when presented with the ugly but unavoidable facts as spelled out in the actuarial reports, recognized the stark reality – that this rigged system was unsustainable and that bold, decisive action needed to be taken lest our entire State end up in a Central Falls type situation:  A dire scenario in which nobody wins.  The workers would eventually lose everything if we continued on the teetering path of non-sustainability and if leadership continued to practice the art of putting their heads in the sand.  Alas, the choice was clear that painful but necessary pension reform had to be undertaken in order to save the system. 

In its upcoming session the General Assembly needs to, and I believe will, grant cities and towns the tools necessary to accomplish similar pension reform at the local level.  This is because municipal pension reform is just as essential to resuscitating our state’s economy as what has just been accomplished with the State Retirement System.  However, this is going to be a far more difficult and complex task in that the various municipal pension plans are unique, presenting differing sets of problems and with each community facing attendant financial hardships of varying degree, making a “one-size-fits-all” solution virtually impossible.  That being the case, I was grateful for the postponement of this issue until the 2012 session, in which it can now be vetted properly before the legislature instead of pushing through an 11th hour add-on by a Governor who had not the slightest clue what the “reform” he proposed would have done - except to cripple municipalities with more costs and higher taxes.

While the primary focus of most people has been on Central Falls as an example of what can go wrong if pension reform does not occur, another community that is just as worthy of our attention is Coventry.  In that regard, Senator Shibley and I, along with Coventry’s town officials, recently sat down with General Treasurer Raimondo to review the ongoing pension crisis which looms in Coventry. Presently, the town faces a municipal worker’s pension fund that is only about 40% funded, a level just below where the State’s pension fund was when the recent reform process began. The most troubled pension fund in Coventry, however, is the police pension that presently sits at a mere 15% funding level, with the real possibility that it will run out of money by 2021, with the municipal plan not far behind in 2028.

With an unfunded accrued liability of about $17 million at the beginning of 2011, Coventry’s police pension fund was already in dire straits.  Why then did the present Democrat-controlled Town Council believe that it was fiscally responsible for them to increase that liability by an additional $11 million (a whopping 64% increase) by agreeing to a ludicrous pension COLA provision in a new contract with the police union?  General Treasurer Raimondo, upon learning of this provision, cautioned that the aforementioned $11 million cost would most likely be pegged even higher once a more accurate actuarial study is completed.

The larger issue facing us all is that these types of shenanigans have been going on for years across our state.  Part of the problem stems from municipal leaders not being willing to fund the ARC (annual required contributions) to their pension funds in order to balance their local budgets while giving away even more goodies to their constituents – that age-old desire to “have one’s cake and eat it, too”. In Coventry’s case, the ARC is 4.5 million, but each year the Town only pays about 2.8 million into the pension funds – essentially creating a pay-as-you-go system.  Piling an even greater financial burden, in the form of a pension COLA, upon our beleaguered taxpayers is, under such circumstances, the epitome of reckless disregard of their interests.

Now, I am the last one to advocate for increasing taxes, as I believe that we as taxpayers are already paying too much as it is.  What I am saying is, that we need to first identify the people who helped put our town council members into office. Much like the “Minion System” that is used by the NEA and other teachers unions to support those who are sympathetic to their cause, as well as to oust those for non-compliance (i.e. Doug Gablinski), in Coventry it has likewise been the unions who have consistently controlled the council by supporting and actively campaigning for Democrats who consistently gave those same unions everything they wanted. (Except for the brief period between 2009 and 2011 when Republicans were in charge and we coincidentally had no tax increases for two years!) This convenient “scratch-my-back-and-I’ll-scratch-yours” relationship is all coming back to haunt us, not only in Coventry but also across the State. If something is not done about it soon our plight is going to get even worse! 

I am encouraged to see that many city and town leaders across the state are now apparently willing to confront their pension problems and I am firmly committed to working with them to address this issue in a positive manner.  Now, let’s get to work! Please call or email your senator and representative today and urge them to support municipal pension reform.

Bill Marzahn January 05, 2012 at 04:17 PM
Joel: I do beg your pardon. My comment was in response to CP2. It was not directed at the Senator. Bill Marzahn a 30+ year Coventry resident
Bill Marzahn January 05, 2012 at 04:17 PM
Reply to CP2 Your words: "Let's be constuctive here bill , What does a 20 year old who's strings are pulled by the tea-party know about life, finances , real world situations?" Are you saying that the question quoted above is constructive? If so, may I ask how an attack on one's experience qualifies? The issue gentlemen! Let's discuss the issue please. On the other hand, I agree with you that in the end we will be meeting "half-way" to solve the issue. Neither taking away the pensions nor letting things go on as they have. Please quote the section of the op-ed piece that seems to be "extreme right" to you. I just do not see it. I believe that it is quite reasonable to say as the senator does: ". . . I am firmly committed to working with them to address this issue in a positive manner. Now, let’s get to work! Please call or email your senator and representative today and urge them to support municipal pension reform." Bill Marzahn a 30+ year Coventry resident
coventry voter-Jay January 05, 2012 at 04:40 PM
Joe you can change your name but your IP address gives you away every time, It’s kind of like having an Eye On You. The truth is the best lesson in history. I don’t think I stated I’m a republican, because I am not. I do have conservative beliefs and hate to be fleeced by unethical politicians and union thugs. (synonymous) The truth and history are one in the same here. RI’s political power history can’t be defended as proper action for the good of the people. As far as “hate” this is an old tactic used by the Dems. You can call my criticism of Caprio’s legacy hate and call it a personal attack, but it doesn’t make it hate. What is true is Caprio and many other local Dem’s lined their pockets with taxpayer $$$ while in office. Some walked away some voted out, but the truth of the actions and decisions is their legacy around us.
Brian January 06, 2012 at 03:32 AM
Thank you, Senator Kettle , for bringing the message, whether you are the author or not. The reality is that the taxpayer cannot substain much further into the future and the only way we can have a future is with good, responsible fiscal planning. I hope you can be successful. At the end of the day, what we have going for us in Coventry is a very competent Town Manager and a person that I think you will be able to collectively work out a plan with. good luck Senator Kettle. t
PO Taxpayer February 05, 2013 at 02:40 PM
"Pension Reform" occurred last year at the State level .... The emphasis was placed on protecting "retirement security" for state workers ... After hard fought "reform" ... The pension system is again severely underfunded after an estimated 300 Million dollar loss .... Sorry Coventry Taxpayer 2, you can continue to try to attack the messenger, you can paint the Tea Party with any brush you want .. but at this point it is simple math ... no matter what, you lose ... now, with some potential to retain your investment, or everything in a very few years ... Your choice! Personally, I hope you keep up your silly attacks, head in the sand denials, and then lose everything ... but, well, it is your choice...

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