PROVIDENCE, R.I. (AP) -- Lawyers plan to release the details Wednesday of a proposed settlement to end the legal challenges to Rhode Island's landmark pension overhaul. What's at stake for Rhode Island and what happens next:
Q. How did we get here, and what's at stake?
A. Lawmakers overhauled the state's underfunded pension system in 2011, voting to raise retirement ages, suspend pension cost-of-living increases for at five years and create a benefit plan that combines traditional pensions with a 401(k)-type account. The changes were designed to save billions of dollars in coming decades. But unions and public-sector retirees said the changes were unconstitutional and unfair, and they sued to block the law.
The complicated, expensive lawsuit went into mediation about a year ago, and both sides have been working toward compromise since then. A proposed settlement could roll back some of the changes lawmakers made — potentially restoring benefits to workers and retirees and reducing the savings to taxpayers and local governments.
Q. Why has the settlement proposal been kept secret?
A. Those who know the details of the settlement — Gov. Lincoln Chafee, Treasurer Gina Raimondo and others — say they are legally prohibited from talking about the proposal because the mediation is the subject of a gag order. Top lawmakers were briefed on the proposal only Monday. The public will learn the details Wednesday when attorneys on both sides of the case are scheduled to hold a news conference.
Q. What's a settlement likely to include?
A. While the details haven't been made public, many observers think it's likely that a proposed settlement might restore the pension increases — particularly for the lowest-income retirees — that were put off indefinitely by lawmakers. Other possibilities include increasing the amount workers pay toward their own retirement savings, and adjusting retirement ages that were raised by lawmakers.
Q. How much could this cost the state?
A. The price tag for a settlement will depend on the details in the proposal. State Director of Administration Richard Licht said last month, however, that whatever is in the settlement proposal won't affect next year's budget. The comments from Licht, one of Chafee's top advisers, suggest that either lawmakers won't have to take action on the proposal this session, or that the impact of the settlement won't be felt until the following year's budget.
Q. What happens next?
A. Any settlement proposal must be approved by the General Assembly. Many lawmakers have expressed frustration with the secret settlement talks and there's always a chance lawmakers might not pass the proposal. If that happens, the case could go back to mediation or proceed toward a decision.
Q. What are the political ramifications of the debate?
A. The proposed settlement has implications for the gubernatorial campaign, fall legislative elections and the political might of organized labor. Democratic Treasurer Gina Raimondo is making her work to write and pass the overhaul a cornerstone of her campaign for governor. And pensions are always a political divisive topic for lawmakers, who face their own elections this fall.
The legal fight is being closely watched by financial analysts, labor leaders and elected officials outside of the state too. The 2011 overhaul has been cited as a model during pension debates in Oklahoma, Illinois, California and other states where officials are looking for ways to cut pension costs.
- Retirement Benefits
- Politics & Government