Could COLAs come back for state pensioners? RI Treasurer taking a fresh look

PROVIDENCE – More than a decade after then-Treasurer Gina Raimondo made a national name for herself by leading a dramatic overhaul of the state's pension system, Rhode Island's current state treasurer, James Diossa, has launched a second look at one of the more controversial pieces in Raimondo's cost-cutting package.

The suspension of guaranteed annual increases – known as COLAs – in the pensions of tens of thousands of retired public school teachers and government employees will be getting another look through the creation of a "Pension Advisory Working Group" that Diossa announced on Tuesday.

Rhode Island lawmakers directed Diossa to launch the study in the face of insistent and increasingly organized retirees pushing for the state to reinstate their COLAs before, they fear, they will all die.

What will the Pension Advisory Working Group study?

The first question: can Rhode Island taxpayers afford to reinstate the COLAs that retired state employees received annually before the massive cost-cutting pension overhaul of 2011? Before that, many of them were getting as much as 3% compounded increases added to their pensions each year.

The retirees say the study group needs to look just as closely at the impact of no-annual-COLA on retirees' standard of living and buying power after more than a decade of inflation, especially on those without Social Security.

"What is the purchasing power of the average pension today?" asked one retiree who chose to remain nameless.

Another retiree asked why no one was appointed by Diossa to represent retirees on the advisory group. Diossa spokeswoman Michelle Moreno-Silva responded:

"We are positive the group will consider the impacts of the 2011 reforms on both active and retired members of the system and that we fully expect that we will hear from retirees and their representatives throughout the process."

A Journal analysis earlier this year found that these compounded yearly adjustments, piling increases on top of increases, raised a retired teacher’s "average pension" from $40,151 in 2006 to $43,053 by 2011 and kept it growing from there.

Over that same time period, the COLAs’ price tag jumped from $62.9 million to $104 million for retired teachers. For retired state workers, it went from $43.6 million to $64.6 million, according to the state's pension consultant.

More: State retirees make their case: Many won't live to see COLA boosts when they resume in 2031

In the years since the Raimondo-led overhaul, the retirees have seen small bumps in their benefits at four-year intervals. Current law does not anticipate full reinstatement until there is enough money set aside in the pension fund to cover 80% of current and future obligations to the state's pensioners. The projected date: 2031.

In the big budget bill they passed last June, state lawmakers directed Diossa to create the working group to "develop options ... [to] address any unintended consequences" of the 2011 pension overhaul that then-treasurer, future governor and current U.S. Commerce Secretary Raimondo championed.

How will the group work?

Under the plan rolling out Tuesday, the advisory group will meet at least six times before Feb. 21, 2024 to evaluate "the impact" of the COLA suspension and the options for reinstating it in whole or in part, and then issue a report by March 1, 2024 on the group's findings and potential options.

“As general treasurer, it is my duty to protect Rhode Island’s assets and strengthen the state’s financial position, beginning with the $10.5B in assets in our pension system, Diossa said. "This working group will review the impact of the Retirement Security Act of 2011 and ensure that we continue to protect Rhode Island retirees, public employees and taxpayers going forward."

The 10-member advisory group includes some well-known names in Rhode Island, including the president, George Nee, and secretary-treasurer Patrick Crowley, of the AFL-CIO of Rhode Island, and John P. Maguire, a retired North Providence high school teacher, who holds a seat reserved for an "active teacher representative" on the state retirement board.

Others on the list include: former Auditor General Ernest Almonte, who currently heads the Rhode Island League of Cities and Towns; Department of Administration Director Jonathan Womer and former administration director Michael DiBiase, who currently heads the Rhode Island's Public Expenditure Council; and Edinaldo Tebaldi, a professor of mathematics and economics at Bryant University

And from outside of the insider world of the Rhode Island State House: Eric Atwater – partner, Aon PLC; Thomas Huestis – senior managing director at Public Resources Advisory Group; Alicia Munnell – director of Boston College’s Center for Retirement Research and/or her designee,  Laura Quinby, a senior research economist at the center.

According to Diossa's office, the full Pension Advisory Working Group will meet at 4 p.m. at the State House at least six times, on Nov. 2, Nov. 30 and Dec. 14, 2023, and Jan. 17, Jan. 31 and Feb. 21, 2024.

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This article originally appeared on The Providence Journal: COLAs for RI state pensioners getting another look after Raimondo cuts