Should RI roll back Raimondo pension reforms? Union leaders make their case.

PROVIDENCE – Far from the Washington D.C. political world where she is viewed by many as a rising star, U.S. Commerce Secretary Gina Raimondo is still the pension-cutting former state treasurer whom retired public employees and union leaders love to hate.

The anger and distrust remaining more than a decade after she led a dramatic 2011 pension overhaul in Rhode Island surfaced again on Thursday at a meeting of a pension advisory group created to look at the "unintended consequences" of the benefit cuts she championed in her role as state treasurer.

The pension cuts have saved taxpayers nearly $3 billion in the years since, according to the state's pension consultant.

But Thursday's meeting at the State House gave the leaders of Rhode Island's public-employee unions a chance to lay out the changes they would like to see in state pension law.

It also gave firefighters' lobbyist Paul Valletta a platform to assail the Raimondo "reforms" as an "egregious," unnecessary and politically motivated assault on public employees to divert to Wall Street more than $1 billion in benefit dollars from retirees.

Evoking some of the angriest moments of the 2011 debate and its aftermath, Valletta told the pension study group:

"Everybody was willing to do something, but that wouldn't have played into the [treasurer's] plan ... Just think about that for a minute. Your benefits are taken for someone's political future and the payment of her political future. That's what this was done for."

Valletta then went on to describe how Engage Rhode Island, "the propaganda arm of this thing," used a town hall tour to, as he described it, turn "hardworking blue-collar" non-union and union Rhode Island workers against each other and tell the public, "if we don't change this pension, we're going to go bankrupt and your taxes are going to go through the roof."

"Ever wonder why an Enron billionaire, John Arnold, and his foundation launched Engage Rhode Island? What would an Enron billionaire care about Rhode Island's pension system?" he asked.

"People should be up in arms over this," said Valletta, to applause after he recounted the history through his lens, and the impact on firefighters forced to work into their 60s by the 2011 pension overhaul. One had a heart attack on the job; another a stroke.

"It's time to undo some of the harm caused by the 2011 legislation and restore the retirement benefits to both active and retired employees," said Frank Flynn, president of the Rhode Island Federation of Teachers.

What do labor leaders suggest the state do?

One after another, union leaders spelled out the recommendations they hoped to see from the pension advisory panel assembled by current state Treasurer James Diossa at the direction of legislative leaders facing pressure from multiple directions to roll back some of the pension cuts.

The details varied from union to union. Most basically, they all want the state to lower the retirement age, raise the value of each year of work toward a pension and reduce the early-retirement penalty.

With teachers in half the school districts in Rhode Island ineligible for Social Security because both they and their employers did not contribute, Flynn urged the state to "mandate that all new employees be included in Social Security."

'We went too far'

Retirees want the state to resume giving them annual cost-of-living increases in their pension checks, aka COLAs.

The public employee unions are more focused on the benefits available to current-day state and municipal workers and public school teachers when they retire.

Today's public employees have to work years longer for a much smaller pension than their predecessors did in the decades before Raimondo sounded urgent alarms about the skyrocketing cost to taxpayers of Rhode Island's famously generous pension system.

In a recent interview, Patrick Crowley, the secretary-treasurer of the Rhode Island AFL-CIO, told The Journal: "The labor movement acknowledged at the time ... [and] we have to acknowledge today that if we didn't do anything, that plan was going to collapse."

But "we went too far in 2011, and the unintended consequences are starting to hold the state back and they need to be addressed."

Labor leaders say pension cuts are making it hard to recruit

Union leaders and social service advocates are concerned, for example, about worker shortages in critical state agencies, such as the Department of Human Services. They do not believe the state's retirement package offers enough to attract and keep workers.

"When employees can travel to our nearest neighbors, Massachusetts and Connecticut, and obtain better pay, pensions and benefits, taking a job one state away is a logical choice," said AFSCME Council 94's Jim Cenerini in an advance copy of his testimony.

"The math is going to determine everything. It really is," Crowley, who is a member of the pension advisory panel, said recently.

Some suggestions

Crowley and others suggest the state lower the minimum retirement age and ratchet up the "accrual rate," which is pension-speak for the value of each year of work toward a pension.

For perspective: state pensions once paid a retiree up to 80% of their average pay in their final years of work and then guaranteed them 3%, compounded annual increases in their pensions.

The current accrual rate is 1% of a salary for each year of work. "So after a 40-year career, their pension benefit would be 40% of their salary. It's not enough to live on," Crowley said.

He has suggested increasing the rate gradually to give the state enough time to adjust the required contribution for the active workers without adding time to the projected 2031 date when annual COLAs return.

Council 94's Cenerini also suggests an increase in the "multiplier" for each year of service, with each of the first 10 years in public employment worth 1.25% of pay towards a pension; each year between 11-20 worth 1.5 % and each year after that 2%.

By his math, a worker could retire after 38 years on the job with a pension that paid 51% of their pay, instead of the current 38%. (His suggestions for sheriffs and other public-safety workers are more dramatic.)

Could COLA's come back earlier?

Crowley questions why the COLA return date has to wait until the state-run pension system has 80% on hand of what it will need to pay all of its foreseeable pension obligations. "Why not 70%?" he asked rhetorically.

About COLAs, he said: "We cannot go back to the status quo on 3% annual compounded pensions. It's unfair for anyone to advocate for that without thinking it's going to destroy the pension system as a whole .... [But] is there a different way to do the COLA? Probably. Is there a simple COLA as opposed to a compounded COLA? That's an option."

More: He once chased Lincoln Chafee in a George W. Bush mask. Now, he's in line to lead RI AFL-CIO.

"If one of the concerns of the retirees, which is also a concern of the actives, is that 'by freezing my pension at a dollar amount ... diminishes my earning power, diminishes my purchasing power' .... How do we make sure that there is something more in retirees paychecks every month that doesn't completely blow up the [pension] plan."

"We know we have a budget surplus going into the general assembly session. There are going to be a lot of different groups laying claim to it, including us. And we think we have a compelling argument to make that the state will be better off if we address some of the concerns of the active employees."

The retirees will get the chance to make their case at a future meeting.

The alphabet-soup of unions that got invitations from the treasurer's office to send representatives to speak, includes: LIUNA, RIFTHP, NEARI, AFSCME – Council 94, SEIU Local 580, UNAP, International Brotherhood of Police Officers (IBPO), National Association of Government Employees (NAGE), SEIU Local 401, Rhode Island Brotherhood of Corrections Officers (RIBCO), Rhode Island State Association of Fire Fighters, Rhode Island Troopers Association and the International Federation of Professional and Technical Engineers.

This article originally appeared on The Providence Journal: Pension reform up for debate again at the RI State House