Rhode Island governor

Rhode Island Lawyers to Suss Out How Court Should Handle Pension Lawsuit

At the end of this week, the lawyers representing Rhode Island and its retirees will meet with a Superior Court judge to discuss a major point of contention in the pension lawsuit brought against the state: how many trials should be held?

Lawyers for retirees argue that the lawsuit should be separated into multiple trials.

But the state, citing cost, is arguing for one trial.

Video: Raimondo Talks Pension Settlement, Defends 2011 Reforms

In this interview, new Rhode Island Governor Gina Raimondo discusses the amount of fees the pension system pays to Wall Street managers and defends her pension reforms (2:00 mark); she also talks about a possible settlement with the retirees suing the state over those reforms (3:20 mark).

Photo by By Jim Jones (Own work) [CC BY-SA 3.0]

Raimondo Seeks Pension Settlement, But Has “No Interest” In Negotiating Changes to Reforms

Rhode Island Gov. Gina Raimondo said during an interview Wednesday that she is still hoping for a settlement with public workers in the lawsuit over the state’s 2011 pension reforms.

But while she is willing to settle, she has “no interest” in re-opening negotiations on the reforms.

From NBC 10:

She said during a taping of “10 News Conference” that she is pushing to have pension reform settled, but she is not calling for negotiations.

Raimondo and other state leaders have said they would like to see the pension reform lawsuit settled out of court, and a deal was negotiated that was approved by a majority of the unions involved. But one unit rejected it, scuttling the deal.

The incoming governor says that deal is the best that she will agree to. When the agreement was announced nearly a year ago, she said it preserved the bulk of savings for taxpayers. And as far as she is concerned, while she would prefer to have all sides agree to those terms, she is not willing to offer unions and retirees anything better.

“I have no interest in changing the terms of that,” Raimondo said. “Otherwise, we can go forward with the litigation. The state has a very strong case. But it’s in everyone’s interest to have some finality.”

Raimondo said she will reach out to all the parties to try to reach agreement, but admits it may not be possible. But it’s something she’d like to get finalized soon.

The state’s 2011 pension reforms were especially controversial because they applied to all workers and retirees, not just new hires.

Photo by By Jim Jones (Own work) [CC BY-SA 3.0]

Implications for Pension Investments As Elections Put Ex-Financial Firm Executives in Office

The results of several state-level elections could have implications for pension fund investments as three ex-financial firm executives became their states’ respective governors.

David Sirota writes:

Wall Street firms and executives have poured campaign contributions into states that have embraced the strategy, eager for expanded opportunities. Tuesday’s results affirmed that this money was well spent: More public pension money will now likely be entrusted to the financial services industry.

In Illinois, Democratic incumbent Pat Quinn was defeated by Republican challenger Bruce Rauner, who made his fortune as one of the namesakes of Golder, Thoma, Cressey & Rauner (GTCR) – a financial firm that manages more than $40 million of the state’s $50 billion pension system. Rauner — who retains an ownership stake in at least 15 separate GTCR entities, according to his financial disclosure forms— will now be fully in charge of the pension system.

In Rhode Island, venture capitalist Gina Raimondo, a Democrat, defeated Republican Allan Fung. Raimondo retains an ownership stake in a firm that manages funds from Rhode Island’s $7 billion pension system. Raimondo’s campaign received hundreds of thousands of dollars from financial industry donors. She was also aided by six-figure PAC donations from former Enron trader John Arnold, who has waged a national campaign to slash workers’ pensions. Fung slammed Raimondo as a tool of Wall Street, but she eked out a victory after a libertarian-leaning third party candidate, Robert Healy, unexpectedly siphoned votes away from Fung.

In New York, Gov. Andrew Cuomo, a Democrat, handily defeated his Republican opponent, Rob Astorino, after raising millions of dollars from the finance industry. The New York legislature is set to send Cuomo a bill that would permit the New York state and city pension funds to move an additional $7 billion into hedge funds, private equity, venture capital, real estate and other high-fee “alternative” investments. Assuming the standard 1 to 2 percent management fees applies, that could generate between $70 million and $150 million a year in fresh fees for Wall Street firms.

Cuomo has not taken a public position on the bill, but his party in the legislature passed it by a wide margin, and he is widely expected to sign it into law.

In Massachusetts, Republican Charlie Baker appeared early Wednesday to have secured a narrow victory over Massachusetts Attorney General Martha Coakley. Baker was a board member of mutual funds managed by a financial firm that also manages funds from Massachusetts’ $53 billion pension system. Baker is also the subject of a New Jersey investigation over his $10,000 contribution to the New Jersey State Republican Party just months before New Jersey Gov. Chris Christie’s officials awarded his firm a state pension deal. Christie, whose Republican Governors Association spent heavily to support Baker’s campaign, blocked the release of documents related to that investigation until after the election.

Read the full analysis here.

Photo by Keith Ivey via Flickr CC License

Gina Raimondo Wins Rhode Island Democratic Primary; Pensions Remain Campaign Issue

Rhode Island Governor candidate Gina Raimondo has beaten out challengers Angel Taveras and Clay Pell to win the state’s Democratic Primary. From Politico:

With 96 percent of precincts reporting, Raimondo led Providence Mayor Angel Taveras, 42 percent to 29 percent, with first-time candidate Clay Pell at 27 percent.

Rhode Island Democrats are hoping Raimondo can break a long streak of gubernatorial heartbreak: It’s been since 1992, when Bruce Sundlin earned a second two-year term, that a Democrat won an election for governor. Current Gov. Lincoln Chafee, who is not seeking reelection, took office as an independent but later became a Democrat as he pondered his electoral future.

The primary was of particular interest because of the pension issues surrounding the candidates, and the lack of public-sector union support for Raimondo.

Some further analysis of the outcome, courtesy of Daniel DiSalvo at Public Sector Inc:

Raimondo won for three reasons. First, in a three way race that included the Mayor of Providence Angel Taveras and Clay Pell, the 32-year old scion of former Senator Claiborne Pell, Raimondo enjoyed greater name recognition and outraised and outspent her opponents.

Second, the Ocean State’s public employee unions were divided between Taveras and Pell. Traveras had run afoul of the state’s teacher unions after a labor dispute in Providence and he had also supported pension reform, albeit a milder version than Raimondo. In short, the unions could either back Pell–the least experienced candidate–or they could chose between pension reformers. Some went for Pell, most notably the teacher unions, and others for Taveras. The lack of unity weakened the force of the public employee voting block.

Third, the labor movement was divided between public and private sectors–a phenomenon that has occurred frequently in recent years. Many private sector unions, concerned about the state’s business climate, backed Raimondo.

Raimondo will face Allan Fung in the general election. Fung, who is currently the mayor of Cranston, defeated Ken Block in the Republican primary.