rhode island pension reform

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.

Ruling on Jury Trial for Rhode Island Pension Lawsuit Could Come This Week

Will it be a jury or a judge deciding the legality of Rhode Island’s 2011 pension reforms?

That’s a question that could be answered as soon as tomorrow, when a judge will decide whether to grant the state’s request for a jury trial in the long-running lawsuit against the state’s pension reforms.

From the Providence Journal:

The lawyers in the state’s high-stakes pension case are headed back to Superior Court on Tuesday to hear Judge Sarah Taft-Carter’s anticipated decision on whether to let a jury decide the legality of the state’s sweeping 2011 pension overhaul.

[…]

The treasurer, the governor and the state retirement system have requested a jury trial in the long-running fight over the legality of pension cuts that Governor-elect Gina Raimondo crafted — and shepherded to passage in 2011 — in her current role as state treasurer, and earlier cost-cutting moves dating to 2009.

The phalanx of unions that filed the central lawsuit in June 2012 contend the cutbacks — which include the temporary suspension of the annual “cost-of-living adjustments” (familiarly known as COLAs) for retirees — are illegal.

Even though the pension benefits at issue are dictated by state law, not contract, the unions argued — and Taft-Carter agreed as a starting point for the case — that there was an implied contract.

The defendants want a jury, not a single judge, to decide whether the 2011 rewrite of state pension law impaired a contract, whether the impairment was substantial and “whether there was a legitimate public policy purpose behind the legislation that is sufficient to justify the impairment of the alleged contractual rights.”

Even if the plaintiffs who brought the six linked lawsuits establish “beyond a reasonable doubt a substantial impairment of a contractual relationship,” the state’s filing says: “It must be decided whether there is a legitimate public purpose behind the government action and whether that purpose is sufficient to justify the impairment of contractual rights.”

But a lawyer for the plaintiffs, Douglas L. Steele, told the court at an earlier juncture that the case isn’t about monetary damages. The unions want the court to use its discretion and injunctive powers to put the law back the way it was.

Carly Beauvais Iafrate, an attorney representing about 7,000 retirees, said: “We’re asking you to reinstate our benefits as they existed on June 30, 2012. That means we are asking you to take the law and just put it back. That, to me, is equitable.”

In short, the lawyers for the unions — and the retiree groups — that filed the legal challenges contend: “There simply is no right under Rhode Island law to a jury for impairment of contract claims” or any of the other alleged violations of the “takings” and “due process” clauses of the Rhode Island Constitution.

The state’s 2011 reforms applied to all workers and retirees, not just new hires. The changes included suspending COLAs and moving employees into a hybrid pension plan with elements of a 401(k)-plan.

Rhode Island Pension Reform Law Sits in Legal Limbo on Three Year Anniversary – But Raimondo, Other Lawmakers Open To Settlement

It’s been three years since Rhode Island passed into law a sweeping pension reform measure. But the law still sits in legal limbo after being challenged by labor groups.

A settlement has been hard to come by. But incoming Rhode Island governor Gina Raimondo said Monday she is open to a settlement. From WPRI:

Raimondo – who initially resisted efforts to mediate, but ended up supporting the failed settlement after a judge ordered talks – suggested Monday she remains open to settling but only if she can preserve the lion’s share of the savings from the original 2011 law. The previous settlement reduced the state’s pension shortfall by $3.86 billion, about 94% of the $4.09 billion the law saved.

“As I have said numerous times, I supported the settlement agreement,” Raimondo told WPRI.com in a statement. “I would like to see that back on the table and enacted to put the lawsuits behind us. I am open to making that happen.”

But Raimondo added: “What I am not interested in is going backwards from what was agreed upon in the settlement.” The state is already projecting a budget deficit of nearly $200 million next year; it would be more than twice as high if the old pension system were still in place.

She isn’t the only Rhode Island lawmaker eager to settle and put the legal challenge behind them. From WPRI:

Seth Magaziner – the Democrat newly elected to succeed Raimondo as treasurer, who will therefore become a lead defendant in the pension suit – has long backed seeking a deal.

“I continue to be supportive of renewing settlement talks, and am hopeful that a resolution can be reached that will keep the retirement system on a secure footing and avoid lengthy and expensive litigation,” Magaziner told WPRI.com in a statement Monday.

Legislative leaders are also open to the possibility.

House Speaker Nicholas Mattiello and Senate President M. Teresa Paiva Weed have both signaled in recent days they want to reduce or eliminate taxes on retirement income, such as Social Security and pension benefits – a new perk for older residents that could help smooth the way for settling the pension suit.

“The speaker will work with all parties to help facilitate a settlement of the pension lawsuit that is in the best interests of the citizens of our state,” Larry Berman, a spokesman for Mattiello, told WPRI.com in an email Monday.

Paiva Weed spokesman Greg Pare sounded a similar note. “The Senate worked closely with Treasurer Raimondo to develop the Rhode Island Retirement Security Act, and will continue to work with her as governor,” Pare told WPRI.com in an email Monday.

The pension reform law froze COLAs and moved most employees into a hybrid system with 401(k) qualities. An actuarial analysis stated the reforms improved the funding level of the state’s pension system from 42 percent to 56 percent.

Gina Raimondo Suddenly Pulling In Union Endorsements

Heading into the primary that took place earlier this month, Rhode Island’s democratic candidate for governor Gina Raimondo had notoriously little union support.

That was due to the 2011 pension reforms she spearheaded. Unions, aside from disliking the policy, thought they never got a fair shake during negotiations.

But now Raimondo is pulling in union endorsements by the dozen. Her stance on pensions hasn’t changed. So how is she doing it? The Providence Journal asked the same question:

What did Raimondo tell these unions to win their support?

Neither Raimondo, the state’s general treasurer, nor her Republican opponent, Cranston Mayor Allan Fung, has been willing to make public their written answers on any candidate questionnaires they submitted in pursuit of endorsements.

Why not? They won’t say.

[…]

Gina Raimondo is on a roll, with a new endorsement almost every day this past week.

In the last week alone, the Democratic nominee for governor has picked up glowing endorsements from the International Brotherhood of Electrical Workers Local 99 and an arm of the Service Employees International Union that represents “nearly 1,000 contracted janitors at office buildings in R.I.”

A week earlier, she netted the endorsement of the separate wing of the SEIU that won the right to unionize at-home child-care workers.

Raimondo has now picked up endorsements from 15 unions.

Unions have vocally opposed Raimondo’s 2011 reform efforts for years.

But it could be that they see her as the lesser of two evils; unions could have reason to believe they’d have better luck with Raimondo in office than her Republican challenger, Allan Fung.

But without the release of the questionnaires, we won’t know for sure.

Rhode Island Gov. Candidate Allan Fung Is A Pension Reformer, Too

By now, everyone knows about Gina Raimondo’s track record on pensions. Despite the controversy surrounding her 2011 reform efforts and subsequent investment strategies, she made pensions a central facet of her campaign for governor.

Her Republican opponent, Allan Fung, is now taking up a similar strategy. Fung, currently the Mayor of Cranston, has this week begun touting his own record of pension reform. From Public Sector Inc:

Like Raimondo, Fung, who served on a reform panel that helped craft the 2011 state pension changes, has been an ardent backer of trimming pensions to make them more affordable. The difference is that the media hasn’t seemed to consider that such an unusual story for a Republican politician. Raimondo, by contrast, has benefited from a barrage of stories hailing her as a Democrat willing to take on public employees and their unions.

[…]

Cranston’s current employees participate in the state’s retirement system, so the city had a stake in the state-engineered reforms. But Cranston fire and police retirees and those workers who were hired before July 1, 1995 participate in a separate city-directed plan that was deeply in debt . Although the plan has just 483 members, the vast majority of which were already retired, the plan was so expensive that it cost the city $22.3 million to support this year, amounting to 20 percent of the city’s operating budget, excluding its school system.

Earlier this year Fung struck a deal with the majority of plan members to suspend cost of living adjustments and to cap any future COLA’s at 3 percent. The deal is expected to save Cranston about $6 million a year for a plan that was so expensive that the city began winding it down in 1995. When Fung took office in 2008 the pension system had just 15 percent of the assets on hand necessary to pay its current liabilities, and Fung warned beneficiaries that a day could come when the fund went bankrupt. Now the system is on track to be fully funded, but it will take two decades.

Cranston is also saving money because Fung struck a deal to place new city employees in a 401(k) style defined contribution plan.

A side note: this election will be a historic one for Rhode Island no matter who wins. Raimondo is vying to become the first woman governor in the state’s history. Fung, meanwhile, would be the first Asian elected to that office.

Photo credit: “Mayor Allan Fung visits Providence” by Office of Mr. Fung. Licensed under Creative Commons Attribution 3.0 via Wikimedia Commons

Raimondo, Taveras Continue Throwing Pension Punches in Race for Rhode Island Governorship

The pension system continues to occupy center stage in Rhode Island’s race for governor. In one corner is current state Treasurer Gina Raimondo, whose 2011 pension reforms were among the boldest in the country and are the subject of numerous lawsuits from labor groups.

In the other corner in Angel Taveras, the current mayor of Providence who has been critical of the pension system’s investments under Raimondo and has accused the Treasurer of being in bed with Wall Street.

Raimondo released a new campaign ad yesterday – you can watch it above – that responded to Taveras’ claims. The Providence Journal reports:

In a new one-minute TV ad released to the media on Monday morning, Raimondo, the state’s general treasurer, looks into the camera and says of her leading rival in the Democratic primary race for governor:

“I’m Gina Raimondo and you might have heard about Mayor Taveras attacking pension reform, claiming I did it to enrich Wall Street. Nothing could be more wrong.”

“I was 11 years old when my dad lost his job at Bulova. I have never forgotten how hard that was. So when I became treasurer and inherited the pension crisis, I knew if we didn’t face up to the problem a lot of people were going to get hurt. And we couldn’t let that happen” she says in the video.

Raimondo, who is being sued by the state’s public-employee unions, next says: “Our reforms passed by overwhelming majorities in the legislature and, in the end, most of our changes were agreed to by every union except one.”

The Taveras campaign has been extremely critical of the hedge funds investments and accompanying investment fees incurred by the state’s pension system under Raimondo’s watch.

A Taveras spokesperson responded to Raimondo’s new ad:

“As a former venture capitalist who raised fees to Wall Street to $70 million, the Treasurer [Raimondo] has taken over $500,000 from the financial industry. The Treasurer received a no bid, secret contract managing taxpayer money that ensured that her venture capital firm was paid whether they made money or not. Rhode Island deserves a governor who has a record of standing up to Wall Street.”

Raimondo has been adamant that most unions were receptive to her reforms. But several union leaders have gone on record to say that is not the case. As the leaders told the Providence Journal:

Leaders of several of the state’s public-employee unions — including Council 94, American Federation of State, County and Municipal Employees — accused Raimondo of misrepresenting their position in the high-stakes pension fight headed for trial next month.

“Council 94, AFSCME vigorously opposed the pension changes. The treasurer’s process was a farce,” said Council 94 President J. Michael Downey, a Taveras backer.

“Our ideas and suggested amendments were ignored. She broke her word about taking care of people with the least amount of pension benefits, in her words: ‘the little guy.’ And she harmed many municipal employees whose pensions were healthy,” Downey said.

Added Paul Reed, president of the Rhode Island State Association of Firefighters: “She never negotiated with us on any of these things.”

Both of those union leaders support Taveras.

Watch Taveras’ original ad below: