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Newspaper: Rhode Island Should Settle Pension Suit With Retirees, But Keep Savings Intact

Rhode Island Governor-elect Gina Raimondo said last week that one of her top priorities was reaching a settlement with workers in the long-running lawsuit against the state’s 2011 pension reforms.

The Providence Journal opines that a settlement would be ideal for everyone – if the law’s savings are kept intact. From the Providence Journal:

State leaders — led by Governor-elect Gina Raimondo — are again eyeing a possible settlement with the unions that are challenging the 2011 overhaul in court. The state’s goal, presumably, is to retain the bulk of the savings created by the overhaul and avoid the risk of losing — an outcome that could cost taxpayers hundreds of millions of dollars that they cannot afford.

That goal is a good one, as long as the bulk of the overhaul savings is retained. Even with those savings, the state’s public pension costs are high, and those tax dollars pay for retirement plans that are often far more generous than those in the private sector.

There is also the issue of uncertainty. The projection that the taxpayer contribution rate will slowly nudge downward assumes that the state’s $8 billion pension portfolio will meet its annual investment goal of 7.5 percent. If that goal is reached or exceeded, all well and good. But if the investment returns fall short, the cost to taxpayers could rise.

The idea of reaching a settlement also raises logistical concerns. There are more than two dozen communities enrolled in the state-run Municipal Employees Retirement System, which will be impacted by the outcome of the pension lawsuit. Naturally, most if not all of these municipalities will want to have a say in any negotiated settlement.

If a settlement is reached, it could look a lot like the one that was almost accepted in 2014. In that deal, 95 percent of the state’s savings were retained. In exchange, pension increases were given to retirees and some employees.

But that deal fell through when one retiree group rejected it.

Photo by By Jim Jones (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons

Rhode Island Pension Payments to Total Over $400 Million in FY 2016, 2017 As New Contribution Rates Approved

Rhode Island’s Retirement Board approved employer contribution rates for fiscal years 2016 and 2017 on Wednesday.

Total state and local pension payments are projected to top $400 million in those years, just as they did in 2015.

From the Providence Journal:

New contribution rates approved by the state Retirement Board on Wednesday will require state and local payments into the pension fund of a projected $171.2 million for state employees, and $237.3 million for teachers during the budget year that begins on July 1, 2016.

At those projected payment levels, state and local taxpayers will pay a total of $408.5 million in fiscal year 2017, compared with a potential $411.6 million during the budget year beginning July 1, 2015, according to information the state’s actuary provided the Retirement Board chaired by General Treasurer and Governor-elect Gina Raimondo.

[…]

While most state employees are now required to contribute 3.75 percent of their pay toward their reduced defined-benefit pensions, the actuaries recommended the state share go from 23.65 percent of payroll to 23.78 percent come July 1, 2016.

And while teachers also contribute 3.75 percent of their pay, the state — and the communities that employ them — would pay 22.76 percent of payroll, compared with 23.14 percent a year earlier. (The drop is a result of a lowering of earlier projections of potential teacher salaries.)

The net result: the required contribution to teachers’ pensions will drop from a projected $241,742,873 in the new budget year that begins on July 1, to $237,251,068 the following year, while rising for state employees from a projected $169,811,685 to $171,169,925.

Rhode Island’s pension system for general state employees was 57 percent funded as of June 30. The teachers’ system was 59.6 percent funded as of June 30.

Photo credit: “Flag-map of Rhode Island” by Darwinek – self-made using Image:Flag of Rhode Island.svg and Image:USA Rhode Island location map.svg. Licensed under CC BY-SA 3.0 via Wikimedia Commons

Newspaper: Kentucky Pension System is Public Business

Pension360 covered the push last week by several Kentucky lawmakers to make the state’s pension system more transparent.

But at least one lawmaker wasn’t on board with those plans. House State Government Committee Chairman Brent Yonts had this to say about his colleagues’ proposals, which included public disclosure of pension benefits, management fees, and other data:

“Frankly, I don’t think that’s the public’s business,” Yonts said. “They have access to the public payroll and salary information. They can theorize about what we’re going to collect in pensions. But the public is not entitled to know every last little thing about us.”

The Lexington-Herald Leader editorial board weighed in on the issue on Wednesday. The newspaper’s stance: public pensions should be public business. From the editorial:

Rep. Brent Yonts, D-Greenville, is certainly right that the public “is not entitled to know every little thing about us.”

We don’t need to know Yonts’ blood pressure or where he gets his hair done, or which, if any, bourbon he likes to sip of an evening.

But taxpayers are entitled to know how much he and every other state employee will receive from our public pension systems.

Yonts, chairman of the House State Government Committee, made his “every little thing” remark while explaining his opposition to two bills — prefiled for the upcoming session — that would increase transparency in the beleaguered public retirement systems.

Specifically, Yonts thinks the public just doesn’t have the right to know how much retirees are drawing in public pension benefits.

“Frankly, I don’t think that’s the public’s business,” he told reporter John Cheves.

It is all the public’s business: How much people draw and how much the retirement systems pay hedge fund managers and other investment advisers.

Right now the largest of these funds, the Kentucky Employees Retirement System, which covers workers in non-hazardous jobs, is at a perilous 21-percent funding level. That means it has only about one in five of the dollars it is obligated to pay out.

This has happened for several reasons, undoubtedly the most important being that governors and the General Assembly have balanced too many budgets by forgoing the state’s annual match to the money paid in by employees. That’s a breach of promise and an unconscionable slap at state workers.

[…]

And, then there’s the $55 million that the retirement systems paid to investment managers with very little disclosure about what we got for that money.

It’s impossible to fix Kentucky’s public pension mess without laying all the cards on the table. How much do the spikers, double-dippers and well-retired lawmakers cost the system? No one knows, or if they do they’re not telling. How are the investment advisers’ fees set and what do we get for them?

Yonts and public employees who say retirement benefits are none of our business should get over it.

Employees are absolutely right that they took jobs and paid into the retirement system on the belief the money would be there.

But taxpayers funded those salaries and will pay the lion’s share of the bill to solve the pension mess. They have the right to know every little thing.

The full editorial can be read here.