Even on the summer solstice, there is rarely a Jamestown resident at Taylor Point, sometimes called “pew view” because of its proximity to the sewage treatment plant. But it’s one of the more popular fishing spots for those who come to Conanicut Island from the mainland.
Prov City Council votes to divest from fossil fuels
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In a victory for the national movement urging colleges and cities to divest from fossil fuels, the Providence City Council voted this Thursday to divest from the fossil fuel industry. The resolution, introduced by Council President Michael Solomon and Council Majority Leader Seth Yurdin, commits the city to divesting its assets from the top 200 fossil fuel companies because of the industry’s contribution to the climate crisis.
“The Council has a moral obligation to ensure that no public money is being used to promote industries or practices that harm the health and well-being of the people of Providence,” said Yurdin. “Fossil fuels are a major contributor to rising amounts of carbon dioxide, and global warming is already approaching dangerous levels.”
With this resolution, Providence joins 15 other municipalities –including Seattle, San Francisco, and Madison– as well as 6 colleges that have already pledged to divest. Amongst the cities, Providence is the first state capital and the largest east coast city to divest.
Abel Collins, manager of the Rhode Island Chapter of the Sierra Club, celebrated the council’s decision. “Cities around the country will follow the leadership of Providence, the schools of the city too. In the process, more people will be educated about the danger posed by the fossil fuel industry, and perhaps even the political will to deal with the problem in Washington will at last be found. The City Council should be applauded for being on the right side of history.”
At the vote on Thursday, a group of Rhode Island climate activists rallied outside the council chambers in City Hall to show their support for divestment. The group, called Fossil Free Rhode Island (FFRI), is calling for divestment of the state, as well as all Rhode Island municipalities and public universities. To date, Fossil Free Rhode Island has collected over 400 petition signature in support of divestment, and has received the endorsement of a number of local business and nonprofits, including the South-East New England Program of the American Friends Service Committee (AFSC-SENE). FFRI is part of a national fossil fuel divestment campaign that has spread to over 300 colleges and 100 cities, states, and religious institutions over the last 9 months.
“The growth of the national Fossil Free movement has been incredibly quick, and the victory in Providence will inspire the divestment movement at Rhode Island’s colleges. Divesting from fossil fuels is crucial for institutions truly dedicated to providing their students with a sustainable future.” said Peter Nightingale, a professor at The University of Rhode Island and a member of Fossil Free Rhode Island.
(The material presented above is from a press release issued by Fossil Free Rhode Island yesterday. For the resolution of the Providence City Council follow this link.)
Harrington Hall bathrooms not ADA compliant
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As the legislature considers investing $600,000 in Harrington Hall, the overnight shelter in Cranston, it’s worth pointing out that the conditions there are not only deplorable, they are also illegal.
In November, when I spent the night at the homeless shelter, I learned that the showers are not handicap accessible. According to the Americans with Disabilities Act, all “places of public accommodation” (even privately operated hotels) must have handicap-accessible bathing facilities “whenever typical inaccessible units are provided.”
As you can see by this picture of the shower facility at Harrington Hall, it’s not only pretty nasty, there also isn’t a safety bar:
The problem was explained to me by a homeless man, confined to a wheelchair, who has been staying at Harrington Hall for five years.
I slept at Harrington Hall as part of my Homeless Like Me project. It’s really worth reading my post about it.
Here are some more pictures of Harrington Hall:
Pension report: facts are right, big picture is wrong
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The Economic Policy Institute has release a short issue brief on the Rhode Island Retirement Security Act (RIRSA) by Robert Hiltonsmith that manages to get all of the details right but the big picture entirely wrong.
The EPI Issue Brief details the differences between the retirement system for state workers before and after the passage of RIRSA as accurately and clearly as I have ever seen. Mr. Hiltonsmith has done a notable job explaining the differences between the new system and the old system.
The brief, unfortunately, fails by engaging in two common fallacies to support its broader conclusions. The first is the straw man fallacy. Mr. Hiltonsmith takes a limited set of the objectives of the entire RIRSA legislation and says defined contribution plans do not meet those objectives. That is true, but ignores the other objectives it does accomplish which were also part of the motivation behind RIRSA. The second is circular reasoning. In this case, Mr. Hiltonsmith states that the reason for a low funding ratio is because the state did not put 100% of its paper liability into the pension fund. This is a tautology and not in dispute and should not be trumpeted as a conclusion of analysis.
Here are his three main points that he believes makes RIRSA a bad policy:
- The defined contribution plan does not save the state money from its annual pension contributions.
- The defined contribution plan is likely to earn lower returns and therefore result in lower benefits for retirees.
- The defined contribution plan does not solve the low funding ratio of the pension plan which exists because law makers did not make required contributions.
Of course, the defined contribution portion of RIRSA was not in place to do any of these three things. The purpose of including a defined contribution plan in the new state pension system is to create stability in annual budget allocations and avoid locking the government into promises it has demonstrated it fails to keep. Defined benefit plans require the state to change pension contributions when there are market fluctuations and leads to anti-cyclical costs, where the state is forced to put substantially more resources into pensions when revenues are lowest and spending on social welfare is most important. The defined contribution plan keeps the payments required by the state consistent and highly predictable. This is far preferable from a budget perspective.
It is unfortunate that there are lower returns to defined contribution plans which may lead to a decrease in overall benefits. It is my opinion that the unions in Rhode Island should be pushing for a substantially better match on the defined contribution portion of their plan that more closely resembles private sector match rates. This could more than alleviate the difference in benefits while maintaining the predictability, for budgeting purposes, of the defined contribution plan. I doubt this policy would have much hope of passing while Rhode Island slowly crawls out of a deep recession, but it is certainly a reasonable matter for future legislatures.
There are only two ways to decrease the current pension fund shortfalls: increase payments to the fund or decrease benefits. There is no structural magic sauce to get around this. Structural changes in the pension system are aimed at reducing the likelihood that the state will reproduce its current situation, with liabilities well outstripping funds. It is true that the “savings” largely came from cutting benefits. I have not heard anyone claim otherwise. The only alternative was to put a big lump sum into the pension fund. That clearly was not a part of RIRSA.
It is absurd to judge RIRSA on the ability of defined contribution plans to achieve policy objectives that are unrelated to the purpose of this structural change.
Perhaps the most troubling conclusion of this brief was that,
The shortfall in Rhode Islands pension plan for public employees is largely due not to overly generous benefits, but to the failure of state and local government employers to pay their required share of pensions cost.
I read that and expected to see evidence of skipped payments or a discussion of overly ambitious expectations for investment returns, etc. Instead, it seems that this conclusion is based simply on the fact that the benefits in Rhode Island were not deemed outrageously large, and therefore Rhode Island should just pay the liability hole. The “failure” here is predicated entirely on the idea that the pensions as offered should be met, period, whatever the cost to the government. This is the “required share”. Which, of course, is technically true without a change in the law, but feels disingenuous. It is essentially a wholesale agreement with the union interpretation of the state pension system as an immutable contract. The courts will likely resolve whether or not this is true. My objection is that Mr. Hiltonsmith makes a definitive statement on this rationale without describing it. In such a lucid description of how the retirement system has changed, it seems this could only be intentional omission intended to support a predetermined conclusion rather than illuminate the unconvinced.
Mr. Hiltonsmith also claims that, “Over the long term, RIRSA may cost the state upwards of $15 million a year in additional contributions while providing a smaller benefit for the average full-career worker.” I am not 100% certain, but based on his use of the normal cost 1 to do these calculations, it appears this conclusion is drawn only based on the marginal contributions to current employees. In other words, if we completely ignore the existing liability, the new plan cost the state more money marginally while potentially decreasing benefits for employees. It is my opinion that Mr. Hiltonsmith is intentionally creating the perception that RIRSA costs more than the current plan while providing fewer benefits. Again, this is true for future liabilities, but ignores that RIRSA also dramatically decreased the unfunded liabilities through cutting existing retiree benefits. So the overall cost for the act is far less, while the marginal cost was increased with the objective of decreasing the instability in government appropriations.
We can have a serious debate about whether there is value in the state goals of a defined contribution plan. In my view, the purpose of switching to this structure is about:
- Portability of plans for more mobile workers, potentially serving to attract younger and more highly skilled employees.
- Stability in government expenditures on retiree benefits from year to year that are less susceptible to market forces. This includes avoiding the temptation to reduce payments when there are strong market returns as well as the crushing difficulty of increasing payments when the market (and almost certainly government receipts) are down.
- Insulating workers from a government that perpetually writes checks they can cash, as was the case with the current system.
This paper does not address any of these objectives or others I might have forgotten. In essence, the brief looks at only one subset of the perceived costs of this structural change, but it is far from a comprehensive analysis of the potential universe of both costs and benefits. In fact, it fails to even address the most commonly cited benefits. That is why I view it as heavily biased and flawed, even if I might draw similar conclusions from a more thorough analysis.