Bob Plain is the editor/publisher of Rhode Island's Future. Previously, he's worked as a reporter for several different news organizations both in Rhode Island and across the country.

14 responses to “Can RI Take Tips from Illinois Pension Reform Bill”

  1. jasonpbecker

    In Rhode Island, the story is largely that the government paid their share as well, based on the calculations and requirements in the system.

    Unfortunately, the economy of today and investment environment of today does not reflect the environment when the last major changes were made. In this case, following the rules, on both sides were not enough.

    Union folks like to point out that the contributions were approaching 100% “normal” costs. This is quite a bit. But it’s also a normal cost based on an unrealistic profile of “safe” returns when risky returns are lucky to hit the safe numbers for quite some time, and it’s a normal cost of current employees on currently accruing benefits– these normal costs were not always so high and don’t impact the largest portion of the debt which is structural due to past accrued benefits.

    I think you’re wrong to assume that a plan that is a bit more means-sensitive like that in Illinois would have had any impact on the extent to which the “ALEC and Manhattan Institutes” of the world were excited by what happened in RI. That pension reform happened at all in Rhode Island and happened in a sweeping way that may actually improve the state’s financial position is remarkable. What impressed those folks was a combination of first-mover advantage, an extremely democratic government involved, and something in the size/scope of what the federal government might call a “grand bargain”. Virtually none of this relies on any of the particulars of the plan other than the dramatic impact on the long term outcome of the new policy.

    This is why a positive outcome of “negotiation”, which frankly, I think is not the paradigm by which we should make statute,  could be starting with the current reform and tweaking the path to a comparably strong outcome for the state’s finances. Beginning with a dramatically new structure and finding ways to mitigate the concerns for the most vulnerable pensioners is a good thing. It’s a hell of a lot better than beginning with a structure that is totally unsustainable and make line-item changes, which reflects the history of past pension changes and union contract negotiations writ large.

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  2. RoundHouseLeft

    like most of Jason Becker’s commentary, here and elsewhere, it is just plain wrong.  There were several times the state did not make the require contributions.  .

    What Mr. Becker seems to want to say is “its the benefits” while simply ignoring the Wall Street crash, the housing bubble, and other maladies of the market place.  Yet, the employees shoulder the burden of fixing the problem?  That blame the victim mentality may have worked for the conservative way of thinking that go us into this mess, but getting us out?  Sorry, try nothing else.  


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    1. PinkHatLib

      “Yet, the employees shoulder the burden of fixing the problem?”

      You seem to be saying RI taxpayers caused the financial markets to crash, or is there someone else you had in mind for shouldering the burden of fixing the problem?

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  3. jasonpbecker

    You seem to neglect paragraph 2, “Unfortunately, the economy of today and investment environment of today does not reflect the environment when the last major changes were made. In this case, following the rules, on both sides were not enough.”

    That’s all about the housing crash and Wall Street crash and maladies of the market place. It’s explicitly calling out the failure to anticipate an environment where government bonds don’t have 6% interest and market performance, over the course of a decade, is far off long term trends.

    That’s not saying “its the benefits” so much as saying “its the revenues”. And while the costs can largely be accurately estimated, overconfidence in both the size and predictability of market returns has left a very large gap. It is my view that we should not make the mistake of continuing to overestimate our ability to predict the market. In fact, many European socialist countries have long maintained 100% (not even the 80% target) of the pension costs funded.

    It’s hard to say that “conservative” thinking got us into this mess. This mess was created by writing up a system that had to last generations in a way that is inflexible to changing conditions. A better system would have built in automatic triggers to deal with changing environments that at least protects folks if political will cannot be mustered to make changes in any direction.

    That the state, on I believe 2 occasions, did not make their required contributions is virtually irrelevant. It represents a very, very small part of the pension funds shortfall (, the one story I found about this on a quick search).

    Note, I have said that this is not the same as the municipal system where missed/underpayment is FAR more common and insidious. 

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  4. RoundHouseLeft

    Hmmm. So Kathy Gregg Jr. uses a quote, out of context, from a former Governor’s Chief of Staff, to defend his guy, and you take it as Gospel.  You really hate public employees THAT much?

    Keep trying Becker. And yes, PHL. among others, those who got major tax breaks during the last decade should have to pay more as part of a way to solve the pension crisis.  State workers and teachers have to pay almost 10% of their salaries, plus taxes, and in many cases do’t get social security.   

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    1. DogDiesel

      10 percent…really? You do realize it’s an investment matched by the taxpayer and they get a return on investment. I’m not saying they got it made but the wife and I are putting 20+ percent away with no match for retirement. We’ll get no guaranteed benefit.

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    2. jasonpbecker


      You make one point, I attempt to address it. I felt you both mischaracterized what I wrote and supplied a link with some evidence that supports my assertion that you claim is “just plain wrong” (which you setup as a strawman, btw. I did not say the state never skipped a payment, I said they “largely paid their share… given the requirements,” emphasis added. This should not be read as “entirely paid their share”).

      You do realize that up until late October I was a state employee, right? And right now, though I am technically an employee of Brown, 50% of my compensation is paid for by Providence Public Schools (and 80% of my work is for them)? The idea that I “hate public employees” is absurd. Not only was I one, and likely will be one again in the future, but my mother is a civil servant for the State of New York and my father is a federal employee. My views on pension reform implies nothing about public employment or employees in general.

      It may be convenient to write me off as some right wing conservative public-sector hating fascist, but you’re talking to a liberal democrat from a family of liberal democrats who works in the public sector and education because of my belief in social justice despite having skills that are more valuable in the corporate world who supports progressive taxation and a strong social safety net. None of this is relevant to the discussion, but you seem to have a need to lean on your sense of my personal narrative to guide your critique of my ideas. So let’s get that out of the way and have a better conversation. 

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    3. PinkHatLib

      I didn’t see any tax breaks and my 401k and home value took a beating in the market. I don’t object to rolling back the Carcieri cuts but that wouldn’t make the system solvent, even assuming 100% of that revenue went towards pensions (vs say restoring aid to cities and towns or to other programs which faced cuts during the recession). I’m guessing as a student it’s a bit easier to say someone else needs to pay.

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  5. RoundHouseLeft

     What you call “mischaracterized”  I call calling out.  You may not be used to people disagreeing with you but this is what it looks like.  

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    1. jasonpbecker

      Hard to call me out for something I didn’t say. But thanks for making commenting on RIFuture less appealing!

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  6. cailin rua

    I think this story is interesting for several reasons. During the massive media campaign engaged upon by Engage R i, local advertising and the media, it seemed as though the R I pension crisis was the result of a situation unique to R I.  Yet, a simple Google search on the subject quickly leads one to the California Public Policy Institute pages with stories about pension systems in crisis across the country.  The only thing unique about R I is the way the press worked tirelessly to turn the public against the public employees and the way the legislature has dealt with the state pension crisis and the situation in Central Falls.

    Who is allowed to use services or borrow money and not pay for the services or pay back the money?  Who?  It seems the state of R I can hire people and not pay them what they agreed to?  R I state law now says it depends on how wealthy and powerful the entity is.  If you are a bondholder, the answer is yes, you must be paid.  If not you get what’s left after everyone else has taken their share.  How is this fair?  Governments are at the mercy of the rating agencies that allowed the institutions to fail that, at the very least, helped us get into this mess.

    Other municipalities have dealt with these same issues very differently than R I has.  Now it seems Illinois, with even bigger problems, will not follow what was done in R I.  R I is the perfect petri dish for neo-liberals to do their experiments in.  R I is a city-state. Unlike Washington, D C, New York City and Chicago it is an entire state but with a very high population density and has all the attendant problems of those cities but it has state sovereignty and a small, easily influenced,  state legislature. 

    There is more at stake here than just the pension debt.  Does anyone recall what Raimondo said about privatization at the Manhattan Institute? :

    The Manhattan Institute, perhaps best known as the “brain trust” of the Giuliani administration in New York, has a long history of working to privatize, undermine, and cut public schools, social services, and public transportation. These are the very services that Raimondo cited as essential in her life and to all citizens of Rhode Island.

    Yes, Gina Raimondo has made it to the pages of Right Wing Watch.  She’s a Democrat just like Patrick Kennedy and Jon Brien.  I can’t provide another link w/out this post going into moderation but there was a good explanation of how all these puzzle pieces fit together by Mark Karlin of Truthout’s Buzzflash yesterday:  
    How the “Fiscal Cliff” Is Making Us All Indebted Servants to Wall Street.  In the article Karlin quotes  Richard Wolff:

    Tax favoritism for the wealthy deepens the budget deficit, forcing governments to borrow more. Paying interest on this debt diverts revenue from being spent on goods a services. This fiscal austerity shrinks markets, reducing tax revenue to the brink of default. This enables bondholders to treat the government in the same way that banks treat a bankrupt family, forcing the debtor to sell off assets – in this case the public domain as if it were the family silver, as Britain’s Prime Minister Harold MacMillan characterized Margaret Thatcher’s privatization sell-offs.

    How long have “Starve the Beast” tactics been used to undermine the solvency of government bodies in the U S?  I think the plan is to grab the school system and as many public assets as possible.  The “Fiscal Cliff” may be a federal situation and the details may be different but the forces, neo-liberal forces, driving these various crises are the same.

    By the way, the only union I ever worked for was at the Outlet Co. in a summer job I had as a teenager.  I am unaffiliated.  My parents never worked for the state, local or federal governments. I find it interesting that  “Democrats” like Gina Raimondo and Frank Caprio make no promises to remain loyal to the Democratic Party.  Caprio approached the Republicans about running on their ticket, didn’t he?  Raimondo say she won’t promise not to change affiliations?  They all belong to the Financier’s Party as far as I’m concerned.


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    1. cailin rua

      This post was in moderation so long, I didn’t think it would see the light of day.  Seeing it posted so long after I had written it.  

      I made a reference to the California Public Policy Institute.  I really meant the California Public Policy Center.  I think they are two very different groups.  I am not sure.  Regardless the CCPC has a blog called Pension Tsunami.  FWIW it has been providing updates about pension crises across the country for some time.  I don’t know if this is news to anyone but it seems to me some have seen all this coming for a long time.  Seems like whoever did was well prepared to take advantage of the situation.

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  7. simon846

    I thought the Judge gave the parties till late January to settle their case. What’s taking them so long.

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