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.

9 responses to “ProJo Stories Show Where Gina Values Transparency”

  1. PinkHatLib

    “We ought to be as open with our citizens as we are with our investors.”

    Let me get this straight… after months of community meetings across the state you were totally in the dark and blindsided by what was propsed? She even set up a Web site to “to help collect and organize ideas from constituents for pension system reform. Ideas for reform.” I take it you missed that?

    www.treasury.ri.gov/secure-path-ri/index.php

    Somebody get Bob a Projo subscription for Christmas. I’m pretty sure they still covered at least some of that.

  2. Rhody Towny

    PinkHat,

    I don’t think anyone expected the 1% match, or the force-vesting of people between 5 and 11 years in (so they can’t even get out the money they paid into the old system), or the cola suspensions for as long as they were for current retirees. The bill was banged through mighty quickly.  She and Chaffee were on the same page about the “hybrid system,” but there was a lot of wiggle room relating to what that meant. 

    I remember people specifically asking these questions during her live projo online chat just after the bill passed.  State Employees had no idea what it meant for them specifically.  They didn’t get a memo listing a dollar amount equivalent to how much money they lost.

    And that’s because Gina insists they didn’t lose anything.

    But when you look at the pension system (particularly in the less generous plan B that most people under 40 are on), you see a different story.

    To put it simply, pensions took the same percentage out of your check, but the percentage of your annual salary that would be calculated into the pension grew over time.  So in your late career, your pension contributions were worth much more.  In your early career, they were worth much less (slightly more than the 1% they’re worth now).

    In 401(a)s, like 401(k)s, the idea is (hopefully) to earn interest on the money, and that this interest will compound over time.  So earlier investments are worth more, and later investments are worth less.

    What the pension plan does to someone who had 10 years in when Gina pulled the trigger is particularly mean.

    It force-vests them into the new system, so they cannot get back the year’s worth of salary they had paid into the kitty at that point unless they quit their job in a time of high unemployment. 

    It takes the least valuable years from the ramp-up percentage pension pay out scheme, but prevents the high value years from ever being added in.

    It prevents the most valuable years from 401(a) contributions from being possible, since the employee can’t go back in time and invest the money they dropped in the pension system.

    These people are actually worse off than new employees who start with her new system from the getgo (assuming another stock market crash doesn’t wipe everyone out).

    And that’s just one example.  What the current retirees lost in the cola has been well documented elsewhere.  Their payments will be cut in half by the time they’re 80-something (if they make it that far).

    But it was impossible to know details like that until the bill passed.

    And that’s because she didn’t provide them.

    She also didn’t say that Houston oil billionaires bankrolled and wrote the damned bill.

    That might have affected public opinion a bit, don’t you think?

    1. PinkHatLib

      I’m not sure how any of that was opaque. The plan was published and then debated by the GA in a series of hearings. There’s even a FAQ out on the Web (note – this was published before the GA vote)…
      www.treasury.ri.gov/documents/SPRI/HOUSE-FINANCE-FAQ-10-27-11.pdf

      I’m not trying to defend any specific provision. Just quesitoning those who are now trying to scapegoat the GT for delivering a plan that we all knew would be a difficult pill to swallow. If anything, the blame goes to those who underfunded the pension in the first place, no?

      1. Rhody Towny

        Look at the link I posted below: blogs.wpri.com/2011/10/20/a-19-year-cola-freeze-is-about-a-13000-loss-for-pensioners/

        That’s from 7 days before the document you posted.

        Ted Nesi, who was as on top of this as anyone in Rhode Island, couldn’t exactly figure out what the COLA suspension meant at that point, and had to modify his post several times due to reader comments.

        Are you telling me that a janitor or a cook’s helper knew exactly what this bill was doing to them?

        Everyone knew it would suck.  But I don’t think people even now realize how much money they stand to personally lose.

         

    2. DogDiesel

      Bankrolled and wrote the damned bill? Hyperbolize much? 
       
      “Their payments will be cut in half by the time they’re 80-something”



      Would you mind providing a source for that statistic?
       
       

      1. Rhody Towny

        Sure Dog.

        It’s just back of the envelope arithmetic.  The law of 72 is the law of doubling in compound interest.

        So 24 years in with a 3% annual cola doubles the pay. (72/3=24)

        If you retire at 62, at 86 without a 3% cola, your pay is cut in half compared to what it would have been. 

        If inflation runs at 3% over that time, your real purchasing power is cut in half as well.

        Since they are estimating 18-20 years without a cola as it is now (and they always make rosy estimates it seems), I’m guessing that retirees will see their pay cut in half.  Ted Nesi estimates a 19 year cola freeze with further numbers and graphs here: http://blogs.wpri.com/2011/10/20/a-19-year-cola-freeze-is-about-a-13000-loss-for-pensioners/

        Obviously nothing is guaranteed. 

        But it’s a serious hit. 

        1. DogDiesel

          So their payments will never be cut in half. That’s just you hyperbolizing which seems to be theme for you.

          1. Rhody Towny

            I did the math out for you.  What, do you want me to show you where to carry the ones?

  3. leftyrite

    Rhody TownDog:

    Thanks for these illuminating pieces. They are articulate.

    As for me, a retiree of a few years, I knew that the COLA concept would constitute a big hit, but I also understood the “stop the bleeding” argument behind it.

    Foolishly, it seems, I was hoping for some kind of return to normalcy and balance thereafter.

    But I haven’t seen it. No one has stopped the attack on pensioners and on teachers still at work.

    The Engage R.I. story shows the depths to which out and out greed will drive people.

    From here on in, I am for the fight.

    That Gina Raimondo, or any local politician, would accept money first accrued from an operation as fraudulent and illicit as Enron is disgusting.

    Enron, for those who remember, was an under-prosecuted 80 billion dollar disgrace, a constellation of criminal activity.  

    To think that this Arnold fellow made a fortune from it, and that somehow that money is not disreputable, involves a parsing process in which most decent people would not want to participate.

    It leads me to believe that the vultures are after the pension fund principal now. They are immoral.

    How could we not think that?  

    GINA! GIVE BACK THE DIRTY MONEY!  

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