pension – Page 4 – RI Future

August 21, 2012August 21, 2012

Progress Report: Engage RI, Labor Make Pensions Election Issue; The Paul Ryan, Todd Akin Connection; Generosity

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ft wetherill — Fort Wetherill State Park in Jamestown.

If you had any doubt that this year’s campaigns for General Assembly seats would be colored by last year’s pension debate, just look at the news cycle this morning: Ted Nesi reports that EngageRI is attacking those who had the nerve to speak out against cuts to retired state worker’s salaries, while the Projo editorial board condemns organized labor for doing the same.

Thanks to RIPTA for trying to stave off reductions in public transportation. Doing so would certainly be bad for our already struggling economy. Remember, the goal is to make society work well, not for it to be inexpensive.

What do Paul Ryan and Todd Akin have in common: radical beliefs on reproductive freedom.

A new report claims religious people tend to be more generous than the secular folk among us. While they may give more to their church than others do to charities, I don’t buy for one minute that they are holier than the rest when it comes to giving. In fact, WPRO’s Matt Allen points out the last paragraph in the story: “People in less religious states are giving in a different way by being more willing to pay higher taxes so the government can equitably distribute superior benefits, Wolfe said. And the distribution is based purely on need, rather than religious affiliation or other variables, said Wolfe…”

The state is looking for ideas for the old Shooters building next to India Point Park. As Providence begins its massive redevelopment project, this will be one o the lynchpins to overall success. How about an aquarium?

Poor Curt Schilling … he still somehow thinks it’s Gov. Chafee’s fault he doesn’t know how to run a video game company. In fact, he’s resorted to name calling over the matter. Even the Boston Herald recognizes this isn’t going to do him any good.

Did you hear that Augusta National is finally allowing women to join the exclusive Georgia golf country club? Well, Providence progressive activist Jessica Sherwood called upon them to do so two years ago!

Today in 1959, Hawaii becomes the 50th state.

August 14, 2012August 14, 2012

Progress Report: Doherty the ‘Blank Slate’; Pension Vote Fallout; Junk Food Subsidies; Happy B-day, Social Security

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Dutch Island cove — A cove on Dutch Island. (Photo by Bob Plain)

First Brendan Doherty supported Paul Ryan’s draconian budget proposal; then he didn’t. First he wanted to foist anti-organized labor laws on Rhode Island; but he changed his mind on that one too. The Bush tax cuts? He changed his mind on that one during a single interview, so who knows what he’ll think by the end of the campaign. Really, there is only one thing we know for certain about his positions, and Ted Nesi nails it down in a piece about how Paul Ryan will change the CD1 race: “Doherty is about as close to a policy blank slate as you can get.”

This headline from the dept. of no duh: Pension vote key to unions’ support

But the Projo’s Randy Edgar throws in a very interesting graph down near the end of his story: “Meanwhile, state General Treasurer Gina M. Raimondo, the chief architect of last year’s pension overhaul, also plans to weigh in with “financial support” and “information for campaign material” for Assembly members who voted for the pension bill, a spokeswoman said last week.”

RIPR’s Kristen Gourlay reports on an interesting new compensation structure between Blue Cross and some RI hospitals: “The new arrangement moves away from paying the hospitals based on the volume of care it provides – like the number of procedures – toward paying them for better outcomes for patients.”

Speaking of health, did you know junk food subsidies costs Rhode Island taxpayers millions each year? Small government activists, we’re waiting to hear from you on this one … Or does government not need to be shrunk so much when its largess is going to corporate America?

Fellow kayakers, here’s a new map of some of the best waterways in the Ocean State to paddle. And here’s the existing one folks who like to get out on Narragansett Bay use. Me, if I can swing it, I’m going to pay Dyer Island a visit this weekend. And it seems like Tim Faulkner, over at EcoRI, recently paid a visit to Prudence Island.

Today in 1935, President Roosevelt signs the Social Security Act, one of the many ways America governed itself out of the Great Depression.

True that, Projo!

July 3, 2012July 3, 2012

Progressives Should Care About Pension Security

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gina linc fung — Gina Raimondo, Linc Chafee and Allan Fung, at an event in 2011 to launch the campaign to decrease pension costs. Photo by Bob Plain, courtesy of WPRO.

I suspect if that if named a United States Senator tomorrow (might as well give the right-wing immediate heartburn at that prospect) my committee assignment of choice would be the Senate Committee on Health, Education, Labor and Pensions, the so-called, and when run correctly, aptly named HELP Committee. Putting four important issues so remarkably interlinked together was wise indeed, but those linkages are not always obvious to some who deem themselves progressives.

My progressive friends breathed a sigh of relief last week when the Supreme Court upheld the Affordable Care Act, appreciate the importance of a strong public education system, and usually understand the basics of workers having a voice at the table through collective bargaining rights. But last year, so many progressive legislators, despite making commitments to the contrary, often in writing to the groups that endorsed them, voted to implement some of the most draconian changes in the country to Rhode Island’s state-run public pension plans. And many of their progressive supporters seem to be equally confused by the issue or just wish it would go away. It will not, and should not.

The elected officials who broke their commitments know who they are. While, to the dismay of many, I remain personally fond of Rhode Island General Treasurer Gina Raimondo (who made no commitments on the issue), she essentially told the General Assembly that our unfunded pension liability was a “weapon of mass destruction,” and with remarkable haste in a virtually unprecedented special session, the Rhode Island Retirement Security Act of 2011 was enacted. And it was enacted with a lot of nominally progressive votes. I have more sympathy for elected officials willing to make amends, those who felt caught up in the same type of political tide that led federal elected officials to support the ill-advised war in Iraq (a vote which was at least a contributing factor to Hillary Clinton losing the Democratic Presidential nomination) and now acknowledge their errors in judgment, than for those who are angry they have been asked to account for their votes. I do give kudos to Providence Mayor Angel Taveras for negotiating a solution with active and retired employees as the state should have done and progressive legislators should have insisted they do.

All of that said, this article is not primarily directed at elected officials who need to reconsider their priorities, but at the progressive community in general. It is ironic that many of my more conservative acquaintances, while still maintaining their distaste for both unions and defined benefit pensions, confide in me their belief that the State of Rhode Island acted illegally in breaking the covenant it had with those workers and retirees. It pains me that some of the progressives with whom I have fought side by side in so many battles do not understand either the legal or moral obligation the State has to those workers, or that society should have to provide real retirement security to all workers. Worse are those that buy into, and repeat, the false choices argument – that if the state honors commitments to its public sector workers, it won’t be able to tighten the safety net for those most in need. Have the recent tax cuts for the wealthiest among us have been forgotten so quickly? False choices indeed!

Progressives believe that the entire arc of an individual’s life should be imbued with justice. That includes not only a world free from discrimination, a clean environment, the right to choose, the right to marry the partner of your choice and help for those who need it the most, but access to quality, affordable health care, an excellent public education, a good job with good wages where workers have a voice, and a secure retirement.

Apparently, one can still be a Democrat and ignore some of these issues – but you can’t claim to be a progressive.

June 20, 2012June 20, 2012

ALEC Praises Rhode Island’s 2011 Pension Cuts

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While Rhode Island debates if ALEC has its hand in our local politics, a new report indicates the right wing group is at least happy with the results.

In its 2012 annual “Rich State, Poor State report,” the American Legislative Exchange Council praises Rhode Island for its efforts to pare back public sector pension benefits last year.

“Perhaps the biggest pension reform success last year came from Rhode Island,” reads the report, authored by right-wing economists Arthur Laffer, Stephen Moore and Jonathan Williams, in a subsection titled “Blue State Rhode Island Passes Bipartisan Pension Reform.”

The authors, two of whom (Laffer and Moore) are charter members of the far-right wing Club for Growth, anticipated further reform on the municipal level in this year’s legislative session.

“The initial draft of [the bill] set out not only to reform state pension plans, but municipal ones as well,” says the ALEC report. “As it went through the legislature, the municipal aspect of pension reform was removed. This is unfortunate, as other cities in Rhode Island are seriously underfunded and on the verge of delinquency. We anticipate seeing more good reforms from the Ocean State this year and hope they can tackle their pension burden once and for all.”

Conservative Woonsocket Rep. Jon Brien, a member of ALEC’s board of directors also pushed hard for the municipal pension efforts this year.

In fact, the ALEC report cites an article Brien wrote with report co-author Williams for the Rhode Island Center for Freedom and Prosperity, a local right wing organization that advocates for political objectives similar to ALEC: lower taxes and smaller government. Its website identifies Williams as “a member of the RI Center for Freedom’s special pension task force, is a co-author of ‘Rich States, Poor States’ and serves as Director of the Tax and Fiscal Policy Task Force at the American Legislative Exchange Council, a non-partisan membership association of state legislators.”

The Center also runs the new website the Ocean State Current, which took issue with the New York Times column yesterday making a link between Brien’s ALEC ties and his position against increasing taxes in Woonsocket to avoid receivership.

Rhode Island is one of two states singled out in the report for making “the tough choice to reform programs and benefits.” The other was Wisconsin, which did so through the controversial Act 10, pushed by Gov. Scott Walker, that led to a recall campaign against him.

The PDF was too big too upload, but you can download it for yourself here. And here’s the entire section on Rhode Island:

Blue State Rhode Island Passes Bipartisan Pension Reform

Perhaps the biggest pension reform success last year came from Rhode Island. This tiny liberal state had a big problem: An estimated unfunded liability ranging from $6.8 billion to more than $15 billion (depending on your actuarial assumptions). Assuming an unfunded pension liability of roughly $15 billion, which is from the estimate that uses generally accepted accounting principles (GAAP) from the private sector, every man, woman and child in Rhode Island owed $14,256. Realizing that the system was un- sustainable, Gov. Lincoln Chafee and State Treasurer Gina Raimondo proposed and successfully pushed for the Rhode Island Retirement Security Act of 2011 (RIRSA), which the legislature passed on a bipartisan basis.
While initially many Rhode Islanders didn’t take the need for reform seriously, they began to see reality when one city in the state, Central Falls, declared bankruptcy and cut public pension plans by nearly 50 percent.22 Passing RIRSA wasn’t easy and took a lot of input and analysis from employees, retirees, residents, and other groups throughout the state. The plan provides that:

•     Reforms well as new workers.
•     Both employees and taxpayers will share the burden of investment risks.
•     Workers are subject to cost-of-living adjustments that take into consideration the pension fund’s over or under performance.
•     Cost-of-living adjustments are frozen for current retirees in the defined-benefit plan.23

Not only does RIRSA save Rhode Island taxpayers billions of dollars, it also provides public workers with the security that their money will be there when they retire. Rhode Island has proved that the choice is not between Republican or Democrat, Left or Right. Though RIRSA was monumental, Rhode Island still has some work to do. The initial draft of RIRSA set out not only to reform state pension plans, but munici- pal ones as well. As it went through the legislature, the municipal aspect of pension reform was removed. This is unfortunate, as other cities in Rhode Island are seriously underfunded and on the verge of delinquency. We anticipate seeing more good reforms from the Ocean State this year and hope they can tackle their pension burden once and for all. Reflecting on the success of pension reform in the Ocean State, Gov. Chafee remarked, “With the passage of the Rhode Island Retirement Security Act, Rhode Island has demonstrated to the rest of the country that we are committed to getting our fiscal house in order. While this is an important step toward comprehensive pension reform, it is not complete. Our job is not done.”

April 13, 2012April 15, 2012

Fixing the U.S. Post Office, and Fixing It Good

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Headed down Route 2 yesterday and what did I see? About a hundred men and women in US Postal Service uniforms, demonstrating outside Senator Jack Reed’s office. What’s up? They are members of the National Association of Letter Carriers, protesting Senate Bill 1789, a plan to “fix” the post office.

As you may have heard, the Post Office is going broke. It is routinely facing multi-billion-dollar shortfalls. What you may not have heard is why it’s going broke. Actually that’s not quite right. If you’ve been paying attention, you’ve undoubtedly heard accounts of how email is breaking the world of paper mail. While there’s a nugget of truth in this, the real facts show that the real story is that it’s mostly bad accounting pulling the Post Office down.

First some facts: the USPS gets no tax money, except a tiny bit used to pay the postage to send audio books to blind people. The rest of its budget is made through sales of postage and other business income. But despite insisting that the Postal Service be run like a business, Congress has put strict limits on what it must and must not do.

Among the limits are a 2006 law that forces the Postal Service to put away far more money to pay for retirements than is necessary. The USPS retirement funds are currently overfunded by about $13 billion. What’s more, the law demands that by 2016 the USPS have enough money socked away to pay retiree health benefits for 75 years. Yes, that’s correct: the Postal Service is going broke today in order to pay medical benefits for retirees who are not yet born. In the last quarter of 2011, the Service spent $3.2 billion more than it took in. This crazy savings plan for retiree health benefits alone cost $3.6 billion. By itself this expense made the difference between profitability and loss. For the nine months ending last June, the service lost $5.5 billion and $5.9 billion was for retiree health care. (They report everything by quarters.) Without that expense, the USPS would have made money for the entire year 2011 — the year its cash flow problems became a crisis. For the record, the retiree health care fund now holds $42.5 billion, and is 48% funded at that 75-year horizon. This is approximately enough to pay benefits through 2060, according to my back-of-the-envelope calculations.

NALC members on Route 2 near Jack Reed's office

Obviously retiree health care is part of the employment contract, and should be counted as an operating expense, but that’s not the same as saying that pre-funding 75 years worth of expenses in 10 years is the right way to go. On the contrary, the USPS experience says it is exactly the wrong way.

The Postal Service is not without business challenges. The shift from regular mail to email has taken a big chunk of postage revenue with it, and it’s not likely to come back. But the moaning you may have read about how the USPS can’t make it in an electronic world is mostly uninformed. The fact is that the business operations are covering the costs by most reasonable measures and a few simple changes, like adding some counter services, or offering email, as lots of other countries do, would provide more revenue.

Unfortunately, instead of questioning the decisions of accountants, the USPS managers are bowing to them, and planning to close post offices in 2012, processing facilities in 2013, and end Saturday delivery in 2014, all in order to fund retiree health care in 2091. All these changes will make service slower and less convenient for all of us. The S1789 bill makes this possible.

There is some good in the bill. It does slightly relieve the pre-funding mandate of the retiree health care. But it doesn’t do enough. It also doesn’t allow USPS to use its pension surplus to pay for the retiree health care shortfall. It doesn’t loosen up the crazy restrictions on USPS businesses, like offering notary services, or contracting for delivery services.

So that’s the story: there is trouble afoot in the world of the Post Office, but it’s not a crisis. What makes it a crisis is the absurd accounting rules, and the restrictions on USPS businesses. Please tell Senator Reed to reject this bill and vote for a bill that actually addresses the real problems in a sensible way.

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