LINCOLN — Despite giving a dire assessment of the current condition of the state pension fund, General Treasurer Gina Raimondo told the Northern Rhode Island Chamber of Commerce Wednesday that there is reason for optimism that the state will bring the $9 billion problem under control.
Raimondo said that Gov. Lincoln Chafee, House Speaker Gordon Fox and Senate President Teresa Paiva Weed “are ready to line up and take on pension reform. They are talking about acting quickly, they are talking about a special session, they are talking about working with me to come out with concrete solutions.
“That should give you hope,” the former venture capitalist asserted. “We are moving this ball down the field. As I said to every one of them, I am not going to go away on this issue. I am not going to be quiet or stop until we fix it.”
If it is to be done, Raimondo said, it is best to be done quickly.
“The writing is on the wall; the fundamentals are broken,” she declared.
Reiterating what she has said in speeches across the state, Raimondo told the audience at Kirkbrae Country Club that “fixing this pension is not an issue, it is the issue…It is not a state employee issue, it is not a retiree issue, it is an everybody issue.
“There is no silver bullet,” the treasurer cautioned, “the silver bullet is fixing the fundamentals. You can’t build a great economy, a great state, on a cracked foundation. Today we have a great crack in our foundation. It is our pension debt. The pension is the fastest growing line item in the state budget, it is the fastest growing item in municipal budgets and if we don’t fix it, it will crush us.”
Raimondo, who has been studying the pension problem virtually since she took office in January, is due to release a report on her findings next week, perhaps as soon as Monday. In addition, Raimondo announced this week that she has launched an audit of the disability pension system, saying her office “has uncovered a pattern of irregular documentation in the files of disability pension beneficiaries and is taking action to fully understand the matter. As the fiduciary of the pension system, my job is to protect its integrity. Any issues that may weaken the entire system for hardworking employees must be avoided."
Raimondo hired the Rhode Island firm Sullivan & Company to conduct the audit, seeking documentation of annual medical follow-ups on those receiving disability pensions and of employment earnings that could reduce pension payouts.
“Given this lack of documentation,” Raimondo said in a written statement, “ERSRI (Employee Retirement System of Rhode Island) cannot determine the level of compliance that may be occurring within the disability pension program,” Raimondo continued. “Completion of this audit will provide my office with a clear set of priorities to take action on.”
Raimondo said “the consequences of doing nothing” are that money will have to go toward paying the pension debt rather than funding “higher education, schools, roads, bridges, everything we need to build a great economy and a great state. If we don’t stem the tide of this pension debt it will crowd out all the other services we depend on.”
In 2002, she said, five cents of every state tax dollar went into the pension fund. Currently, 12 cents of every tax dollar goes into pensions. In seven years, Raimondo warned, 20 cents of every tax dollar will go into the pension fund “and it will go up and up from there.”
To see the problem from the state employee’s side, Raimondo gave an example of a first grade teacher in Providence. “She is a great, hard-working public school teacher. She is in her late 30s. She has been paying in almost 10 percent of her pay into the pension. She has had to endure four rounds of pension cuts in the last 20 years and she has to listen to me every day talking about how she may have to have another cut. It’s tough right now for these state employees, they are facing anxiety and uncertainty. She can’t count on the money being there in 30 years. Quite frankly, I can almost guarantee her it won’t be there if we don’t fix it today.
“This is why we have to act,” the treasurer explained. “It’s not fair. We have not been honest. For 10, 20 30 years, the problem has been building and it has been built on bad numbers and politics. This system is not working for anyone.”