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The drama surrounding Rhode Islandâs public employee pension mess reached a crescendo on October 18th with the unveiling of Governor Chafee and General Treasurer Raimondoâs proposed, final, one-time, 124-page solution. Apparently the governorâs contribution was a last minute inclusion of the 37 pension plans run by municipalities, 22 of which are seriously unfunded and on the brink of collapse.
Appearing on last Sunday morningâs Channel 10âs âNews Conferenceâ Council 94âs president J. Michael Downey and AFL/CIO honcho George Nee said the unions are prepared to fight in court any legislation to change âthe conditions we were hired underâ. Their solution is to have 12 percent deducted from public employeesâ paychecks rather than the current 8.75 percent and keep their very lucrative pension benefits as is.
General Treasurer Raimondo, who is leading the fight to reform the pension system, says the deduction would have to be 20 percent to make the MERS as fiscally sound as her reform proposal. How many of the rank-and-file union members would vote for that?
The attempt at including the multiple locally-managed retirement plans included in the reform legislation didnât make it out of the joint finance committee much to the consternation of mayors of financially strapped municipalities like Providence, Cranston, West Warwick and Woonsocket.
Instead, a requirement was inserted that the elected legislative body of any municipality with a critically underfunded pension plan would present a âreasonable alternative-improvement plan.â Cranstonâs Republican mayor, Alan Fung, for one is upset that the full-time chief elected official would not be involved in any proposal.
My bet is that Governor Chafee had the local pension plan language inserted in the plan at the behest of the unions to add another element of legal uncertainty since the pensions run by municipalities are the result of union contract negotiations which is different that the state-run plans that were enacted into law by the legislature.
A Rhode Island judge has already ruled that retirees are no longer members of a union and therefore cannot be represented by it. My guess is that wonât stop the unions from funding some sort of âretireeâs associationâ in order to file a suit and then become a co-plaintiff or enter a âfriend of the courtâ brief in the case.
One provision of the Raimondo-Chafee reform proposal that didnât make it out of committee involves the oft-abused disability pensions. There are two types of disability pension: one for work-related injuries and another for off-the-job injuries that prevent the public employee from doing his or her job. The discarded reform would have taxed the pensions paid to these retirees once they reached their normal retirement age and reduced the pensions of those not totally and permanently disabled to 50%.
A much-publicized example involves personal injury lawyer Rob Levine who advertises regularly as âThe Heavy Hitterâ. Levine is a former Central Falls policeman who went out on disability after a short stint on the job. Long enough, however, that he got through Roger Williams Law School on the taxpayerâs dime.
Attorney Levine now lives in a million dollar-plus home in East Greenwich and has drawn the attention of Central Fallsâ receiver, former Judge Robert Flanders. I submit a not-unreasonable reform would be to offset the earnings of disabled retirees against his or her pension.
Then we have the report that aired in April of former Providence fireman John Sauro who went out on accidental disability in 2005 after nine years with the department. Channel 12 taped Sauro, who collects $3,789 a month, doing strenuous weight-lifting exercises at a gym. The pension review board couldnât get his doctor to say that his patient was able to perform the duties of a firefighter. Apparently Sauro has a shoulder injury of some sort which doesnât preclude him from a weight-lifting routine.
There were only three votes cast against the measure that emerged from the joint committee. Rep. John Carnavale, 50, who presently collects $45,649 a year as an accidentally-disabled Providence policeman; Rep. William San Bento who has two sons on the state payroll; and Sen. Frank Ciccone who enjoys a current state pension of $64,054 per year while serving as a field rep for the Rhode Island Laborers District Council.
If meaningful pension reform is not enacted quickly, North Kingstownâs contribution to MERS will increase from 11.45% of payroll in the fiscal year ended 6/30/2010 to 23.6% next year. The town is in relatively good shape with the 448 active and 215 retired municipal employees, firefighters and police pensions funded at 67%. This is still $16.2 million below the target 80% benchmark for a fiscally strong pension plan.
To its credit, Exeter already has a 401(k)-type âdefined contributionâ pension plan in place for its employees.
At its annual meeting a week ago Operation Clean Government, of which I am now a director, had Treasurer Raimondo as its keynote speaker. She said as a freshman elected official she was surprised at the constant lobbying on Smith Hill by the labor unions.
Mrs. Raimondo urged us to contact our state reps and senators to express support for the reforms she is proposing.
Itâs pretty clear that Republican representatives Larry Ehrhardt and Doreen Costa and Senator Dawson Hodgson who represent North Kingstown and Exeter are in favor of pension reform. Rep. Earhardt was out of state and did not vote on the reform bill in joint committee. He did, however, have a letter read into the record that he supported the measure.
Several thousand union supporters, some of whom arrived in buses with out-of-state license plates, demonstrated at the State House just before the joint committee vote. The stateâs daily newspaper reported that legislators mostly stayed away. Not so with Warwick teacher and state senator John Sheehan who attended the rally. Sen. Sheehan represents the southern part of North Kingstown and Narragansett.
Do you think any number of telephone calls, letters and emails would convince Sen. Sheehan to vote against a bill in which he has a direct interest or at least recuse himself due to a conflict of interest?
I have heard many municipal employees and teachers say that they have contributed to their pensions. Since 1960, their payroll deduction has increased by 75%. Taxpayers, however, have had their contribution to these pensions increase by nearly 500% from 5% in 1960 to 21.13%. And, if nothing is done, taxpayers will have to pony up 35% in the fiscal year that starts on July 1, 2012.
As you hear the arguments against reforming the public employee pension system, keep in mind that surveys show the average state workerâs pay is higher than an employee in the private sector doing similar work. And, according to the Congressional Research Service, retired civil servants get more than twice the retirement pay of private sector employees.
Richard August is a North Kingstown resident and a regular contributor to the Standard Times. His opinions are his own. He can be reached at email@example.com.