PROVIDENCE -- Unions representing state employees are objecting to
proposed changes in the state's pension system and are presenting their
own plan, which they say is fair to taxpayers and workers affected by
the cuts.
The proposal put forward at a press conference today by Working Rhode
Island would restore some of the benefits that state employees would
lose under a proposal endorsed this week by the House Finance Committee.
The unions' proposal, billed as "The Fair Pension Amendment," would also
reduce pension contributions from workers affected by the cuts.
"We're asking the governor. We're asking the General Assembly to embrace
these proposals as a fair compromise," Bob Walsh, secretary-treasurer of
Working Rhode Island, said at a press conference today at the State
House.
Working Rhode Island's membership includes unions and organizations
representing more than 100,000 Rhode Island workers. Walsh is also
executive director of the National Education Association of Rhode Island.
Walsh estimated that the unions' proposal would save $25 million to $30
million next year, while state lawmakers estimated their proposal would
save the state and local communities about $44 million.
The pension reform package unveiled as part of a $6.3 billion budget
Tuesday night would cut benefits to some 4,350 state workers and 7,000
teachers. The changes would affect only those workers who haven't served
the 10 years required for vesting. It would not affect state troopers,
judges or correctional officers and employees at quasi-public agencies.
Governor Carcieri has pushed for pension reform, and he has said he's
pleased with the lawmakers' budget proposal.
Changes proposed by the lawmakers' include the institution of a minimum
retirement age of 59.
The lawmakers' plan would also reduce the maximum benefit available to
retirees and make them work longer to get it. For example, workers can
now receive 80 percent of their salary after serving 35 years. Under the
lawmakers' proposal, workers would have to serve 38 years to receive a
maximum benefit of 75 percent of their salary.
Cost-of-living increases would also be tied to the Consumer Price Index
and capped at 3 percent under the proposal.
Walsh said the unions understood the need for change in the pension
system and were willing to discuss the issue with lawmakers, but "these
proposals went far beyond anything we thought was fair."
For example, he complained that non-vested employees would see their
benefits reduced without a reduction in their contributions to the
system. He said teachers currently contribute 9.5 percent of their
salary to their pension, while other employees contribute 8.75 percent.
Under the unions' proposal discussed today, those contributions would
drop to 8.5 percent and 7.75 percent, respectively, starting in July
2006, then drop further as the pension fund becomes healthier.
Walsh said the problems in the pension system were not created by the
employees who would be affected by the lawmakers' proposed cuts.
"The folks these changes are being done to are not part of the problem,"
he said. "The new new folks and the non-vested folks should not be
paying for this problem."
Walsh blamed the system's unfunded liability in part on government
decisions, such as early retirements in the late 1980s and underfunding
during the state's banking crisis zzz. He said poor investment decisions
had also hurt the system. He also acknowledged that longer life
expectancies were playing a role.
The union also takes issue with the lawmakers' proposal to cut the
maximum benefit from 80 to 75 percent. Under the unions' plan, the
service time required for the maximum benefit would increase to 38
years, as the lawmakers have proposed, but workers serving that long
would receive 80 percent of their salary in retirement.
The union proposal would also make some other adjustments to the minimum
age and service requirements for retirement.
The unions also reject the idea of tying the cost-of-living adjustment
to the consumer price index, with a 3 percent cap.
Walsh said he and other union representatives planned to meet with
lawmakers in an effort to convince them to adopt their recommendations.
He said, "I'm very optimistic the legislature will look at these again."
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