State Government
Report proposes $90 million in pension savings
01:00 AM EDT on Thursday, June 11, 2009
PROVIDENCE — After more than a year of study, a panel appointed by House Speaker William J. Murphy has posted online the results of a study pointing the way to a potential $90 million in taxpayer savings on the cost of providing public employee pensions.
Citing the findings of the state’s actuarial consultants at Gabriel Roeder Smith & Co., the 232-page report, mostly minutes of the panel’s meetings, outlines $33.1 million in state savings on state employee pensions, and $57.9 million in state and local savings on the cost of teacher pensions.
In addition, the report says, “the unfunded actuarial accrued liability is reduced by $796.5 million.”
The savings are hinged, however, on a number of controversial proposals that have not yet won the endorsement of House and Senate leaders and budget writers, including a proposed requirement that future retirees reach 65 before they start collecting a pension.
At its last meeting, on March 12, the special House study-commission also recommended curbs on the 3 percent, compounded annual cost-of-living increases for retirees; using a five-year salary average — instead of the current three-year average — to calculate an employee’s pension benefit, and a “hybrid” pension system for newly hired teachers and state employees that couples a much-reduced defined-benefit plan with a government-style 401(k) plan.
The panel also recommended reducing the disability benefit available to workers who are not “permanently and totally disabled” from the current two-thirds of pay to half.
Those already eligible for retirement would be exempt from most if not all of the new rules.
The final report also reflects a proposal about which there was little discussion: the resurrection of a “standing committee” to deal exclusively with pension issues in the legislature.
The dismantling of the General Assembly’s Joint Committee on Retirement was considered one of the major reforms that helped end the costly era of special pension deals.
That was the committee where, in the waning hours of a legislative session, lawmakers met to cut deals. In late March 1993, the House voted unanimously in favor of a bill sponsored by current House Majority Whip Peter Kilmartin, D-Pawtucket, to abolish the committee.
The move to resurrect a legislative pension committee was made by Rep. Timothy Williamson, the West Warwick Democrat who chaired the study panel. The vote was 14-1, with George Nee, secretary-treasurer of the state AFL-CIO, voting against.
Rhode Island public employees — and their union leaders — packed a State House hearing room Friday in an effort to head off any changes in their anticipated pension benefits for which state employees contribute 8.75 percent of their pay; teachers 9.5 percent. To sustain those benefits, taxpayers have to pay more than double.
The study commission’s pension-cutting package would cut the required taxpayer contribution from a projected 25.03 percent to 19.43 percent for state employee pensions and from 23.88 percent to 18.25 percent for teacher pensions.
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