A fourteen-member panel created by last year's pension reform legislation held its first meeting yesterday at the Rhode Island State House to discuss failing municipal pension systems. After months of debate about the state pension system last year, the first meeting of the panel — which comprises municipal executives, union leaders and other political appointees — represents the beginning of a new chapter as the state shifts its focus to unfunded liabilities facing the pension systems of Rhode Island cities and towns.
Larry Berman, communications director for House Speaker Gordon Fox, D-Providence, said the panel is tasked with conducting research and compiling actuarial data on the local pension plans from each city and town for analysis. This data, along with the panel's deliberations, will constitute the basis for its recommendations to the General Assembly in April.
The panel appointments coincided with a series of meetings Gov. Lincoln Chafee '75 P'14 convened with municipal executives, union leaders and business leaders to discuss remedies for underfunded municipal pension plans.
"In order to solve the municipal issues that are facing cities and towns, all the parties should come together to better solve this problem," said Christine Hunsinger, Chafee's press secretary.
Many critics are eager to point out that unfunded municipal pension plans are a local problem.
Paul Valletta, president of the Cranston firefighters union, attended a meeting earlier this month. He represents firefighters enrolled in one of the most dangerously unfunded pension systems in the state.
"It wasn't our fault — we didn't cause this thing, but we also don't think that the sins of past elected officials should be borne by the taxpayers or the firefighters," Valletta said. He added that the firefighters were interested in sitting down with municipal officials to address the problem on a local level.
"Let the mayors do the job they were elected to do," Valletta said, adding that he thinks Cranston Mayor Allan Fung, and not Chafee, should negotiate with firefighters.
But Hunsinger said the fact that the situation is "at a crisis level" means municipal pensions are indeed a statewide problem.
Valletta said a suspension of cost-of-living adjustments, pension payments indexed to inflation, will result in the "biggest savings to any pension system" and that the unions are ready to negotiate in Cranston.
Providence Mayor Angel Taveras also suggested the suspension of cost-of-living adjustments as a possible solution.
"Right now, we have a pension system that is unsustainable," Taveras said. "It's not something we can afford."
Union leaders like Valletta want to bring their current retirees into negotiations.
"We made this offer to our mayor a year ago, but we've never gotten a call to sit down," Valletta said. "If the union is willing to sit down with you, and you could solve this problem that has been going on for years, you would be a hero. Why wouldn't you want to do it?"
Philip Keefe, president of the local Service Employees' International Union, also attended Chafee's meeting with union leaders. He said the Chafee administration's involvement in the issue is problematic due to its approach.
"I think they're trying to mix apples and oranges," he said. "There are some cities and towns that are very well-funded, that really don't need to be tinkered with."
Rhode Island's 36 different municipal pension plans have a total unfunded pension liability of more than $2 billion, though the liabilities are unequally distributed. Cranston's pension system, for example, has one of the largest unfunded liabilities, valued at more than $240 million.
Hunsinger said the approximately $192 million worth of cuts to municipalities from the state government over the past three years has only exacerbated the pension problem and that this administration is interested in working with cities and towns to address the issue.
In the third session members of the Chafee administration met with business leaders like Tammy Collins, owner of Paragon Small Business Solutions. The governor emphasized the importance of strong business support for a financially solvent state.
"Rhode Island has been historically considered not small-business-friendly," she said. "They seem to want to make changes to regulations and legislation to make the state appealing to small business owners."
Collins said the meeting was an effective forum to express concerns with current regulations and legislation. "I don't know if they'll change anything, but at least they are hearing us out."
