Bankruptcy looming without municipal pension reform
'Changing benefits for only select groups will not work.'
When the Rhode Island Retirement Security Act of 2011 (RIRSA) was being debated on the House floor last November, I sat in the gallery with many other Rhode Islanders watching the proceedings. The discussion was spirited, but somber, and as I left the building on that cold and damp evening, I had no desire to celebrate the passage of this important legislation, only to reflect upon what Rhode Island’s future could now hold.
With the passage of RIRSA that night, Rhode Island’s unfunded liability for the state-administered pension system was slashed by $3 billion and went from being 48 percent funded to more than 60 percent funded – a tremendous improvement by any standard. RIRSA represented a shared responsibility between taxpayers, employees and retirees and is now being viewed as a national model for addressing pension crises across the country. And, for the first time in recent memory, Rhode Island is being hailed as a leader and has been featured in numerous national media pieces.
But there is still much to do – and much at stake – as we all look ahead to a day when Rhode Island has a strong education system, stable property taxes, sound infrastructure, plentiful jobs and the ability to support those among us who need an extra hand.
EngageRI is committed to support RIRSA as enacted. We believe that the courageous legislators who voted “yes” did so with a thorough understanding of the dire circumstances that we faced without reform. They understood that this was an issue that affected all of us as they heard from Rhode Islanders across every age and income level who pressed for reform to preserve funding for schools, social services and infrastructure. They heard from struggling small-business owners who can’t afford to pay more taxes and won’t survive another year in a terrible business climate.
They heard from young teachers who worried that without reform, they would have no retirement security. These legislators went out on a limb and voted “yes” and we must not let their hard work be rolled back.
As many of our cities and towns face municipal finance crises, it’s clear that the non-MERS pension plans need to be addressed, or more cities and towns could face a painful bankruptcy like Central Falls. EngageRI supports the efforts of cities and towns to implement comprehensive pension reform. We encourage the cities and towns to take the same approach to pension reform as the state did when implementing RIRSA by doing the “number-crunching” and the legal work to design a plan for comprehensive and sustainable reform. It is clear that suspending cost-of-living increases is essential to ensuring the long-term viability of pension funds, but it is only one step and may not be appropriate for every municipality.