Another exodus looming?

John Golden could hear the sense of frustration in the school principal’s voice last week when she concluded that her career might soon be over after 30 or so years on the job.
The administrator had called Golden, executive director of the Rhode Island Association of School Principals, to lament her predicament.
“She’s in the middle of something important at her school and she wants to stay there,” said Golden. “But she’s facing the likelihood that she will have to retire.”
It’s a story Golden has heard over and over since Gov. Donald L. Carcieri unveiled his plan Jan. 7 to close this budget year’s estimated $360 million deficit – a supplemental package that, among other things, contains proposals for changes to the state pension system that could touch off another mass exodus of public employees.
Carcieri has recommended doing away with the 3-percent annual cost-of-living adjustment that participants are guaranteed after retiring, and he wants to set a minimum retirement age of 59. Currently, state employees and public school teachers need only to work at least 28 years, or after reaching 60, can retire with as little as 10 years on the job.
The Carcieri administration says those changes and a proposed reduction of state and local contributions to the pension fund in the last five months of the fiscal year will save $96.1 million this year and more in future years.
Critics of the plan insist it will force hundreds of state employees – in many cases, the most experienced of them – to retire in large numbers before the changes take effect. The predicted exodus would come just months after another large group of state workers had to make a similar decision when retiree health benefits were altered last year.
“Many offices right now are consistently short-staffed throughout the state,” said James Cenerini, spokesman for Council 94, American Federation of State, County & Municipal Employees (AFSCME), which represents about 4,500 state employees. “It’s creating a system that is under a large amount of stress.”
This time is different in that the proposed pension changes would also affect most of the state’s 13,000 public-school educators who are covered by the same system.
And that has raised concerns that such pension changes would decimate the ranks of principals and administrators, who typically have the most years in the system and who are more difficult to replace quickly.
No one is sure how many people would enter retirement if the changes were to be approved by the R.I. General Assembly. But state officials say that about 1,600 state employees and another 1,000 teachers are already eligible for retirement, making it more likely they would leave their jobs rather than lose the guaranteed annual pension hikes.
“I think it could have a devastating impact,” said Tim Duffy, executive director of the Rhode Island Association of School Committees.
The House Finance Committee was slated to hold a hearing on the proposed pension changes – Article 32 in the governor’s supplemental budget package – on Jan. 15.
Earlier last week, Carcieri spoke briefly about his supplemental budget package and the pension situation at a R.I. Economy Policy Council meeting, noting that the state still has an “enormous” unfunded pension liability estimated to be about $7 billion.
“These are not new problems, but they need to be dealt with,” the governor told the council of mostly business leaders and executives at its Jan. 14 meeting. “These are tough decisions. … The reality is, you have two choices: either raise broad-based taxes or work our way through it.”
Pensions have been a major focus of the budget cutting because of the sheer amount of general revenue in the state’s spending plan that is dedicated annually to funding the system.
General Treasurer Frank T. Caprio – who also acts as chairman of the Employees’ Retirement System of Rhode Island – last week said that the state contributes about $350 million per year, as part of a plan to fully fund the pension system in about 20 years.
Caprio said Carcieri’s plan is on the right track by reducing the liability, but he added that it might have to be reworked to minimize disruptions that the loss of so many workers at once could cause.
With 13,300 full-time-equivalent (FTE) employees, the Carcieri administration says the state’s payroll is at its smallest since officials started keeping track of FTE counts in the early 1990s.
Carcieri spokeswoman Amy Kempe said the supplemental-budget proposal does not assume any saving from further job reductions.
The portion of Carcieri’s pension reforms that drew the most criticism was his initial recommendation that they take effect April 1, more than two months before the end of the school year.
School and labor officials statewide feared that such a date would force many teachers and administrators to leave their posts before the end of the school year, disrupting classes for countless public school students.
“This was done, at best, thoughtlessly and unintelligently,” said Marcia Reback, president of the Rhode Island Teachers and Health Professionals, which represents about 6,000 teachers. “There was no view to what the consequences will be.”
By last week, the Carcieri administration had backed off that portion of the pension proposal, with spokeswoman Amy Kempe saying the governor would be flexible on the date for the proposed changes to take effect.
Still some insist that, no matter the start date, Carcieri’s recommendations would exacerbate teacher shortages in subject areas such as math, physics and chemistry that have traditionally been difficult no matter the circumstances.
New college grads with science degrees “are choosing to go into engineering, and pharmaceuticals and research instead of making $40,000 a year teaching,” Reback said.
And if pension changes are approved as Carcieri has recommended, Golden said he foresees many principals retiring, and then crossing the state border to take jobs in Massachusetts, a move that will allow them to collect a pension while still working in education.
“You start losing the most senior people, and they’re irreplaceable at this time of year,” he said. “Even over the summer, it will be a challenge to replace them.”
Rep. Timothy A. Williamson, D-West Warwick, chairman of a House commission charged with studying the state’s retirement system, said his group might have a “difference of opinion” with the governor, particularly on eliminating the cost-of-living adjustments and the retirement age.
Williamson said that the commission, which has been working on the issue for a year, is on track to make its own set of pension recommendations to the full House in mid-February.
Among the possible recommendations, Williamson said: Changing the guaranteed, compounding 3 percent cost-of-living adjustment to non-compounding annual increases in amounts that would depend on the amount of money available in the state budget. “It’s the only fair way to do it,” he said.
But Cenerini, from Council 94, said many of his members are still “shell-shocked” by the supplemental-budget package.
“There have been lots of calls, and also lots of anger,” he said. “This is going to be the third time [since 2005] they’ve gone to this well of reducing pension benefits – or attacking them.” •