RIPEC: State pension system not sustainable

PROVIDENCE – The Rhode Island Public Expenditure Council said the state cannot afford its pension system without moving to ensure the funds’ sustainability.
The business-backed fiscal watchdog issued a report that found that personnel expenditures in Gov. Donald L. Carcieri’s proposed fiscal 2011 budget have increased 43.2 percent, to $1.7 billion, since 2001.
Employee benefits, which include health care and pensions, are the most significant driver of those costs, the council said. Retirement costs in particular are taking up a greater percentage of the state’s expenditure, accounting for 8.1 percent of personnel costs in Carcieri’s proposed budget, compared with 5.2 percent in fiscal 2001.
Since fiscal 2001, expenditures on retirement have increased 125 percent to $136.3 million in Carcieri’s proposed 2011 budget.
Facing skyrocketing personnel costs, Rhode Island should look to change its benefit structure, increase employee contributions and revaluate actuarial assumptions, the report said. RIPEC also recommended keeping up with pension-funding requirements. At 61 percent, Rhode Island was one of eight states that had more than one-third of its pension liability unfunded in 2008, the report said. •