Published in RINewsToday on May 22, 2023
To this day, talk to any state worker or teacher who retired and they are not happy campers. To the contrary, they remain bitter as to how former Governor Gina Raimondo sold them out with her version of pension cuts in 2011 when state retirees, retired teachers, and many municipal retirees had their annual pension Cost of Living Adjustments (COLAs) suspended, and public workers had to trade in part of their defined-benefit pension plan for a 401 (k) style benefit, putting their retirement at risk.
Four days ago, just like abortion and gun control legislation, pension change filled Room 35 to capacity with retired teachers and state workers calling for the Rhode Island General Assembly to bring back Cost of Living Adjustments (COLAs) to the retirees’ pensions. The Clifford Group, Citizens for Pension Justice, and the Facebook Group, Advocates for COLA Restoration, successfully mobilized their retiree members to come to the House Finance Committee (HFC) held on May 18, 2023.
Putting the spotlight on three pension proposals
Currently there are at least 11 bills in the legislative hopper retgarding COLAs for state workers and teachers and the HFC heard testimony on many of these bills. These bills were held for further study in Committee. According to RI General Law Title 36-20-39 any proposed bills impacting the retirement system shall not be approved by the General Assembly unless a “pension impact note” is appended to the proposed legislation. At press time this has not occurred.
Here are three of the pension bill fixes considered at last Thursday’s HFC:
Kicking off the over three-hour long hearing Rep. David A. Bennett (D-District 20, Warwick) called for HFC’s 15 members to pass H 5038, a bill that would restore the COLA to state employees and other RI pension system members who retired prior to July 1, 2012.
Looking back when he was a freshman lawmaker in 2011, Bennett remembers voting to eliminate the retirees’ COLA because the administration told him that keeping the COLA would bankrupt the state and nullify all contracts. “This is the only bill I have strong regrets voting for and it affected a lot of people, some of them already deceased,” he said.
“It’s a shame and I wish I would never have voted yes to taking away the retirees’ COLA” says Bennett. With the cost of living continuing to increase, people need a COLA,” admits Bennett, noting that they had a contract ensuring a COLA when they retired. “When you retire your pension should be protected,” he says.
Like Bennett, Rep. Patricia A. Serpa (D-District 27, Coventry, Warwick and West Warwick) expressed concerns about her vote to eliminate the retirees’ COLA over 12 years ago. Serpa told the HFC that “valuable actuarial information was withheld” and that she was “misled back in 2011” about the financial condition of the state’s pension system.
Serpa acknowledged that many of her former colleagues are suffering because of her “terrible” vote. ”In all of my time it was the worse vote I ever, ever took. I will never ever, ever, ever again take a vote like that against retired teachers or retired state employees,” she pledged.
“I have spoken to a number of people since that vote. People I respect. People with degrees in accounting and they have clearly indicated that the pension fund could easily have been amortized and left almost whole,” says Serpa.
Serpa is the sponsor of H 6295 which provides a one-time stipend of 3 percent of retirees’ first
H 6295 would at least provide temporary relief to the retirees,” says Serpa, admitting that she is “not married to her bill” and has signed onto every pension bill that has come before her. “I have been here long enough to know that if you have only one idea in the hopper you have no cards to play with”, she says. “We must put the ideas out there to start a conversation. and we have to take action soon,” notes Serpa.
State Treasurer James Diossa requested Rep. William O’Brien (D-District 54, North Providence) to introduce bill H 6006 that would provide a one-time allowance of $500 for eligible members of the employees retirement system of Rhode Island.
“H 6006 provides meaningful relief to those struggling to buy gas or groceries,” says Diossa, noting that over 30,000 retired teachers, state and municipal employees would benefit from passage. “This bill would not impact the pension system like other COLA restoration and stipend proposals would,” he said, stressing it would provide relief while maintaining the stability of the pension funds. Diossa acknowledged that many might be frustrated knowing that it’s a stipend only and not a COLA.
To watch the May 18, 2023 hearing of the House Finance Committee, go to https://ritv.devosvideo.com/show?video=f66975520d59&apg=52ab780b.
Retirees weigh in
According to W. David Shallcross, a former Cranston teacher and retired Lincoln school principal, many Rhode Island state workers and teachers do not receive Social Security coverage. The state pension system was established in 1936 as an alternate Social Security plan. The state required by Rhode Island law that every teacher and state worker must participate and that the employer, the state, like all employers, must contribute.
Shallcross stressed that to teachers and state workers “this is not free money, it is money they ‘banked by RI law’ to sustain them when they retire. They contributed a significant portion of their wage as long as they were employed.
“Today’s dollar is only worth 68 cents compared to the 2012 dollar. Yearly, Social Security adjusts benefits based on the cost of living in the preceding year. Rhode Island has done nothing in this regard for retirees in the last 10 years. Yet our legislators continue to enjoy the COLA first awarded them in 1995,” he charged.
Retired State Employee Santa Priviter strongly supported the passage of H 5038, opposing any retirement bills [considered by the HFC] which offer a one-time stipend and/or distribution schedules for pension benefits. “Those other bills would still maintain the RI Retirement Security Act formula which effectively eliminates retirees’ inflation protection,” she says.
“A one-time taxable stipend worth about $1.00 per day for one year – or 25 cents per day for 4 years – is not a COLA because it doesn’t offer continuing, real relief against inflation. H 5038 does,” notes Priviter.
“Our newly elected treasurer has offered a $500 onetime stipend. How utterly insulting. What can $500 buy?” asks Lorraine Savard, a teacher who retired in 2004. “The millions in this years’ financial state surplus can be used to give teachers and state workers a much needed financial boost. If not the return of our COLAs, then other creative compensations, for example a reduction in state income tax on state pensioners,” she urges.
“As you know, since 2012 the value of our pension benefits has decreased by 30%”, said Brian Kennedy, a former state worker employed for over 30 years at Rhode Island’s Division of Personnel at the Office of Human Resources. “In the same time period, the State Budget has increased from $7.7 billion to $13.7 billion,” he says.
Kennedy acknowledged that it is highly unrealistic to consider being reimbursed all the COLA monies owed, as some other bills provide, but he urged the HFC to consider adjusting the 2012 base for computation of the go-forward COLAs. That base should be increased by the inflation rate from 2012 to the current time in order to reflect 2023 dollars.
According to Kennedy, in dollar amounts, the average individual “increase” over the last ten years is roughly $10/month. “Our pensions reflect 2012 benefits paid with 2023 dollars, a windfall for the state, but an insult to the retirees,” he says.
“Is there anything more sinister than mandating a “reform” program with a twenty year finish line to elderly retirees with a twenty year mortality rate? Coincidence?” he quips.
Patricia E. Giammarco, from Citizens for Pension Justice, agrees with Kennedy’s assessment that it is now or never. “It’s abundantly clear that the state will be spending less and less on COLAs until it reaches the illusory 80% funding, when most pre-2012 retirees will be dead. To ask us to continue to subsist on virtually nothing, only to receive that virtually nothing once a year or once every four years, is not only highly suspect, I feel it is downright treacherous,” she says.
Giammarco ends her testimony by stating: “You can disguise a pig and bring it to market trying to sell it as a cow, but in the end, it’s still a pig. I would ask this body to absolutely reject the offerings of any false prophets and to do the only thing that is ethically, morally, and legally acceptable when viewed in the totality of the circumstances. Support H 5038 and return to the retirees who retired prior to July 1, 2012, that which should never have been taken away – their contractually guaranteed 3% compounded COLAS.”
Susan Sweet, a former state associate director of the Department of Elderly Affairs and an advocate for seniors facing hardships and low-income difficulties, remembers being part of the original group opposing the pension cuts and the broken retiree contract and being told by the state arbiters that the pension cuts were entirely political, not financial. Members of the General Assembly were deceived regarding the need and impact of the cuts. No other state has taken benefits away from already retired workers who have fulfilled their side of the contract. Two tried but were struck down by their courts.
“A Rhode Island Superior Court ruling states that a COLA and a pension are “one and the same” and ‘not gratuities’, Sweet quotes, “and the General Assembly was advised otherwise even though the state’s actuary advised against this. How long will this injustice continue? House bill H 5038 and the companion bill in the Senate which is identical, S 0564, are the most reasonable and responsible pieces of legislation being considered. I urge all Representatives and Senators to pass this legislation before it is too late to benefit the retirees who were dealt this terrible blow to their later years.”
The clock is ticking… with the state’s now-estimated surplus of $500 million plus and millions received from the Wells Fargo settlement, it’s time to act now. The General Assembly must not continue to kick the can down the road until the can is destroyed and the retirees are all dead.