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The last hurrah for RI retired pensioners – Herb Weiss
By Herb Weiss, contributing writer on aging issues
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 $30,000 for all teacher and state retirement members, including many municipal systems retirees. This stipend, coming from the state’s General Fund, may be renewed annually by the General Assembly based on the state’s fiscal status.
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 from 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.
Herb Weiss, LRI -12, is a Pawtucket-based writer who has covered aging, health care and medical issues for over 43 years. To purchase his books, Taking Charge: Collected Stories on Aging Boldly and a sequel, compiling weekly published articles, go to herbweiss.com.
Look it up for yourself. I kid you not. It’s right there in black and white.
SECTION 12 of the Rhode Island Constitution.
Our forefathers made it about as simple to read as possible.
Attorneys, Judges, Treasurers and Governors, Citizens, anyone who can read.
There is no doubt about what our Constitution means. The State or individuals cannot legislate their way out of existing contracts as in ‘I know we have a binding contract but we passed a law to cancel it’. If only we could do that with our mortgages, car debt, or any other contract we signed. Just pass a law to kill the contract, dead and buried.
This is what the RI CONSTITUTION STATES:
“NO EX POST FACTO LAW. OR LAW IMPAIRING THE OBLIGATION OF CONTRACTS, SHALL BE PASSED.”
Our legislators and judges completely ignored the constitution they pledged to uphold.
What does that say about our State and our elected leaders? Yes! There are a few legislators who want to do the right thing but definitely not a majority. It’s time to dump those who think they are above the law.
This pension debacle will never be settled to rectify the COLA issue. The reason being is that the people who foisted this draconian, punitive and ridiculous plan upon us teachers now have to admit that they did it without thinking and checking facts and trusted a power hungry politico. Now, the legislators have to face the facts that their leader is in Washington riding around in a gold plated limousine and many of the legislators here are still riding around in their 2011 Hondas. They will never admit that they were taken advantage of by Gina Raimondo.
We retirees have to take the problem and fix it, either via a court fight or at the polls. Those are the only two ways to rectify this problem. Remember, dear people we are in this fight all alone, and no person in the political realm cares about us!
I am pre 2012 retirement with 28 years in the system. I made the decision to retire after careful consultation with retirement counselors who factored in the promised COLA. During my working years I paid into the system to invest in retirement. My money was stolen from me. Looking back, knowing we were lied to by our state leaders is unconscionable! It’s always been a joke about how corrupt Rhode Island politicians are. I hear about it wherever we travel. I think it’s time for our leadership to do what is right and just . Reverse the wrong and move forward in good conscious. Support bill H5038. A stipend of $500.00 is nothing short of ridiculous in this economy.
My sincere thanks to the many Reps, and Senators who stood up in support of this bill. I’ll be there to support you in November.
Save this link for your personal use.
https://www.usinflationcalculator.com/
I am a retired teacher. I devoted more than 30 years to educating thousands of students.
I got paid but never excessively. And I’m not complaining, I chose my profession with few regrets. As the song goes, I did it my way. Every paycheck I earned as a Rhode Island educator had a 9.5% deduction, before taxes, taken from it and for deposit in the ERSRI Pension Fund. Well, not quite. A one point it was only 7.5%, similar to Social Security, except it wasn’t Social Security and it wasn’t backed by our Uncle Sam. Most teachers do not get Social Security; some do because their district chose to participate. At one point, quite some time ago, it changed to 9.5% when the State increased our pension deduction to boost up pension revenues. Sounds like a good thing, except all it really did was change the number of years to get a full pension allotment from 38 years to 35 years. For 2% more over many years, some teachers got their full pension 3 years earlier. Actually, it didn’t do much to help retiring teachers nearly as much as it helped the State and local school district by reducing their costs. Retiring teachers were replaced by younger teachers at a lower pay scale. That meant the employer contribution to the pension fund was lower and the 2% increase to all those still working more than covered it. And then 2011 came around and Gina Raimondo panicked the Legislature by telling it the Pension System was in dire straits and about to go bankrupt soon. She blamed the ‘unfunded liability’ which is like blaming you for not having enough money in the bank to pay off your mortgage now, on the spot, immediately. At the time the pension fund had BILLIONS in assets. And every paycheck millions were deposited by those who were still working and retirees got their pensions as promised and the pension included a COLA. Let’s talk about that COLA (Cost Of Living Adjustment) that every retiree gets in his or her Social Security check each month. This year is is 8.7% higher than last year. Clearly, we all know, inflation is has been high for the last three years. Businesses are trying to recoup what was lost during the Covid years like everyone else. Since the time I first taught, inflation has increased 878.6%. A $1.00 item then would cost $9.79 today. That’s the whole point of having a COLA, to help people to stay protected when inflation increases costs. Working people usually get raises, maybe not enough, but raises just the same. Retirees don’t unless their pension includes a COLA. In 2011 the Legislature blocked the state worker and teacher COLA. It is projected to last until 2031. That’s 20 years of no adjustments to the pension. Using that formula above, there is absolutely no way of knowing just how devastating that will be, but insurance estimates suggest that 90% of current retirees will be dead by then, and that’s just 8 years from now. By now you’ve seen the contradiction to the Raimondo plan, what she calls ‘HER LEGACY’. Not only did ask the legislature to suspend the COLA, she increased the age for workers to qualify for a pension and she lowered the base on which the pension is calculated. As it stands right now, that base for current state workers and teachers has been lowered to $25,000/$35,000 plus what her hybrid plan generates from investment income minus 5.5%. So far, after 13 years of investing, the hybrid plan has been a complete bust. The only people making money are her Wall Street backers. The Pension Fund’s take is less than what it might get just from the interest if it were deposited in your local bank or credit union. But there is good news. Recently some of the legislators are realizing that state workers and teachers were exploited to the max and the Raimondo Plan is a complete and dismal failure. Currently there is legislation in both the House and Senate of RI that can turn this mess around. It will take some time but the longer it takes, the more expensive it will be. Needless to say, there are always the few who keep shouting, ‘stay the course’ as awful heads to dreadful and worse.
Thank you for a great article. I was brought up with the values that contracts like your word were never to be broken. You were honor bound to keep them. That once you promise something you carry through with that promise no matter what the consequences. So when the State of RI decided not to keep it’s promise and broke it’s contract!!!!! It was very hard to believe that it was allowed to happen. But here we are over 10 years later living with the totally unfair devastating ramifications of that. Yes, teachers and state workers are angry. They are trying to make ends meet in these times of very high inflation with no cost of living raise. I think many people think we also get social security. Many school systems did not allow us to pay into social security. The ones that did don’t benefit either because of the Social Security Windfall Act that doesn’t allow teachers to get social security or get their spouses if they die. So we get no help in that direction. I guess all of us that taught values to children all these years are now discovering that the world doesn’t live by those rules. So hopefully after reading this article more people will realize that we need to fix the devastating wrong that was done in 2011 taking away our cost of living.
Eleven years is too long for elderly retirees to go without a significant cost of living increase. Eleven years, with 30% inflation since 2012, and no real relief in sight. This has gone on long enough. We’ve made the sacrifice. The COLA freeze has got to stop now. We need the full return of our guaranteed 3% annual compounded cola, and we don’t have time to “stay the course” for another decade. It’s time for the Governor and the General Assembly to take a stand and fix something that never should have happened in the first place. The financial security of elderly people is at stake.
This was an illegal act by a power hungry Treasurer .We were pawns in her quest to climb the political ladder. Her eyes were on Washington all along .She did not care about the pension she cared about herself and her friends on WALL STREET who financed her . She made them millions .
It was illegal to break our contract in the first place…we retirees have already lost a LOT of money since the 2011 “reforms”…how dare Diossa think that a measly one time $500 stipend will make it right? I worked and PAID towards a contractual agreement to get a pension with a 3% annual and compounded COLA…I retired under that contract…only to have it ILLEGALLY taken away… this deplorable situation needs to be made right…the State has had MY money from January 2012 until now! Now is the time to give it back!!
And yet they all got re-elected and will again. Cold comfort. There was plenty of true fact information out there but they choice to ignore it. Our former Union decided it wasn’t worth the time or effort, but especially the $. Outrageous doesn’t even cover it
Who passes legislation that has such a devastating financial impact on 60,000 individuals without first conducting an independent actuarial audit of the pension system? Now that the damage has been done we are expected to accept a compromise. Why are we expected to compromise for the errors caused by others. We did nothing wrong.
For Post 2012 retirees, the rules were changed in the middle of the game. Definitely a betrayal.
For Pre 2012 retirees, the final score was changed after the game was over. Definitely a bigger betrayal.
It’s a shame that it all can’t be fixed now, but the pre 2012 retirees had an unassailable court case, and should never had been bundled with the other members of ERSRI into a Settlement Agreement. Restoring their COLA first should be the top priority.
After paying into thepension system for 34 years, and working in a District that did not allow teachers to pay into social security, I retired in 2004. When the pension system was “overhauled” there was no allownace for those already retired. So in 2023, I am living on a pension that froze in 2011. I worked other jobs to earn Social security but I am penalized because I worked in a no social security system. If my husband should pass away, I am not entitled to any of his SOcial Security. How much can one public servant be penalized??? Imagine if I had put 34 years of my pension contributions into a 401K?? I lived up to my end of the agreement , I taught Rhode Island dchool children and loved my career, where are those who promised a retirement above the poverty level??
What about those of us who retired after 2012. I am now receiving $1500. dollars less per month than I was promised when I started in 1989 AND I have no COLA. The fact that we are now finding out that “valuable actuarial information was withheld” and that legislators were “misled back in 2011” about the financial condition of the state’s pension system is reason enough to restore the pension as was contractually promised when I became a full time teacher. I paid into my pension by law at 11% of my wages for many years and did not contribute as much as I would have to my 403B if I had known that there was any danger to my projected pension. I would not have spent the $1000. dollars plus per year buying school supplies for my classroom and my students and instead invested it in my 403B. No one is even addressing those of us who retired after 2012 or the many teachers who were booted out of the pension system after their 10 year vesting. They were promised the same as me but considered “okay” because they only had 19 years in. The injustice of the whole fiasco is astounding! Many The article states “People with degrees in accounting have clearly indicated that the pension fund could easily have been amortized and left almost whole”. I have heard this from many people who studied the situation at the time. I am astounded that Raimondo got away with this travesty of justice. Please legislators, do the right thing and restore pensions and COLAs for all
I agree..I was 59 in 2011 when reform was brought to the table..I was told that because I was 59 at the time, I would be in the A/B group and would be under the old contract..HOWEVER. when I retired in 2014 at my full retirement age of 66, I was told by the retirement board that that was no longer true…I had 21 years in the system in 2014..under the old contract I would receive 53% of my salary..but NO, I receive 37% of my salary and have not received a COLA in 9 years..the inflation rate has gone up 30%, but my pension is still the same as it was in 2014
(other than a couple of stipends we received)..and I have to work part-time to keep my home..I’m 75 and have blood cancer..I may not live to 2031 and need help now.. Please consider those of us who NEVER received a COLA, and include us..those that retired after 2012, in this COLA reform..we are struggling just like everyone else..maybe even more so because we have never received a COLA
You are both absolutely right that the COLAs that were taken away should be restored to everyone who began employment before the pension cutting law went into effect. But we have to start somewhere and these bills have the best chance this year because the law was so blatantly illegal for those who had already fulfilled their contract and were already retired. Let’s start this for now and begin to crack the law.
I couldn’t agree more. The whole thing was a travesty that hasn’t lost its sting. It appears that legislators are finally wise to what happened. We have to rely on them to do the right thing. But at the same time, we have to introduce reality into the situation. Money will play a big part in whatever happens and we all know the legislature isn’t going to break the bank in order to prove their upset about what happened. The pre-2012 retirees have law on their side. Therefore I think they would have the best chance to prevail. But if they do, they need to stay in the fight for the rest of those affected by the illegal abomination(s) known as RIRSA 2011 and the Settlement Agreement of 2015.