No RI pension settlement yet; trial set for Sept. 15

WARWICK, R.I. (WPRI) – A Rhode Island judge on Wednesday set a Sept. 15 trial date in the high-stakes union lawsuit over the state’s 2011 pension overhaul, making the move just hours after a much-anticipated news conference about settling the case was abruptly called off.

“I will acknowledge that we were all expecting big news today,” Treasurer Gina Raimondo said at the start of a State Retirement Board meeting where the lawsuit was discussed behind closed doors. “There won’t be big news today.”

Asked by reporters whether there had been a settlement deal 48 hours ago that had now fallen apart, Raimondo declined to comment except to say: “There is no agreement now. We’re going to keep working.”

The Retirement Board quickly scheduled another meeting for 1 p.m. Friday where it will discuss and possibly approve a “proposed settlement,” according to its agenda; the action had originally been expected Wednesday morning.

The pension system’s trustees are “taking the necessary steps in posting a Retirement Board agenda 48 hours in advance in case they need to take action,” Raimondo spokeswoman Joy Fox told WPRI.com.

It’s unclear whether that means negotiators have reached an agreement. The U.S. Federal Mediation and Conciliation Service (FMCS), which is handling the talks between the state and the unions in the pension suit, hasn’t commented since Wednesday morning.

The surprising sequence of events Wednesday began when the FMCS sent reporters an email just before 5:30 a.m. announcing that the hotly anticipated afternoon news conference about a pension-suit settlement was being postponed indefinitely.

The mediators’ advisory said the press conference was postponed at the “joint request” of attorneys for the state and public employee unions and retirees, and that both sides “continue to talk and work with federal mediators.” The two sides were ordered into talks mediated by the FMCS by R.I. Superior Court Judge Sarah Taft-Carter in December 2012.

“Quite frankly, this is too important to rush,” Raimondo said. “We have to get it right. We have to protect the interests of all the people of Rhode Island and the people in the pension system. So when we know more, we’ll provide more updates.” She later argued that the state has “a very strong case.”

“In the meantime we’re going to continue to work cooperatively and, as I say, make sure that we get this right for the people of Rhode Island,” Raimondo said. “So, sorry to disappoint, but that’s what I have to report. … That’s what I’m allowed to say pursuant to the court’s confidentiality order in the open session.”

R.I. Director of Administration Richard Licht confirmed that on Wednesday morning Taft-Carter decided to set Sept. 15 as the date when a trial over the pension lawsuit will start. Licht made the disclosure outside the Retirement Board meeting, where the proposed settlement had been scheduled to be considered and possibly approved.

Taft-Carter’s clerk at Kent County Superior Court also confirmed the Sept. 15 trial date, but said no related filings have been made yet and that lawyers on both sides are still working out the schedule for the pre-trial process. Licht said Taft-Carter also told the two sides she welcomed them to continue settlement talks despite a trial date being set.

The Sept. 15 date means the pension trial would begin just six days after this year’s Rhode Island primary election, in which voters will decide whether to make Raimondo the Democratic nominee for governor.

Neither those involved in the talks nor the mediators offered any details about what changed between Monday, when the settlement press conference was announced, and Wednesday morning. “The parties remain under the court-mandated confidentiality order,” the mediator statement said, alluding to a gag order in the case ordered by Taft-Carter.

“We are still in the process of working out the details of the mediation,” Raimondo said at the meeting. “We worked late into the night and we’re not completed.” Licht added: “I think the public should be aware that parties on both sides are in good faith still in mediation, and under a court order we’re not allowed to talk about it.”

The board, which is chaired by Raimondo, oversees the state’s nearly $8-billion retirement system for workers and retirees. The meeting began at 9 a.m. but soon went into closed-door executive session for over an hour to discuss the settlement situation and other matters. The board voted to keep the meeting minutes secret, citing Taft-Carter’s gag order.

“What we’re trying to do here is settle various lawsuits, which is what we’re after, and we will do our best to see if this can be resolved,” Raimondo said. “If it can’t, we’ll proceed with trial; if it can, then we’ll deal with that at that time.”

Michael Yelnosky, the incoming dean of Roger Williams University School of Law, cautioned against reading too much into Wednesday’s events. “That they decided this morning not to release the terms of the settlement could mean there’s a big problem; it could mean there’s a little problem,” he said. “This happens with some frequency.”

“My hunch, given the timing of when [Judge Taft-Carter] set a trial date, is that … maybe she’s signaling, ‘If this isn’t settled we’re probably done for now, we’re going to start preparing this case for trial, and if you settle it, great, but if you don’t this can’t go on forever,” Yelnosky said.

Prior to the meeting’s start Raimondo was seen conferring with Licht, a powerful figure in the Chafee administration and another senior figure in the pension talks. Licht also confirmed that Chafee remained out of state after giving a speech in Texas on Tuesday, but said he expected the governor to return to Rhode Island by late Wednesday morning.

Licht said he spoke to Chafee several times during the day and into the evening Tuesday about the progress of the talks. “Governor Chafee is involved completely,” Licht said. “He is fully informed. We talk to him all the time. He doesn’t sit in on the meetings, but we’re talking to him.”

The FMCS is a government agency that brokers talks between parties in legal disputes. Anticipation about the announcement had been building since Monday, when the mediators scheduled the press conference to update Rhode Islanders on the proposed settlement.

House Speaker Gordon Fox and Senate President M. Teresa Paiva Weed were briefed Monday afternoon about the potential pension settlement, but declined to provide details when they left the governor’s office. Lawmakers, who aren’t involved in the settlement talks but will need to approve any deal, have expressed serious reservations about taking up the pension issue once again.

“You heard from the legislative leaders – they’ll speak for themselves,” Licht told reporters when asked if Fox or Paiva Weed scuttled the deal. “We just gave them information – brief information, which we were allowed to do under the confidentiality order. They expressed no opinion one way on this or the other, as they did with you.”

Fox said Wednesday there’s no guarantee the General Assembly will vote on a proposed settlement. “I reserve the right to recommend, if I think that it’s not fair or it creates too many problems, to say that, no, I don’t think we should take this up,” he said, adding: “I’m not leaning either way. I’m letting the process take its course.”

Reacting to Wednesday’s sudden change of plans, House Minority Leader Brian Newberry speculated on Twitter that “maybe the message that the [General Assembly] truly might ignore this began to sink in” with those crafting the settlement.

The pension reform law passed in 2011 slashed Rhode Island’s unfunded pension liability from $7.3 billion to $4.3 billion, mainly by freezing pensioners’ annual cost-of-living adjustments (COLAs) for two decades. The law also moved most workers into a new hybrid pension plan that combines a smaller defined benefit with a 401k-style defined-contribution account, raised the minimum retirement age and tied COLAs to the pension fund’s investment returns.

Unions filed suit, claiming the law was unconstitutional, which led Judge Taft-Carter to order the closed-door talks more than a year ago. She also issued the gag order, which has blocked the two sides from discussing anything publicly.

Robert Walsh, president of the National Education Association Rhode Island teacher’s union and a key player in the settlement talks, wrote on Twitter Wednesday morning: “The court imposed gag order regarding pension mediation continues to remain in effect.”

Clay Pell, one of Raimondo’s opponents in the Democratic primary for governor, issued a statement calling on the two sides in the pension suit to set a final deadline to come to a resolution or end the settlement talks. “The secretive nature of this process has gone on for far too long,” Pell said, arguing the “ongoing uncertainty of this situation is one of the factors holding back our economy.”

Republican candidate Ken Block also weighed in, arguing that the pension conflict shouldn’t be settled in talks that took place behind closed doors. “Governor Chafee and Treasurer Raimondo are selling out the taxpayers and state employees to the union bosses,” Block said.

Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi’s Notes blog. Follow him on Twitter: @tednesi

Tim White ( twhite@wpri.com ) is the Target 12 investigative reporter for WPRI 12 and Fox Providence. Follow him on Twitter: @white_tim

Dan McGowan contributed to this report.

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