Governor Chafee and Treasurer Raimondo’s 12-member volunteer panel met for the first time Monday for introductions, an overview of the problem, and a discussion of how the process will proceed.
It’s a formidable group. Alicia Munnell is a nationally known recognized expert on retirement issues. Harry Wilson oversaw the restructuring of General Motors for President Obama. Richard Licht, Bob Walsh and Mike Downey are political heavy hitters. Ernie Almonte and the General Assembly’s two fiscal advisors are trusted on numbers. And on and on.
They dove right into the weeds within an hour of the meeting’s start, too. How much of an employee’s pre-retirement income should a pension replace? 30%? 80%? 100%? More for lower-income workers? What the right “normal cost”? How about the legal questions? And how do you deal with the underfunding when most of it represents future benefits for retirees and veteran workers, who are harder to touch?
The group will need all its intellectual firepower to achieve the goal set out for it by RISD Professor Bill Foulkes, who’s leading its work. Their last meeting is scheduled for late September, about three months from now; by then, they are supposed to send Chafee and Raimondo a “final list of prioritized solutions” to the pension problem so the two of them can then write formal legislation for the General Assembly to take up this fall.
Foulkes may also find it challenging to corral the stronger personalities among the 12, though that would make having everyone on board for the final product an even bigger achievement. “It’s a really complicated problem, but there’s only a finite set of solutions,” he said.
One thing Chafee and Raimondo have in common is their catch-more-flies-with-honey strategy. The treasurer bent over backward again Monday to praise everyone for agreeing to tackle this issue – she called the General Assembly’s fall special session “an extraordinary step” – and expressed concern about how any reforms will impact state employees who played by the rules.
“I was here as a state senator in the ’70s, probably causing the problem,” joked Director of Administration Richard Licht at one point. Raimondo smiled and shot back: “We’re not placing blame.” More seriously, Licht argued the support of two general officers, both General Assembly leaders and organized labor bodes well.
There’s a philosophical debate here, too. Raimondo has made retirement security a core part of her pension reform approach – meaning the final product has to provide a reasonable retirement benefit, however that gets defined. She wants to cut into the unfunded liability with a scalpel, not a chainsaw. And Munnell said she doubts retirement security can be provided by a system that expects workers to save on their own, because they won’t. “I don’t think the private sector is what we want to emulate,” she said.
A lot of people have pointed out that this is hardly the first time a high-powered group has gathered to fix Rhode Island’s pension system. (Chafee recalled two previous attempts, quoting a 2005 Projo article that began: “This appears to be the year for pension reform.”) Can this group find a way forward that the others didn’t, something politically achievable and financially sound, by September?
That said, the 12 don’t have to reach a consensus. In the end, Raimondo said after the meeting, it will be up to her and Governor Chafee to figure out what conclusions to draw from the group’s work and what proposal to put forward for lawmakers to consider.
(photo: Ted Nesi/WPRI)