Union leader: Opposing pension settlement deal is irrational

Opposition to the proposed Rhode Island pension settlement from rank-and-file union members and retirees is “neither rational nor legally sound,” according to one of their leaders who is backing the deal.

Roger Boudreau, president of the Rhode Island American Federation of Teachers’ retirees chapter and a member of the state Retirement Board, made the comments in a Monday email to members of the Rhode Island Public Employees Retiree Coalition (RIPERC), the lead plaintiffs in the case.

“If you have already cast your ballot into the waste basket, you have made a rational and informed decision to agree to the Settlement,” Boudreau wrote in the message, which was obtained by WPRI.com.

The email was sent soon after 24,297 ballots were mailed to union members and retirees to weigh in on the settlement, and just before The Providence Journal revealed at least one was sent to a dead woman; she would effectively be a “yes” vote, since those who don’t return a ballot are counted as favoring the deal.

In the email – which was authenticated by plaintiffs spokesman Ray Sullivan – Boudreau criticized “emails and postings by various individuals and groups in opposition to the Settlement which are inaccurate, and which exhibit, either unintentionally or otherwise, misinformation or misapplication of the Agreement terms.”

“Anyone in a position of local or chapter leadership who opines or promotes opposition to the Agreement is acting contrary to its terms and does not represent the position taken by RIPERC or its member organizations,” Boudreau wrote.

“Those who are opposed to the settlement are operating under emotions which are completely justified and understandable,” he said. “However, they are neither rational nor legally sound.”

Here’s the full text of Boudreau’s email (emphasis in the original):

This second newsletter is intended to follow the ballot mailing which took place on Friday, March 14, 2014. Because of the complexity of the terms of the Settlement Agreement, it is important that RIPERC members understand the impact of the terms. There have been a number of emails and postings by various individuals and groups in opposition to the Settlement which are inaccurate, and which exhibit, either unintentionally or otherwise, misinformation or misapplication of the Agreement terms:

· The “one-time” 2% COLA for 2014, based on the 2013 indexed cap of $25,000 will provide up to $500 this year. The amount will be added to the current benefit you are receiving annually. Like all past COLAs, the amount added to your current benefit remains there as your new benefit base (see Power Point examples on ripensioninfo.org). A current $35,000 pension benefit becomes $35,500 for 2014 and remains at $35,500 for 2015 and 2016. It is the 2% that is “one time,” not the COLA which remains as part of your new base benefit going forward.

· In 2017, under the Agreement, with the exception of those members in MERS plans that are already 80% (or better) funded and who begin receiving annual COLAs this year (2.67%) and every year going forward, everyone will get a COLA based on the new formula, regardless of the funding level of the fund. Some local leadership communications have misinformed their members that the fund needs to be at 80% before a COLA is awarded; that is only true for a COLA given every year. The COLA given by the new formula in 2017 will create a new pension benefit base that will remain unchanged until the next COLA is awarded in 2021. Your new amount in 2017 will be the same for 2018, 2019, and 2020.

· The 50/50 formula based on pension fund performance and the CPI-U has been conservatively estimated to yield 2% on average annually. This is important because the 2013 $25,000 COLA cap is indexed annually by this formula (see under Documents on ripensioninfo.org: Exhibit C – Proposed legislation, page 53, lines 22-24). For 2014, the cap has been increased to $25,168 based on the old formula under RIRSA. If our new formula had been used, the new cap would now be $25,272. Indexing the new cap each year at an average of 2% by our new formula will add about $500 each year to the cap. By 2021, the cap is projected by these assumptions to be at $32,000 (see Power Point presentation/video at ripensioninfo.org), when the second COLA will be awarded.

· The CPI-U as calculated the U.S. Bureau of Labor Statistics is not the same as the CPI-W which is used to calculate the annual COLA for Social Security. One email received by RIPERC directed opposed members to the agreement to a Facebook page by stating that the CPI-U in “recent years” was 0%, 0%, and 1.5%. Those are Social Security COLAs for 2009, 2010, and 2013, respectively. The CPI-U in our formula was -0.4% (effectively 0%) for 2009, 1.6% for 2010, 3.2% for 2011, 2.1% for 2012, and 1.5% for 2013. The CPI-U average for the last 5 years is 1.68% (based on -0.4% in 2009). It’s 2.39% for the last 10 years (see BLS website: January 2014 report, Table 24, page 94). The Social Security CPI-W average is 1.36% for the last 5 years but that is not the standard we are using in this Agreement.

There are a number of other misinterpretations and misrepresentations out there, and some of them will be addressed over the coming week as you consider your vote.

Anyone in a position of local or chapter leadership who opines or promotes opposition to the Agreement is acting contrary to its terms and does not represent the position taken by RIPERC or its member organizations. Those who are opposed to the settlement are operating under emotions which are completely justified and understandable. However, they are neither rational nor legally sound. The plaintiffs to the lawsuits have had the legal counsel of some of the best minds engaged in labor law. Lynette Labinger, Esq., Jerry Cobleigh Esq., and all the other plaintiff attorneys involved in the Settlement Agreement have agreed by unanimous consensus that we should approve the settlement. Our own highly respected labor attorney, Carly Iafrate, Esq., and Chief Legal Counsel for the AARP Foundation, Jay Sushelsky, Esq. who has worked closely with us throughout the mediation process, are a part of that consensus.

The next RIPERC newsletter will offer a perspective on why protracted litigation in this matter is not in our members’ best interests. If you have not already cast a ballot rejecting the Agreement but are leaning in that direction, you may want to wait until later this week. If you have already cast your ballot into the waste basket, you have made a rational and informed decision to agree to the Settlement.

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

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