The center scored all of the state pension systems and sorted them into three categories: "solid performer," "needs improvement," and "serious concerns." You can guess where Lil' Rhody landed.


Ass out of you and me

I'm going to let you in on a little secret: running a big, multimillion dollar pension is just a bunch of guesswork.

It's actuaries in ill-fitting suits and poorly chosen shoes predicting, say, how long it will take Linda, the secretary at the Department of Education, to croak after she leaves her job.

The estimates have an enormous impact on how much the state socks away for its pension fund — if you think the average retiree is going to kick the bucket at 80 instead of 75, you need to set aside a lot more dough to pay her.

Among the most important guesses: the return on a state's pension investments.

If you assume the stock market is going to hum and it doesn't — see the last decade — you'll be short millions in the long run.

But if you're too conservative, you are going to set aside more than needed — bolstering the pension plan but shortchanging schools, roads, and other goodies in the process.

As you see here, Rhode Island's assumed rate of return is among the highest in the nation. And if the state adjusts it down, watch out.

With modest projections for the portfolio, the pressure will mount to pull more dollars out of health care, education, or your wallet.

The Doomsayer

Gina Raimondo, the state's new treasurer, is upbeat, engaging — and, lately, downright terrifying.

For the last few weeks — in a series of appearances on PBS's NewsHour, local television, and in the ProJo — she's been sounding the alarm on pensions at earsplitting decibels.

"I think it could be the greatest financial threat we face as a state — or a nation," she said, in a recent interview with the Phoenix.

That $4.8 billion unfunded liability? Raimondo says it could be as high as $10 billion. And in just a couple of years, she warns, pensioners in the most distressed cities — like Central Falls — could simply stop getting checks.

Raimondo is not yet offering a specific fix; she's waiting on an in-depth study of the system due next month. But she's argued that only sweeping change will do — think 20- or 30-percent haircuts for retirees.

And pensions aren't the only problem. There's also the explosion in retiree health care costs, a problem the nation is just waking up to; Rhode Island's unfunded liability, in that category, is $1 billion at last count.

Whatever the treasurer recommends, it'll carry some serious weight in the State House. Raimondo is a Rhodes Scholar. A former venture capitalist. And, apparently, skilled in the arts of persuasion.

She's already talked Governor Chafee out of a plan to refinance the pension obligation — saving millions in the short-term, but creating a bigger liability down the road.

And the rank-and-file in the General Assembly . . . well, let's just say she won't be matching wits with Warren Buffet.

< prev  1  |  2  |  3  |  4  |  5  |  6  |   next >
Related: Might as well jump, Addicted to distraction, Could Cicilline be in for a surprise on Tuesday?, More more >
  Topics: News Features , Politics, Education, Washington,  More more >
| More

Most Popular
Share this entry with Delicious
  •   LIBERAL WARRIOR  |  April 10, 2013
    When it comes to his signature issues — climate change, campaign finance reform, tax fairness — Whitehouse makes little secret of his approach: marshal the facts, hammer the Republicans, and embarrass them into action.
    A key Brown University oversight committee has voted to recommend the school divest from coal, delivering a significant victory to student climate change activists.
  •   HACKING POLITICS: A GUIDE  |  April 03, 2013
    Last year, the Internet briefly upended everything we know about American politics.
  •   BREAK ON THROUGH  |  March 28, 2013
    When I spoke with Treasurer Gina Raimondo this week, I opened with the obligatory question about whether she'll run for governor. "I'm seriously considering it," she said. "But I think as you know — we've talked about it before — I have little kids: a six-year-old, an eight-year-old. I'm a mother. It's a big deal."
  •   THE LIBERAL CASE FOR GUNS  |  March 27, 2013
    The school massacre in Newtown, Connecticut spurred hope not just for sensible gun regulation, but for a more nuanced discussion of America's gun culture. Neither wish has been realized.

 See all articles by: DAVID SCHARFENBERG