Comments 
0| Recommend 
0
Details of pension savings not divulged
01:00 AM EST on Thursday, February 26, 2009
By Katherine Gregg
Journal State House Bureau
PROVIDENCE - The state's pension advisers dangled potential savings ranging from $22.6 million to $38.2 million in a single year in front of a legislative study commission yesterday, amid promises by the chairman that this year-long, stop-and-go foray into the world of public employee pensions in Rhode Island will wrap up its inquiry by the end of next month.
Rep. Timothy Williamson, D-West Warwick, again refused to make public a letter summarizing the findings of the state-paid actuaries at Gabriel Roeder Smith & Co., and the methodology they used to arrive at their conclusions.
Williamson asserted that the letter, which the actuaries had in front of them as they testified at last night's televised State House meeting, had been written to him personally, in his role as chairman of the commission, and so it was not public. One of House Speaker William J. Murphy's top State House legal advisers, Richard Kearns, backed him up, which kept the letter out of the public arena last night.
The actuaries are being paid a reported $52,000 by the General Assembly for their work, but as of last night, only some of that completed work had been made public.
The commission did, for example, release a series of charts showing how much state taxpayers might save if they moved all but a select group of state employees and public school teachers - those closest to retirement - to the reduced, but still generous defined-benefit pension plan the state adopted in 2005 for its newest employees.
Older employees can still retire - and begin collecting a pension immediately - at any age after 28 years of work and then they are eligible for pensions that pay them up to 80 percent of their average earnings as they neared retirement, plus 3 percent annual "cost-of-living" increases.
The replacement plan adopted in 2005 for the newest employees required employees to work another year - and be at least 59 years old - to qualify for an unreduced pension. It tied their annual COLAs to the consumer price index each year, while capping it at 3 percent. It also scaled back the pension value of each year of work. The longtime employee who might have retired under the old plan with a pension paying 51 percent of his or her average salary would get 44 percent instead. And so on.
Yesterday's presentation centered on the question: what if all state employees and teachers were moved into this somewhat less-generous plan. How much might the state - and the cities and towns that share the cost of teacher pensions - save if the retirement benefits for these workers were frozen on July 1, 2009, and whatever benefits they earned going forward were calculated at the reduced-benefit accrual rate?
Taxpayers currently face the prospect of putting 23.88 percent of payroll - which equates to $245.4 million - into a pension fund for teachers during the year that begins on July 1, and 25.03 percent of payroll ($147.8 million) into a fund for state employees' benefits.
The actuaries told the commission that $24.6 million could be shaved off next year's teachers' pension bill and $13.6 million off the state employee pension tab by moving the vast majority of workers in both groups into the reduced benefit plan. Those already eligible to retire on July 1 would be exempt.
They also laid out alternatives, such as excluding everyone within three years or five years from retirement. The saving were less in each case, but the number of people exempt from this potential mid-career change in benefits grew.
They estimated, for example, that exempting everyone already eligible to retire would apply to 1,510 state workers, while an exclusion for everyone within three years of retirement would encompass 2,309 people and a five-year window of exclusion would extend to 2,852 people. There are more teachers than state employees, so the numbers of people potentially excluded would range from 1,757 to 2,758 to 3,390, depending on which option applied.
After listening to the actuaries' detailed explanations, J. Michael Downey, president of Council 94, American Federation of State, County and Municipal Employees, said he very much likes being a "grandfather," but after more than 27 years as a state employee, doesn't like the idea of any proposal that "grandfathers" some employees, not others.
Talking into the Capitol TV camera filming the hearing, Williamson stressed that no decisions have been made to pursue any of those potential cost-savings measures, and that those decisions will lie with the governor and legislative leaders after his commission produces a report on its findings.
At this point, there are 5,678 state employees still enrolled in the "old" pension plan, and 5,017 in the "new" plan, according to the state retirement office. Comparable numbers for teachers were unavailable yesterday.
