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The Rhode Island Pension Tsunami

When I receive Compass, the newsletter of the Employees’ Retirement System of Rhode Island, I cringe! The June 2022 edition of this newsletter was no exception, in fact, it was more of a horror than past newsletters.

In that newsletter, the general treasurer of Rhode Island, Seth Magaziner, addresses the collective membership of past and present public employees with vested interests in the retirement system: “so it is a great honor for my team and me to serve you and to be responsive to that feedback [about the retirement pension system].”

Further on in his Compass message, he states that the pension fund “has grown by over $3 billion since 2015… outperformed 92% of peer public pension plans.”

Those both past and present in power in political office in Rhode Island must think that some reading Compass are total ignoramuses! Indeed, it was Rhode Island a decade ago that screwed its state and municipal employees and retirees, its teachers, firefighters, and police. A few held out and some were vested in other pension plans, but the majority of those who gave their working lives in public service to the people of Rhode Island got the fucking over of their lives!

This rout of the pension system in Rhode Island was used as a template to screw other public employees in other states and further add to the immiseration of public service workers in Rhode Island, both past and present. The person who led this bald-face charge against workers is the current secretary of commerce in the Biden administration, Gina Raimondo, who was then, at the time of the pension debacle which she authored, the general treasurer of Rhode Island.

But Raimondo was not alone in her perfidy. She had the help of the governor of the state at that time, the legislature, and the courts. Raimondo, with a Wall Street imprimatur and friends in those places with big bags of money, was the prime mover of the pension disaster. She would use those contacts for investing some of the pension’s funds. She then became governor of the state and is now ensconced in Washington, DC, in a department that oversees the expansion of financial and other business interests of the US here and around the world.

Now, with inflation burning through the finances and the pockets of retired workers at over 8%, our fellow members of the working and the middle class have already seen how decimated their interests have become since the 1980s through both deindustrialization and trade agreements. It’s all been scripted! It’s a predatory system of capitalism that is rapacious.

When the Raimondo pension debacle was instituted, public sector retirees had pensions that represented a portion of the number of years they had worked and the average salary of the last three years they worked. In addition, retirees were granted a 3% annual cost of living adjustment, or C.O.L.A. Those C.O.L.A.’s were done away with through Raimondo’s pension reform and retirees have since seen a minuscule amount of money paid them for the cost of living, or thrown at them like just so many crumbs in addition to their regular pensions since the pension debacle. Public sector workers who were in-service at the time of the pension reform law also saw the conditions of their future pensions modified.

Readers can well-imagine the results of the attack on public sector workers in the case of single persons who retired decades ago with a relatively low salary and a final three-year averaged salary.

As the pension disaster unfolded in Rhode Island, I interviewed and talked with a few union presidents and former union officials. The talk was tough until the case landed in Rhode Island superior court and the judge who presided over the final denouement of the pension disaster rubber-stamped the governor’s and legislature’s previous actions on the pension “reform” law. I testified against the pension overhaul in superior court. Instead of making a nondescript pitch to salvage our pensions, I needed to have refused to leave the bar at the end of my testimony and risk arrest in an act of civil disobedience. I do not know what constraints kept me from doing an honorable act that day?

One union president, the head of a state teachers’ union, was honest and said that the union did not have the funds to fight the changes to the pension system. Another public sector union president said that the agreement was the best that could be done. Several former union members stated that we, retirees, couldn’t get blood from a stone, referring to Rhode Island’s public finances. All these years later, as retirees are being hit by historic levels of inflation, it’s more than painful to read what seems to be glee about pension fund earnings. Pension “reformers” cited an underfunded pension fund and mismanagement of the pension system from the past in their successful overhaul of Rhode Island’s pension system.

While some members of the retirement system supported the elimination of the C.O.L.A., a February 18, 2022 report by the Pew Research Center found that among those surveyed in the US, 58% said the precipitous decline in union membership was “somewhat or very bad for the country,” and a greater majority, 61% said it was “bad for working people.”

Here are the Pew Research Center’s numbers that show the precipitous decline in union membership over several decades: “The share of U.S. workers who belong to a union has fallen since 1983, when 20% of American workers were union members. In 2021, 10.3% of U.S. workers were in a union.”

In Rhode Island, the pension debacle was carried out mainly under the governance of Democrats, of which Gina Raimondo is now one in Washington, DC. Unionism was seen, and is seen, as a way to support the well-being of workers on the job and when they retire. Those values were not obvious in the Rhode Island pension debacle.

I helped many students in the years I worked in Rhode Island, but that didn’t matter to those out to reduce the value of public pensions. I recall vividly the afternoon in February 1978, as I drove home from my teaching job as the Great Blizzard of ’78 closed in all around Rhode Island and elsewhere. I did not know if I would make it home (I did), but people were stranded all over the state as blizzard conditions took hold. I watched both the road ahead of me and what was happening behind in my rearview mirror. I did not know on that day, when I went into my job and worked in good faith, along with thousands of other public sector workers in Rhode Island, that those in government in Rhode Island would plan a pension tsunami a few decades later.