Highlights from day 2 of the pension public hearings
Sharp rhetoric from leaders of police and fire unions flared during day 2 of the pension public hearings taking place at the Statehouse. Here are some of the highlights from the afternoon:
— The most fiery fusillade came from Paul Valletta Jr., the head of the Rhode Island Association of Firefighters, who said state Treasurer Gina Raimondo “cooked the books” to inflate the state’s pension problem. “Why she’s doing that, we’ll find out in three years,” Valletta added, in a not-so-subtle suggestion of political motivations. Due to the bad economy, it was a mistake, he says, to back state retirement board changes in April that increased the state’s unfunded pension liability. Of course, it can also be argued the state had a previously overly optimistic rate of return on its investments, and that the retirement board changes were overdue.
— UPDATE: Raimondo spokeswoman Joy Fox offered this response to RIPR, following Valletta’s remarks:
“Upon the recommendations of actuaries and investment professionals, the Retirement Board adopted a new set of assumptions that are more in line with the reality of the system. Using unrealistic assumptions to mask the actual scope of the problem is in no one’s interest, especially public employees and retirees who deserve an honest set of assumptions and numbers.”
Fox said the actual rate of return for the past 10 years is 5.74 percent and 1.52 percent for the past five years. She adds that for the first quarter of fiscal year 2012, the investment rate of return is -3.39. The state’s current investment rate of return target is 7.5 percent.
— Senate Finance Chairman Daniel DaPonte played it close to the vest, as might be expected, in talking with reporters after day 2. He suggested committee witnesses with personal stories, as opposed to paid representatives of different special interests, made a greater impact. DaPonte said some of those personal stories can’t be ignored, at least from his perspective, but that the state’s room to maneuver is limited by an obvious lack of resources. DaPonte said Raimondo’s office is conducting “further technical analysis,” and he added, “We’ll wait to see how those conversations go.”
— Woonsocket Mayor Leo Fontaine outlined the plight of his struggling community, describing how street lights and other basic programs have been reduced or cut. He’s a supporter of the pension overhaul backed by Raimondo and Governor Lincoln Chafee.
— Room 35 still lacks wifi, although state officials say they’re working on it.
The pension public hearing action resumes Tuesday at 11 am in Room 35, with a focus on locally managed pensions.