SOUTH KINGSTOWN – General Treasurer Gina Raimondo touted the pension plan proposed Tuesday night during a special legislative session as fair, but local National Education Association union leaders are seeing it in a different light.
Immediately following Governor Lincoln D. Chafee’s and Raimondo’s introduction of the plan, unions, specifically National Education Association of Rhode Island (NEARI) didn’t hide their disapproval and told lawmakers they will challenge the bill in court for breaking promises made to state employees.
The proposed plan creates a new hybrid plan that combines a traditional pension guarantee with a 401(K)-style plan, a suspension of cost-of-living increases for Rhode Island’s retired government workers for up to 19 years, and a higher retirement age up to 67 years old for current workers 51 years of age. State leaders claim the proposal will save the state from its only 48 percent funded pension system and $7.3 billion unfunded liability.
The pension plan chimes back to the NEASK negotiations with the South Kingstown School Committee over its current three year collective bargaining agreement, in which teachers agreed to a salary freeze and a 20 percent co-payment for health care to save the school department $755,000.
“At the local level, people are very upset and concerned,” NEASK President Christine Heid said. “Certainly we understood in negotiations the tough fiscal climate and that’s why the concessions were made by my members, but we felt like we were part of the state level pension system that would provide us with security. At this point, we know there had to be some kind of modifications made, but we were not expecting the draconian parts.”
President of South Kingstown NEA/NEA-RI, the municipal chapter of the union, Liz Carpentieri echoed the teacher’s union concerns.
“We want a fair and sustainable pension. Some of these proposals are not only unfair, but have unintended consequences,” Carpentieri said.
The part that has gotten the unions so unbridled is the suspension of the COLAs and its impact overtime.
“When you have a COLA and a small pension you think overtime that it would grow. I was hopeful someday with COLAs to get up to $35,000. Now with the COLA adjustment up to 19 years, that will really affect people’s quality of life,” Heid said.
Carpentieri also stated her union worries of the future effect the suspension of the COLAs will have on retirees, suggesting that retirees may not be able to shop locally.
Tuesday night, Raimondo told the General Assembly that the cost-of-living adjustments are the most expensive portion of the current state pension fund and recommended suspending them until the fund reaches 80 percent funding, which she anticipates will take 19 years. Depending on how the pension fund is doing when the COLAs are reinstated, Raimondo said retirees could get an annual increase of up to four percent.
Currently, without reform, Raimondo said the state and local contributions to the pension fund for state workers and teachers would increase from $370 million this year to $615 million next year. Yet, she said the suspension of the COLAs would decrease that by $353 million.
The COLAs are not the unions only concern, however.
Heid said NEARI and its local chapter are also dumbfounded by the increase in the retirement age to 67 years old, which mirrors the Social Security retirement age, a change they do not qualify as fair.
First, Heid said it closes an opportunity for new teachers to find jobs. Second, it requires cities and towns to pay more for teachers at the top tier salaries, for longer periods of time, rather than paying the lower salary of a new teacher. Thirdly, requiring all teachers to work at their full capacity at age 67 and continue to have students and teachers benefit is a likelihood Heid doubts.
“It’s hard to be as effective and energetic. Teaching is an extremely physically rigorous and mentally challenging profession,” Heid said. “To be at the top of your game at age 67 is ill-advised.”
Heid said she would expect state-wide rallies against the pension plan soon. As such, at NEARI.org, the state teacher’s union was already urging its members Wednesday to share the impact the pension plan will have on them at the Finance Committee’s hearing on teacher, state and municipal pensions on Wednesday, Oct. 26.
The union coalition, including NEARI, will also hold a rally later as the legislature comes back in to session or the day of the actual vote.