PROVIDENCE, RI – We continue our week-long series on Rhode Island's troubled pension fund with a look at teachers. Nearly half of the retirees in the pension system are teachers, and they receive an average of just over $41,000 per year. That accounts for more than half of the state's $7 billion unfunded pension liability.
Climbing the stairs to her Providence Apartment, Pat Houlihan gets pretty short of breath these days. At 70-years-old, she is recovering from heart surgery, and like everyone these days she is watching the cost of groceries and health care rise.
"I worry about what's going to happen long term," she says. "I don't have life insurance because I never thought I was going to need it. I don't have long term care insurance. I'm relying on my savings. And my savings are beginning to dwindle."
Those savings are especially important to Houlihan because she is a single woman, who relies almost entirely on her state pension to get by. After 28 years as a Providence public school teacher, she gets $43,400 a year, and takes home about $31,500 after taxes.
"It certainly is low enough that you make decisions about what you can and cannot do. I drive a 10 year old car," says Houlihan. "I have in this house right now a 30-year television set, it is my only tv. If the picture turns orange from time to time that's okay, I can live with that."
Although she is holding off on the new T-V, Houlihan says she feels fortunate - she lives comfortably and has been able to do some traveling. She also served for several years on the State Board of Education, and she has some savings from her work as a union political director.
"I don't know how many more years I have on this earth. Another 10 would be nice. I look at the paper every day and make sure my name's not there, that's an old retirees joke. But right now for the most part I'm enjoying my life."
Because of the way the system works, Houlihan's life as a retiree comes at a cost to the state. While she was teaching, she contributed less than $37-thousand dollars to the system total. Since retirement, she has collected 23-times that amount. That's partly because she retired in back in 1990 when the state offered generous retirement incentives to get senior workers off the payroll. Houlihan wasn't the only one to take the deal and that is part of the problem says General Treasurer Gina Raimondo
The system we have today is fundamentally flawed. The money will not be there.
Raimondo says the state would need $4 billion dollars more than it has right now to pay for all of the pensions promised to current and former teachers. The average teacher pension is about 41-thousand a year, nearly twice that of other state workers. And Raimondo says everyone will have to make sacrifices.
"This pension crisis is so large it is somewhere between 7 billion dollars and 9 billion dollars and it is inconceivable to me that will be able to solve it without changes across the board including changes for new employees, existing employees retirees and taxpayers."
But for many retired teachers, changes like suspending the annual 3% increase meant to account for inflation would be a serious blow. Take Ellen Lenox Smith, a former Middle School teacher.
"That's a stressor for me if I start thinking about that I'm not gonna get the cost of living increase, you know any of those things, its huge," says Smith.
Smith taught social studies in Burrillville for 22 years but had to retire early because of a terminal lung condition. Her pension is $24,000 a year. She says it doesn't even cover all of her medical expenses.
"It's just, I've had braces, there's co-pays, its just, it's amazing how this adds up. And what are you supposed to do? You just do it because it's what's keeping you alive."
To make matters worse, Smith cannot collect Social Security. Like roughly half of Rhode Island teachers, she worked in a school district that opted out of the Social Security program.
"Any crack that was there I seem to have found it with my circumstances and I'm sure whoever initially set this up didn't think about what happens to someone who truly gets disabled and doesn't plan it and what happens to your life. It's a little scary."
Teachers in Rhode Island contribute 9.5% of their salaries each year to the state pension fund, slightly more than other state workers. The amount is set by lawmakers, and many teachers, including Houlihan, say it seems unfair that they are now facing cuts because the state acted irresponsibly.
"And we had no control over the investment of that money either," says Houlihan. "We assumed that it was being invested well and making good returns. Na ve I suppose."
But State Treasurer Gina Raimondo says unions also bear some responsibility for the state's pension crisis. She says in the past, union leaders pushed for benefits the state could not afford.
"It is incumbent on union leadership to be honest as we go through this debate and to recognize to themselves and to their members that pushing for benefits that are unrealistic is a great disservice to their members and to all of Rhode Island," says Raimondo.
Three of the largest teacher pensions in Rhode Island go to former Providence public school employees, who are collecting as much as $124-thousand a year. But the vast majority of retired teachers get much less than that, and what seems clear is that their payments will cut into funding for schools and other state services, unless lawmakers raise taxes or make fundamental changes to the pension system.
Listen to WRNI's entire series on Rhode Island's pension crisis: The Pench.
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