Pension Settlement in Doubt For Now; Taft-Carter Orders Both Sides Back to Mediation

Apr 7, 2014

In a move that could send the battle over Rhode Island's 2011 pension overhaul back to court, one of the six plaintiff groups that had to initially sign off on a proposed settlement has voted against the deal.

As a result, Superior Court Judge Sarah Taft-Carter has ordered the two sides in the dispute -- the state and a series of public-employee unions -- back to mediation. Taft-Carter is slated to get an update on the talks next Monday, April 14.

The latest development could spare the General Assembly the need to take a vote on the controversial pension settlement before lawmakers turn their attention to seeking re-election this year. Legislators and their leaders have seemed less than lukewarm about voting on the settlement, both because of the sensitive nature of the issue and the number of hurdles it needed to clear before reaching them.

According to a statement by Ray Sullivan, a spokesman for the coalition of plaintiffs in the case, more than 70 percent of eligible employees and retirees did not vote to reject the settlement that was unveiled February 14. However, 61 percent of 417 eligible police in the first round voted against the deal. (Under the terms of the settlement, the agreement ends if more than 50 percent of any one of the plaintiff groups voted against it.)

Sullivan provided this (unaudited) breakdown of hte vote:

  • Teachers: 7,442 eligible, 2,320 ballots received: 31% vote to reject
  • Retirees: 6,840 eligible, 1,810 ballots received: 26% vote to reject
  • State: 5,045 eligible,1,697 ballots received: 34% vote to reject
  • Municipal: 3,261 eligible, 504 ballots received: 15% vote to reject
  • Fire: 619 eligible, 170 ballots received: 27% vote to reject
  • Police: 417 eligible, 254 ballots received: 61% vote to reject

Supporters of the pension settlement, including state Treasurer Gina Raimondo and Governor Lincoln Chafee, called it a sensible alternative to litigating a case with an unpredictable outcome in court. They said it would save 94 percent of the billions in savings from the 2011 pension overhaul spearheaded by Raimondo.

Through their respective spokeswomen, Debbie Rich and Joy Fox, Chafee and Raimondo offered this reaction: “For over a year the Governor and Treasurer participated in good faith in court-ordered mediation leading up to the February 14 settlement agreement. This morning, in court, we learned the results of the first round of voting from the plaintiffs. The court has ordered all parties back into mediation. The state will continue to participate in this court-ordered mediation.”

But critics, including Republican gubernatorial candidate Allan Fung, called for fighting the case in court. Part of the objection for opponents was how the settlement would add costs (a combined $24 million for the state and municipalities just in fiscal year 2016), and additional $232 million for the state's long-term pension tab). Some observers also called out for a legal resolution at the heart of the 2011 overhaul -- whether a government can cut pension benefits promised to workers.