The Politics of the RI Pension Settlement

Feb 14, 2014

In most protracted court battles, a settlement reached after tortuous year-long negotiations marks the end of a lawsuit and allows the parties to move forward. Often the lawyers celebrate and perhaps even share an odd drop together.

That wasn’t the case Friday. The  proposed legal settlement between the state and the unions that represent public school teachers and state employees and retirees is just the beginning of a cumbersome ratification process that is sure to become ensnared in what is shaping up as a contentious political campaign season in Rhode Island.

The settlement preserves the bulk of Rhode Island’s landmark 2011 pension overhaul law that trimmed state employee and retiree pension benefits, saved taxpayers hundreds of millions of dollars and launched the multi-billion state retirement fund on a path to solvency.

The result was a carefully crafted compromise that gave public workers and retirees a few concessions, but nothing that would threaten the long term viability of the system. It represented a big compromise by the unions, who in effect acknowledged that the generous retirement benefits they once enjoyed are consigned to the dustbin of Rhode Island political history because they were not sustainable given the size of the state's economy and taxpayer base.

The settlement finally gets the state out from under the cloud of uncertainty that the six related pension lawsuits caused. For a modest increase in state money two years from now – about $13 million in a budget or more than $8.5  billion, the state eradicated any chance that an adverse court decision in favor of the unions would hammer taxpayers or bring the state to the brink of bankruptcy, mentioned around the nation in headlines with the likes of Detroit or the state of Illinois.

Yesterday’s deal was along the lines suggested a while back by Gov. Lincoln Chafee, who unlike other state politicians, is unburdened by the political implications of the deal – he isn’t running for reelection.

And it represented a compromise by state General Treasurer Gina Raimondo, a Democrat locked in a three-way primary for her party’s gubernatorial nomination. Raimondo was the main architect of the original pension overhaul.

In December, 2012, Chafee favored negotiations to settle the lawsuits. At that time Raimondo strongly protested, saying she favored pushing the matter in court. She insisted the state had a strong case.

Now, with Raimondo running for governor in a primary where union workers and liberals are a big constituency, she can say that she is not the polarizing politician that some union activists have asserted. This settlement gives her an argument that she is reasonable and willing to sit down, Chafee-like, and negotiate in good faith with union leaders on a prickly issue.

RI Superior Court Judge Sarah Taft-Carter forced Raimondo's' hand. She ordered the unions and the state into mediation last year. It  took 13 months to forge an agreement .  The issues are contentious and complicated, involving millions, even billions, of dollars. Which is one reason the talks took so long.

Now, the serious politics begin. Six separate groups of state workers and retirees must vote to ratify the settlement. Rejection by just one of those groups, such as public school teachers, would up end the entire deal. The AFT and NEA unions will vote together as a unit, said union lawyer Lynette Labinger. (If you don't think she is a top litigator ask the Brown University lawyers how she crushed them in the famous Title IX women's athletic rights case years ago).

So the state’s union leaders have their work cut out for them. Not all of them are pleased to advocate for this deal to their members, but under terms of the agreement, they have pledged to do just that. The bright and usually voluble National Education Association executive director Bob Walsh sat glumly during the presentation of the deal, saying only that he was committed to the settlement and declining any comment on whether it was  fair or not.

Assuming the state workers and retirees approve, the settlement than goes back to Judge Taft-Carter for further approval to ensure that it was arrived at fairly and that the parties acted in good faith.

If that hurdle is cleared, the settlement would head to the General Assembly a few months before an election in which all 113 seats are at stake. On the one side will be some conservatives and some in the business community who will criticize the settlement as too unfriendly to taxpayers.

On the other side will be union members who support it and retirees who will want their immediate 2 percent cost-of-living adjustments on the first $25,000 of their pensions. How many state representatives want to take a vote that either frosts either the local chamber of commerce or costs their favorite retiree constituent a $500 check.

So far, House Speaker Gordon Fox, D-Providence, and Senate President Teresa Paiva Weed, D-Newport have been reluctant to say they would take up the settlement this session. Yet, if they don’t, they may have to explain why they are ignoring a reasonable solution to a sticky labor-management dispute that threatens the long-term solvency of state government.

The Assembly has no choice but to take an up-or-down vote on the settlement. Any amendments would scuttle the deal and send the cased back to Judge Taft-Carter. There are many ways on Smith Hill to shield members from such a rough vote, such as including it as what is known at the Statehouse as  article in the budget.

That means if you cote against the pension deal you jeopardize the  local little league grant. Yet there is nothing anyone in Rhode Island’s political hierarchy can do to thwart a loud, even foolish, debate about a topic everyone claims to care about but few are expert in. In talk radio stupid nation, a deal  that gave every retiree  free lollipop would be subject to withering  stupid specious nonsense.

Hey rep, do you really wanna tell the old guy at the Portuguese Club that  he doesn’t deserve the $500. Especially when he says ``hey rep, I’m not gonna be eligible again for another 4 years and I’ll be dead then.’’

Ah, the vicissitudes  of local Rhode Island politics.