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Rhode Island pension system budget woes becoming hot button issue
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September 29, 2011
Rhode Island: The Rhode Island Judicial Pension System has come under fire from critics again. Judicial Pensions are some of the highest pensions paid out by the state and have been targeted by lawmakers and citizens alike for reduction. There have been attempts to reform the pension system for judges and for all public employees multiple times in the past decade, but most resulted in compromise or were outright denied.[1][2]
In 2009 a special study commission formed by the Rhode Island General Assembly recommended a plethora of reforms to help get the pension system as a whole back on track. These reforms included raising minimum retirement age from 59 to 65, and utilizing a federal-style hybrid plan that was partially dependent on investment returns to help fund the system. These reforms were opposed by employee unions and in the end the only compromise that was made was raising the minimum retirement age to 62.[1][2]
The Judicial Pension plan has changed in a variety of ways over the years as well. Judges like former Rhode Island Superior Court Presiding Justice Joseph F. Rodgers, Jr. who began their judicial service before 1990 were not required to deposit a portion of their salaries into the pension system. When hired in 1974, Rodger's pension was $25,000, whereas his current salary is $185,000. Rodgers argued that if pensions continue to be cut the court will have difficulty attracting qualified applicants to serve on the bench. Regarding the pension system he stated that "[m]y colleagues were financially doing much better in private practice, but I enjoyed public service and felt I could live on that. Not paying into my pension was part of my salary."[1]
Judges hired after 1990 were required to deposit 8.75% of their salaries into the pension system in order to receive 90% of their salary benefits based on their highest three years salary when they retired. In 2009 the system was reformed to only allow 80% of the judge's salary to be paid out, and the benefit was based upon the highest five years salary the judge earned. It also raised the minimum retirement age to 20 years of service at age 65 or 15 years at age 70. Cost of Living Adjustments (COLA) have also been reduced over the last few decades. Rodgers is eligible for 3% of his total salary as a cost of living adjustment as part of his pension. His daughter Kristin Rodgers who chose to be sworn in after the new pension adjustments had gone into effect is only eligible for the first $35,000 of her pension in the COLAs.[1][2]
Other proposals have been put forth to deal with the pensions issue. In 2008 then Governor Donald Carcieri proposed cutting judicial pensions based on how much social security that judge would receive. In 2009 State Representative Edwin Pacheco proposed a bill that would have given police officers and judges the same pension requirements as other state workers. One of the greatest fears before law makers is that altering the pension system will result in a mass exodus of judges already eligible to retire, costing the state more in pensions paid as well as salaries for justices to fill the vacancies.[1]
| CCMS debacle |
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| We first covered the pension case entering the courts back in late May. To learn more, check out a previous column, Summary judgment requested over pension cuts. |
The case has already been heard by the Rhode Island Superior Court and will likely make its way to the Rhode Island Supreme Court this year. Despite the fact that judicial pensions are being argued, a federal court cannot try the case because it is a state level matter. Many critics see this as a conflict of interests based on the matter being reviewed, however the “rule of necessity” requires that judges decide a case even if a conflict exists provided that no one else has the authority to do so. Therefore Chief Justice Paul Suttell has been unwilling to comment on the case or the pension system as it will likely be before his court.[1]
The final criticism on the matter is the state's funding levels for pension plans. The Judicial Pension plan sits at a respectable 77% funded for its $49 million dollar investment. The State Workers pension plan is only funded at 48% for its $6.8 billion dollar investment. The two systems appear to be vastly different, but the two branches of the general workers fund were founded back in 1936 and 1949 and have a large number of workers who were not required to pay into the system. The Judicial Pension was founded in 1990 and does not take into account any pensions given out to beneficiaries who started service before that date.[1][2]
Footnotes
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