If you were told your state might wither away because it took too long to do the math on its retirement system, would you be angry? Would you pack up and move? Or would you try to be fair?
For a state as small as Rhode Island, there's little margin for squabbling. At $7 billion, the state has the highest unfunded pension liability per capita in any state in the country.
The state has been running its pension numbers with the assumption the funds would post an average annual return of 8.25 percent. The actual number for the last decade has been around 2.4 percent.
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Gina M. Raimondo—Harvard grad, Rhodes Scholar and the state's treasurer—is not a devil's advocate. She's been honest about the severity of her state's situation and her candidness throughout her election a year ago secured her unenviable position. According to The New York Times, although Raimondo is a Democrat who ran in a heavily Democratic state, "she stood out because she refused to promise that state jobs and pension benefits would be protected no matter what."
Now Rhode Island is at the center of what could be an unprecedented and influential overhaul. Forget top-down Wall Street reform, unfunded pension liabilities could very well sink the country from the inside out, starting with the most vulnerable municipalities like Woonsocket, where it's reported half of the streetlights are out because the city couldn't afford to replace them.
For residents of the smallest state in the country, it's a three-sided tug of war. On one side: tax payers, whose contributions will likely double in the coming years. On the other, new and younger employees who would have to bump up contributions and wait longer to reach retirement age.
Then there are the most vulnerable: retirees who, if the pension reform passes, won't be shielded from inflation. For these workers, the fight gets personal. They've been abiding by the rules for years. They set aside a chunk of their paycheck every month, they earned what they're due, and now they wonder whether they'll be able to live without a COLA increase, without extra money for medicine, without the extra money that might keep them from needing a part-time job that isn't available in a state with a 10.5 percent unemployment rate.
The problem in Rhode Island is not isolated, and it's far from being over. What's staggering is the moral dilemma brewing among residents. The burden of accountability is not completely on the part of the state government, it's also on its citizens. To quote the Times again, "In some ways, the central question is not only what the government owes to pensioners but what citizens owe to one another."
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