The accounting for public-sector pension funds is a scam on both taxpayers and government employees.  There’s no way around that conclusion.  Consider:

Rhode Island’s state employee pension fund made 2.22 percent in investment returns for the budget year that ended June 30, state General Treasurer Seth Magaziner announced Tuesday. 

That was below the pension fund’s internal benchmarks and substantially below the 7.5-percent assumed rate of return set for the pension fund, but Magaziner applauded what he said were good returns in a particularly challenging year for investors.

Comparison with other investors is not good enough.  If we were all running from an avalanche (didn’t want to go back to the lava well twice in one day), saying that you’re in the middle of the group of people racing for their lives is an irrelevant measure.  Middle, front, or back, the only measure that counts is whether your speed is enough to escape death.

The fund has to make a certain amount of money.  If it does not… catastrophe for taxpayers, beneficiaries, or both.

The risk does not lay evenly, either.  Note that Paul Edward Parker’s article highlights the fact that the formula for cost of living adjustments (COLAs) for retirees goes by a five-year schedule, by which the state is doing OK.  As I’ve written many times (here, for one), pensions are a long-term investment, and over the long term — a 10-year average or longer — Rhode Island is behind on its investments.  We can’t afford only to beat benchmarks that are lower than the investment projections that we use to calculate contributions.

Back when the General Assembly passed then-Treasurer Gina Raimondo’s pension reform, I estimated that the game would last about a decade, before it would become apparent, again, that the system wasn’t sustainable.  The stock market boom of the last few years (which I’d characterize as artificial) may have extended that period a little bit… or it may have reduced it, depending on the timing and nature of the correction.  Either way, it wouldn’t surprise me to see now-Governor Raimondo find some way to move on from her current job, rather than seek a second term, so as not to be in the direct line of fire when questions about the pension fund become more difficult than Magaziner is able to spin.