I know at least one trail I’ll be chasing in the new year. As I’ve explained, when people in state government talk about pension liabilities, they talk about a current liability: The estimated amount that the state has promised in benefits to employees and retirees subtracting all scheduled contributions from employees and taxpayers and then discounted back in time to the current year with an assumption of 7.5% return on investment each year.
Say a newly hired state employee will work for 25 years and then retire for 20 more. When the state tells us how much he’ll collect 45 years from now, it doesn’t actually tell us how much he’ll collect 45 years from now. I’ll make up these numbers for illustration purposes: Let’s look at a $100 that the retiree will receive in that last year. First, let’s say the employee and state will have contributed $10 toward that $100 over the course of his career; that means the liability is considered to be $90. Next, the state discounts that amount by 7.5% per year. By that math, the state reports the $100 pension payment as a $3.73 liability. If the system is 50% funded, it says its unfunded liability for that $100 is $1.87.
Based on information in the latest valuation, I gave a rough estimate of what the total estimated benefits for which the state is actually liable of $57 billion over the amortization period. At best, this could be said to be the total liability if the state were planning to payoff the benefits and end the system in around 20 years. In other words, it’s nowhere near the total dollar amount that taxpayers are ultimately promising.
So, I asked the treasurer’s office for the actual total for state employees and teachers. At 3:10 p.m. on New Year’s Eve, a state lawyer replied to my request, saying, “The Employees’ Retirement System of Rhode Island (ERSRI) does not maintain the information you seek.”
The state’s private actuary, Gabriel Roeder Smith & Company (GRS) either has this number on hand or could easily produce it. It’s just that General Treasurer Seth Magaziner doesn’t want to ask for it in order to give it to me.
So, on Monday, I’ll begin calling and emailing GRS for the number, although I’m reasonably certain that they’ll say they aren’t authorized to give it to me. Next, I’ll start bugging Attorney General Peter Kilmartin, although the likelihood is that his lawyers will tell me that the state Access to Public Records Act (APRA) doesn’t cover information that private contractors never turn over to the state, and in any event, that a single step in the calculation falls under one of the exemptions of the law.
At each step of the way, I’ll make sure to publicly document every communication, and I’ll appeal to the next level in the process.