Reading Michael Riley’s latest article on the financial condition of pension funds at the state level and in Providence, one gets the sense of two realities. Riley’s an investment professional and knows this game, so when he writes things like this, people should listen:
Unless the Providence pension Plan receives $62 million in cash or investments from the City by June 30, 2015 the city will once again default on a current liability loan. …
The countdown for Providence Bankruptcy and default is on and its 14 days. Raimondo and Magaziner have also been oblivious to the struggles of cities and towns, preferring instead to campaign for green spaces and a green infrastructure bank etc. Meanwhile, the state’s pension performance for fiscal year 2015 is horrible and will certainly push Rhode Island and its funding ratio farther down into critical Status. …
I estimate that with just 2 weeks left in Fiscal Year 2015 the State Pension Fund has earned just over 3% compared to their own projection of 7.5%. That is a shortfall of approximately $360 million dollars.
One would think this sort of assessment from a credible expert would be slipped into the news cycle somewhere, but it’s not. Why is that?
Part of the problem, I think, is that changing models for the news business have broadened the responsibilities of journalists. This is complicated subject matter, and the same reporters who would take it on are also covering a wide variety of complicated subjects. Obviously, there’s a massive state budget in the works, and then there are flashier, edgier topics that the state’s politicians keep tossing into the mix, like truck tolls, for example.
Another part of the problem is that there’s so much fluff and flop in government budgets that it’s relatively easy for officials to cover things up. With a magician spell over the complexity, money can just appear, and policies can just change with some ostensibly disconnected rationale. Lo’ the state slips $62 million somewhere into its aid to Providence, and the same amount materializes in the pension fund, or the projected discount rate or some other assumption changes that makes the problem vanish.
That’s if anybody acknowledges that there’s a problem. There’s no rule of law anymore, it seems, and government is not a very good watchdog over itself. According to Riley, Providence has gotten away with this for years; if those who must enforce the rules do not do so, then no rules appear to have been broken, and when the repercussions play out over years, politicians needn’t be caught.
So why should journalists spend all the time to dig into these topics, only to be given the runaround by government sources (whose good will they need for other stories) and made to look like alarmists when the consequences outlast the public’s attention span?