Who could have guessed that Rhode Island’s pension fund would prove not to be fixed as promised after the much-applauded pension reform pushed by Democrat Governor Gina Raimondo when she was the state treasurer? From today’s Providence Journal:
The Rhode Island state pension fund lost $466 million over the past fiscal year, declining from $7.96 billion in assets to $7.50 billion, or 5.9 percent.
It was the second consecutive year that the fund lost money because the payout of benefits exceeded the return on investments and contributions from taxpayers and employees, according to David Ortiz, director of communications for Rhode Island Gen. Treasurer Seth Magaziner.
The market value of investments in the fund for state employees, public school teachers and some municipal employees also fell, by $26 million, or 0.27 percent, in the fiscal year ended June 30.
A point that Gregory Smith doesn’t make in his article, but that is absolutely critical, is that the pension fund is financed with an expectation of a 7.5% return on investment every year. That means a $26 million loss, versus breaking even, is really nearly a $500 million loss versus where the investment needed to be. The article goes on to note that other states’ pension funds made small returns, below 2%, but even that isn’t good enough. Even that should be seen as a loss.
This is why I’ve been attempting to learn the total benefits that the state has already committed to funding, without adjustment to put it into today’s dollars — that is, without reducing it by the estimated investment return. The state pension agency (the Employees’ Retirement System of Rhode Island, or ERSRI) and treasurer refused to give me that number, saying the actuary (a private contractor) doesn’t even do that calculation, even though it should be a very simple calculation to do. Last week, the attorney general’s office backed the pension agency up, although the lawyer is revisiting the decision because he somehow missed a letter I’d submitted that directly refutes the agency’s reasoning and, therefore, his.
I’ve also now requested all of the numbers that the actuary does calculate, and I will simply add them together to get the total. ERSRI, however, has refused that request, too, insisting that the only way a member of the public can get the number would be to take the raw data and essentially repeat all of the actuary’s work. This one I may pursue all the way into the court system, because it’s a matter of basic transparency and the rule of law, because the public records statute very clearly requires release of this information.
It’s also critical to the state’s finances. If our pension fund cannot even achieve positive returns, let alone returns anywhere near the estimated rate, the taxpayers and voters have a right to know how much money we’re talking about. The reason elected and appointed officials wouldn’t want us to have that information is obvious.