As is the publication’s wont, GoLocalProv’s coverage of the Diocese of Providence’s pension problems makes a play for a sense of scandal and therefore misses a bigger story in the lesson that it teaches:
The document is dated June 19, 2018, and marked “immediate action” and it calls for drastic cuts to beneficiaries of the fund. Also, to be considered at the meeting is the October 2017 recommendation document and the plan outlined is to be considered for action this week.
Another dire statement in the report says, “Even with the revised more realistic assumptions, if we make these changes, it will still take 30-35 years to fully fund the Plan.” …
The four primary reasons for the plan’s lack of stability have been conditions for years. Catholic schools in Rhode Island have been closing for the last three decades, the 7.5 percent annual rate of return has not been considered achievable for the better part of a decade, and the major changes in mortality rates was achieved decades ago.
Note that the state of Rhode Island uses a 7.5% estimate for an annual rate of return, as well, and employees of the state have had the same changes in mortality rates. The only difference is that state government can always raise taxes to pay its mammoth obligations.
My understanding of the history, here, suggests that the problems for diocesan schools are wrapped up with changes in government. (This would make for a worthwhile research project for any students in an appropriate field who have the time.) During the same broad time period that the Church could no longer rely on religious brothers and sisters to run its classrooms, government employees unionized, and the unions began manipulating the electoral system to ensure that compensation — including pensions — would rocket beyond an amount that could conceivably be afforded without the bottomless well of taxpayer dollars. Private schools have to compete in this general job market.
Intentionally or not, public sector pensions were designed to hide the actual cost of the benefit. The system looked affordable, and the diocese offered a variation. Simultaneously, an explosion of regulations and mandates for schools, specifically, increased operating costs across the board.
So, yes, there’s a reckoning coming for this error, but it isn’t only for the diocese.