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Original article URL: http://bridgemi.com/2012/04/everybody-feels-our-pain/
25 April 2012
From the comments piling up on Bridge’s stories about school-employee pension reform, both here and at Mlive, where Bridge shares content, you’d think…well, you’d think a lot of things. For a topic that involves actuarial tables and lots of numbers, it gets blood boiling like few others.
But if there’s one takeaway I hope every reader gets, it’s that Michigan is not alone in this. For all the muttering about dark GOP conspiracies and high-living lunch ladies, it’s far more important to note our shared pain with states, and to learn from their own reform efforts.
This is a very flattering profile of Rhode Island’s state treasurer, Gina Raimondo, and her one-woman crusade the face the fiscal truth of that state’s public-pension disaster. But look beyond the lovely prose of author David Von Drehle, and the facts speak for themselves: Rhode Island was on the brink of disaster, “teetering like an American Greece,” and Raimondo, a Democrat, engineered the reform package that pulled it back from the edge.
The answer? It should sound familiar:
The plan, after some slight legislative compromises–Raimondo drew a stern line against major changes–ended cost of living increases for at least five years and tied future benefit bump-ups to the overall health of the system. It gradually raised the retirement age to mirror that of Social Security, and it converted a plan of defined future benefits for retirees into a two-headed hybrid: employees will now get a diminished guaranteed pension together with a defined-contribution plan along the lines of a 401(k). Taxpayers also took a hit, underwriting a package to refinance the pension debt. Boldest of all, the changes applied to current retirees, not just future ones.
Von Drehle finds a compelling subject in Raimondo. But the answer appears the same everywhere.