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4:00 am
Fri November 25, 2011

Rhode Island Makes Big Changes To Pension System

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LINDA WERTHEIMER, HOST:

Rhode Island had one of the most underfunded pension systems in the country until last week. That's when an overwhelming majority of state lawmakers passed big changes, mostly affecting future retirees. Now those lawmakers are facing angry unions, which are preparing for a legal fight. As Catherine Welch of Rhode Island Public Radio reports, the unions are also hinting at a political battle against those who supported the plan.

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CATHERINE WELCH, BYLINE: About a week before the final vote, thousands of union members rallied outside the state capitol. From her office, State Treasurer Gina Raimondo gazed out the grand window behind her desk. As she watched the crowds gather, she thought about their future.

GINA RAIMONDO: And as I sat and I watched probably a thousand people walk by my window, that's all I could keep thinking of, which is: They're protesting it now, but decades from now when I am out of office, they will get a pension check, and that's the way it should be.

WELCH: Raimondo crafted the plan that immediately chops Rhode Island's $7 billion pension debt by almost half. It does this by hiking the retirement age, freezing cost of living adjustments, and moving nearly half of current state workers contributions into a 401(k)-style plan.

Raimondo spent nearly a year touring the state with pages of calculations, showing union members, taxpayers and business leaders that doing nothing to the pension system would cost Rhode Island more than a billion dollars in 10 years. She also refused to point fingers. And that, she says, is how sweeping changes are made in one of the most unionized states in the country.

RAIMONDO: And so what we didn't have in Rhode Island, we didn't have Wisconsin. We didn't have the nasty rhetoric of us versus them.

WELCH: But since the vote, the us-versus-them language has surfaced in emails from the Rhode Island chapter of the National Education Association, warning lawmakers there will be a political fight and calling for a restraining order to block pension changes.

The unions are also gearing up for a legal battle. A few states protect pension benefits in their constitutions, but Rhode Island does not. And there is already a case working its way through state courts looking at whether workers have property rights to their benefits.

MICHAEL DOWNEY: This would be different if it was given to us. No one gave us anything. We paid for these pensions.

WELCH: Michael Downey is president of Council 94, Rhode Island's largest public employees union. He's aware of the emails calling for lawmakers' heads. He won't say whether his union will wage a similar battle, but...

DOWNEY: When you are retired and you go to check your monthly statement, you won't forget this. You'll remember this. Will it be remembered in the polls? I'm sure it will.

WELCH: House Speaker Gordon Fox, a Democrat, is already feeling the heat.

STATE REPRESENTATIVE GORDON FOX: I was at a wake the other day, and someone I thought was a friend told me to kiss their backside.

WELCH: Fox, who describes himself as union-friendly, is bracing his party for a fight in next year's elections. But he warns organized labor that because treasurer Raimondo toured the state and talked with thousands of Rhode Islanders, politicians are hearing from a public engaged in the pension issue at a level he's never seen before.

FOX: When you go knocking on those doors, as most state reps in Rhode Island with small districts still do, you knock at that door, you're apt to meet people that say, how did you vote on that pension reform? Because I wanted you to vote for that.

WELCH: The pension law passed with wide margins in this heavily Democratic state. Any changes to the law now will likely be done in the courts.

For NPR News, I'm Catherine Welch in Providence Rhode Island. Transcript provided by NPR, Copyright National Public Radio.

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