Rhode Island Reaches Pension Accord With Some Unions

If approved, a proposed settlement will end litigation from six challenges that arose from changes made to Rhode Islands’ public pension systems in the wake of the financial crisis.

Rhode Island Governor Gina Raimondo says her state has reached a tentative settlement with six of the nine public employee unions that sued over the state’s recent pension system overhaul. The tentative settlement would impact up to 59,000 current and past Rhode Island workers, according to Raimondo, and would “keep the pension system on a healthy path.”

Any settlement must be approved by the courts and the state’s general assembly, she adds, so terms of the settlement could change.

“Unlike the situation in 2014 where all groups were required to sign on to the settlement, such a condition does not exist in the current scenario,” she notes. “The court will set a schedule for the parties to implement the settlement, and the remaining three lawsuits will be addressed by the courts. The April trial date will be vacated for the purpose of implementing the settlement.”

Raimondo goes on to call the proposed settlement “an important step toward providing certainty for our public employees and our cities and towns.”

“I believe it is in the best interests of all Rhode Islanders,” she continues. “The proposal keeps our state on a path toward financial stability. While the state has a strong case, the uncertainty of a trial threatened to reverse that progress. I am grateful the parties were able to come to an agreement. I look forward to working with the General Treasurer, the General Assembly and all stakeholders to pass this legislation and then build on this progress by passing a balanced budget focused on creating jobs.”

The tentative settlement agreement comes just about two weeks after the state of Rhode Island offered a new proposal for a settlement of the litigation. According to the Providence Journal, the suggested terms of the settlement included the following:

  • Two one-time $500 stipends to current retirees, with the first payment a month after enactment and the second paid a year later;
  • A once-every-four-years increase in the pensions paid to current retirees on their first $30,000 in retirement benefits, as opposed to the first $25,000; and
  • A tweak in the retirement age, to allow workers to retire with full benefits at age 65 after 30 years of service; age 64, 31 years; age 63, 32 years; and age 62, 33 years.

The latest round of pension reform in Rhode Island, passed in November 2011, sparked several lawsuits by both unions and retirees. A settlement agreement on the lawsuits was reached last year, but police union members rejected the deal, prompting a judge to order the parties back to mediation.

Meanwhile, a Rhode Island state court denied the state’s motion to dismiss the challenge, rejecting the state’s argument that no contractual relationship existed between it and the plaintiffs at the time the pension reform was enacted.

According to a statement from General Treasurer Seth Magaziner, “This proposed settlement lifts a cloud of uncertainty from our state and allows us to finally move forward, so we can focus our energy on new ideas to rebuild our economy. I am grateful to the settling parties in these lawsuits for being willing to come together to forge a common solution.”