Rhode Island: The Little State With a Big Mess

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In summary, the state of Rhode Island faces a $14.8 billion pension crisis, with 10 cents of every state tax dollar going towards retired public workers. State Treasurer Gina M. Raimondo has been warning that this figure could climb to 20 cents, leading to a hollowed out economy and loss of jobs. Raimondo has proposed rolling back benefits for public employees in order to safeguard bond investors and avoid bankruptcy. However, this has caused controversy and concerns over morality and class warfare. The situation in Rhode Island reflects a larger trend in many other states, where pensions are facing a combined shortfall of about $3 trillion. Tough choices must be made in regards to reducing future liability and raising contributions and minimum retirement age. Ultimately,
  • #71
http://blogs.wpri.com/2012/01/25/chart-the-decline-and-fall-of-the-providence-pension-system/

Hat tip AO.
 
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  • #72
http://blogs.wpri.com/2012/02/22/prof-providence-retirees-may-face-73-haircut-in-bankruptcy/comment-page-1/

Not a lot new in this one, but it discusses a looming question:

If Providence declares bankrupcy, how much of its pension promise does it actually have to pay?
 
  • #73
Locrian said:
http://blogs.wpri.com/2012/02/22/prof-providence-retirees-may-face-73-haircut-in-bankruptcy/comment-page-1/

Not a lot new in this one, but it discusses a looming question:

If Providence declares bankruptcy, how much of its pension promise does it actually have to pay?
Not sure, for sure less than 100% minus the fees the lawyers will make fighting for and defending against it. What a mess, in the end, shame on us as a society for letting this happen, it is all too common these days, not just in little Rhody.

Rhody...
 
  • #74
rhody said:
it is all too common these days, not just in little Rhody.

Absolutely. I think it is worth the occasional reminder that, while this thread is dedicated to RI, they are far from the only ones with this problem.

I sometimes ask relatives how well funded their pensions actually are. The first time they always look at me like I'm crazy.
 
  • #75
Public Sector Pensions: 'Their Accounting Makes Enron Look Good'

But the Rhode Island reforms -- which are being challenged in court -- are seen as a template for other cash-strapped states to model, giving rise to more fears that pension systems may not be as unshakable as once thought. "Any change will hurt," Munnell says. "If you were counting on your pension and the value is reduced, it can be a painful adjustment."

Hat tip AO.
 

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