This Woman Has a Solution to America’s Pension Problem – Next City

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This Woman Has a Solution to America’s Pension Problem

Gina Raimondo Isn’t One to Let a Good Crisis Go To Waste. Now She Is Running for Governor.

Story by Anna ClarkTwitter

Illustrations by Alex Lukas

Published on Sep 1, 2014

Most people at the party didn’t plan to come; they just happened by. Or they were driving past and a few energetic folks in blue t-shirts waved them down and asked if they wanted a burger, right off the grill. Or perhaps a bottle of ice-cold water? On a steaming Saturday afternoon in June, that sounded perfect.

In the backyard of an unassuming wood-frame home in Lower South Providence, Gina Raimondo, a Democratic candidate for governor, was celebrating the opening of her second campaign office in Rhode Island’s largest city. You wouldn’t know anything political was happening here if it weren’t for the giant sign situated on the lawn with Raimondo’s name in large blue letters. But around back, the grill was afire. A deejay cycled through crowd-pleasing tunes: “U Can’t Touch This,” “September,” “Super Freak.” When Raimondo’s car pulled up, blue-shirted volunteers and staff swarmed, chanting her name (“Gi-na! Gi-na!”). Through the passenger-side window, she grinned.

The neighbors came by, one by one, often bringing their kids. In fact, it was the kids who won over Percio Rodriguez. The 42-year-old carpenter grew up in this neighborhood, and watched with sadness as it became a community where, “you got to be careful. You got to watch your kids.” As he sat down with a paper plate topped with a heaping burger, he looked at the diverse assortment of people talking and playing on the lawn and said, “It’s nice they do things like this for the community. Gives them somewhere to go.” He said he didn’t have any particular opinion about Raimondo’s main challenger in the primary on September 9th, Providence Mayor Angel Taveras.

Providence is one of the oldest towns in America, founded in 1636 by Roger Williams as a refuge for religious minorities. It later became one of the country’s first industrialized cities, specializing in high-end jewelry, silverware and textiles. While the contracting of the manufacturing sector challenged this dense city, it has the enviable economic and cultural power of seven colleges and universities, most located within just a few square miles of each other and some that are among the best in the world. Eight hospitals also call Providence home, as well as a regional hub for the U.S. Postal Service, a major seaport and, of course, the state capitol.

In South Providence though, all that feels far away. Here, there are few large businesses open; quiet residential blocks are pockmarked by vacancy. While the city is known for its jaw-dropping historic architecture, the homes here feel mostly, well, old. Many are boarded up; some blackened from fire. Most residents are African-American and Hispanic, and many don’t speak English fluently. These were the people invited over for Saturday barbecue.

Gina Raimondo answering a question at a mayoral forum hosted by the Rhode Island Black Business Association in July. (AP Photo/Steven Senne)

For all the hype of her entrance, Gina Raimondo didn’t talk long — formally, at least. A petite woman, she had to stand on a chair to be seen. “Buenos tardes a todos,” she began, which sent the largely Hispanic crowd into a loud, cheering rush: Wooo! “This campaign will be a diverse campaign that brings together all the cultures of Rhode Island.” State Representative Grace Diaz stood at Raimondo’s side and translated the candidate’s short speech into Spanish. “We will bring jobs back to Rhode Island, and we will do it in a way that will not leave anyone behind.”

Raimondo hit the usual gubernatorial candidate notes: stimulating the economy, a leader who will look out for everyone, gratitude to campaign supporters. (Her young son Tommy interrupted: “You forgot to thank me!”) She gave a nod to the cultural importance of electing the state’s first female governor.

But Raimondo did not so much as hint at what made her famous — the very reason she has the momentum to run for the state’s top office in the first place.

Politicians talk a big game about “taking on the tough issues,” but Gina Raimondo is unusual in that she did it. Only a few months into her first term in any kind of public office — the unglamorous role of general treasurer — she opted to take the lead on an incipient problem that many of her predecessors had happily ignored: a desperately underfunded pension system. By picking up this ticking time bomb, Raimondo dove into a toxic morass from which virtually no one emerges a winner. You couldn’t imagine a less politically winning strategy if you tried.

Rhode Island’s pension problems are hardly extraordinary. Nationally, state and local governments are an astonishing $900 billion short on benefits they’ve promised to retirees, and even that may not fully capture the scope of the problem. Most states don’t contribute what they’ve promised to their employees’ pension funds, and most estimate that the funds will average an 8 percent rate of return — an “unrealistic assumption,” according to a 2013 Brookings paper, that, even if true, still leaves that unfunded $900 billion liability. A more realistic estimate is a 5 percent return, which pushes the unfunded liability up to $2.7 trillion. Altogether, “the average state has only funded half of its pension promises,” according to Brookings.

The pension debt facing cities and states creates a dangerous situation for the wellbeing of retirees and their families — and threatens the fiscal health of local governments. Communities must choose between supporting retired workers or keeping streetlights on and libraries open. As Greg Mennis, the director of public sector retirement systems for the Pew Charitable Trusts put it, “Governments need a sound plan to fund these (pension) obligations, and a sustainable system for the future. If adequate funding is not achieved, the cost of paying for benefits, the impact on other essential services, and the potential for unpaid pension promises will only increase.”

But as familiar as the pension problem is, it is a political non-starter. In a state as Democratic and pro-labor as Rhode Island, comprehensive pension reform appeared to be even more hopeless. How do you persuade people that giving up something — whether it is a portion of their income in the latter half of their life or their political capital — is the right thing to do?

“You Can’t Argue With the Math”

Rhode Island has long lagged economically behind its New England neighbors and today is no different. The teeny state boasted the nation’s highest unemployment rate for the better part of the last year and is now in third place at 7.7 percent, tied with Michigan and Nevada. (Providence’s unemployment rate is even higher, at 10 percent.) By comparison, Massachusetts, Maine, Vermont and New Hampshire all had unemployment rates in July that were lower than the national rate of 6.2 percent, and Connecticut wasn’t too far above that. Along with the ailing economy, an entrenched, corruption-prone political culture has long handicapped the state. Between 1992 and 2012, Rhode Island had more convicted state employees than any U.S. state other than Mississippi and Kentucky, research by University of Missouri Prof. Jeffrey Milyo and Winthrop University Prof. Adriana Cordis showed.

“So Rhode Island families are really struggling,” Raimondo told me.

The treasurer made her name as a force that is unafraid to blame the political class for failing to stanch the economic bleeding. The state’s political leaders exacerbated the challenges because they “squandered a lot of opportunities we needed to be a competitive state,” she said.

Raimondo, 43, talks frankly about the state’s political culture in part because she’s still a newcomer to it.

She grew up in Smithfield, outside Providence. Her father, the son of an Italian immigrant, worked for 26 years for a luxury watchmaker before the company moved its factory overseas — a story told in one of Raimondo’s campaign ads. Raimondo graduated as valedictorian from a Catholic school in Providence and studied economics at Harvard, where she graduated with honors. She was a Rhodes fellow, earned her law degree from Yale, and ultimately co-founded Rhode Island’s first venture capital firm. She ran the company for a decade before newspaper headlines about her home state’s financial crisis riled her up enough to step in. She had never before run for office before becoming treasurer in January 2011.

Even if Raimondo was committed to solving Rhode Island’s pension crisis from day one, it would have been reasonable for her to spend her first year or so working behind the scenes to build political allies and chip away at the political deadlock. But “very quickly” after she arrived in office, she recalls, the state’s actuary advised her that she had no time to lose before crisis hit. Only eight months after her term began, the city of Central Falls fell into Chapter 9 bankruptcy, “mostly because they couldn’t afford pensions,” Raimondo said.

“It was clear that if we didn’t take action, other cities would follow suit,” she said, in her swift methodical way.

Central Falls is a dense city of about 20,000 people crammed into 1.2 square miles straddling the Blackstone River. Despite a sign resolutely declaring it the “City of Dreams,” Central Falls has struggled for years. In 2010, after 20 years of state control, the school district superintendent made national headlines by trying to fire every single teacher, administrator and staff member at the high school. The city declared insolvency and was put in receivership in May 2010, shortly after media reports implicated its mayor for corruption in issuing no-bid contracts and kickbacks to an old friend. But receivership wasn’t enough to overcome Central Falls’ financial hole, which included an $80 million unfunded pension and retiree health care liability — equaling more than five times the city’s annual budget — as well as a $5 million deficit.

Bankruptcy became official in August 2011 for this community of mostly low-income people and Central American immigrants. It emerged from it more than year later, with a plan for higher taxes and deep cuts. Bondholders made out better than other creditors, including city employees. In a chilling picture of what could come for statewide employees, Central Falls unions rejected proposed pension reforms shortly before the community declared bankruptcy. In the ensuing trial and negotiations, union members wound up with their pensions gutted more deeply than the reforms would have left them. Workers ultimately took about a 50 percent hit. Younger workers had pensions cut by 55 percent.

“A constituent in my district is a Central Falls retiree,” said Brian Newberry, a Republican state legislator and minority leader of the House. “Their pension of $40,000 got cut to like $15,000 as result of the bankruptcy.”

The crisis in Central Falls lent urgency to the threat facing the whole state. By 2010, according to Brookings, Rhode Island was underwater like a McMansion in a zombie subdivision. The state had more retirees than workers, and for the previous 10 years, it had been paying more to its pensioners than it collected from state employees and taxpayers combined. The system was only 49 percent funded, thanks to politicians who promised new benefits without quite figuring out how to pay for them. To its credit, Rhode Island had always paid into its pension system — that’s not the case with many other cities and states across the U.S. And yet, this wasn’t enough to save the system from near collapse.

“They gave away benefits down the road, but by the time the costs come due, the politicians who made those decisions are mostly gone,” Raimondo told me.

Raimondo points out that it was not atypical for Rhode Island public employees to retire with benefits totaling more than 100 percent of their final earnings. Meanwhile, retired workers are living longer; retirees in 1960 left public service at age 60, when life expectancy was 70 years old. By the time life expectancy in the state reached nearly 80 years old, Rhode Island’s retirement age had dropped to 50.

Newberry also put the blame for the crisis on careless political leaders. “Collusion is not the right word,” he said. “Not sinister. Just … devil-may-care. They just didn’t care. They thought, well, if [these promised benefits] cost more money in the future, we’ll just tax people.”

Not only did elected officials not have to deal with the consequences of their decisions, they were often rewarded for them. Glad for generous benefits, public sector unions were loyal to politicians who made imprudent promises, offering them donations, fundraising and organized campaign support. Often, union leadership had the same self-interested motives for supporting unrealistic pension policy: They too were elected to represent their community, and they too found themselves rewarded in the short term without having to stick around when the bill finally came due. It’s the same political calculus that drove the city of Stockton, California, into bankruptcy in 2012, and threatens numerous other cities staring down steep pension liabilities.

“Where is the Speaker of the House from 1987?” Newberry asked. “Where’s that guy who was head of Council 94 [of the American Federation of State, County and Municipal Employees, AFSCME] or the NEA [National Education Association]? They’re long gone. But that’s the reason we’re in the mess we’re in.”

Retirees are in a desperate position; they were promised benefits and planned their lives around them. Through no fault of their own, they may not receive them.

“It’s not fair,” Raimondo said. “It’s just not fair.”

Just months into her term, working with the urgency of a high achiever facing a time-sensitive test, Raimondo got tactical. She first worked to persuade the state’s Retirement Board to officially lower its expectations on the rate of return on pension investments, shifting it from 8.25 percent to 7.5 percent, while also planning for longer life expectancies. To drive home the urgency, she brought in a lawyer on the day of the board’s vote to advise them on their legal responsibility to be wise caretakers of pension finances. While six of seven union representatives on the Retirement Board voted against the revised numbers, the measure passed. This was the “master stroke” of Raimondo’s pension strategy, according to WPRI’s Ted Nesi, one of Rhode Island’s best political reporters. It meant that the state’s unfunded liability immediately jumped from $4.7 billion to $7 billion, turning up the heat for legislative action.

This cued a yearlong effort to build support in Rhode Island’s General Assembly for a swing in pension policy. In May 2011, Raimondo commissioned a report called Truth in Numbers: The Security and Sustainability of Rhode Island’s Retirement System to get out to politicians, pensioners and the public. The report emphasizes how state funds are poured into pensions at a rate that is expected to grow exponentially — unless there is some intervention. Its massive price tag is bound to leave less money available for other crucial state programs, like education, health care or social welfare, she argued.

This was Raimondo’s battle to lead, yet as treasurer, she herself had no vote, and technically no power to actually make any fixes. Rhode Island’s pension system is laid out in a statute, which means that the General Assembly had all the power to make change — or not. “So my job as treasurer was to give all the numbers to [the legislators] and advise them around the facts of the pension system — the math of it,” Raimondo explains. “The General Assembly had to craft legislation to enact a new law, and of course the governor had to sign it.”

A 12-member pension advisory group was formed to decide on what sort of legislative steps could be taken based on the “Truth in Numbers” paper. The group included four members from organized labor, as well as several pension experts. All meetings of the group were public and held at a variety of community locations; information and ideas on pension reform were solicited from citizens. Raimondo made sure to stay personally involved, speaking across the state about the issue and having her department use online tools to disseminate information on the crisis.

In September, Raimondo spoke to a restless crowd at the Cranston Portuguese Club, with many union members challenging the proposal. One audience member asked whether the state would be reneging on a moral obligation by cutting pensions, and Raimando responded, according to the New York Times, by saying that Rhode Island has choices; it can pay for books in schools, road repairs, senior services and other civic essentials — or it can keep every promise the state has made to retirees.

“I would ask you, is it morally right to do nothing, and not provide services to the state’s most vulnerable citizens?” Raimondo asked the crowd, according to the Times. “Yes, sir, I think this is moral.”

Finally, in October 2011 — only 10 months after Raimondo took office, five months after the “Truth in Numbers” report, and two months after Central Falls’ bankruptcy — the Rhode Island Retirement Security Act (RIRSA) was introduced before the assembly. It called for cost-of-living adjustments (COLAs) for retirees to be held up until pensions were at least 80 percent funded, increased the retirement age for current employees, and created a new contribution model that paired a smaller defined benefit pension with a 401(k)-style supplement. The bill also detailed a sort of “contingency plan” that would take effect if the pension fund’s financing gap grew larger than 60 percent. In that case, the Retirement Board would be tasked with creating a new plan to fix the gap, which would then go before the legislature.

EngageRI, the advocacy group for pension reform, effectively worked as the PR arm of the campaign. It was developed as a 501©(4) to push reform by spending hundreds of thousands of undisclosed dollars — that’s a lot in this tiny state — on a multifaceted media campaign in support of the legislation. While a donor list was never revealed, reporters showed that a chunk of EngageRI’s money came from a Houston billionaire who was a former Enron trader and hedge fund manager. The group, now disbanded, urged citizens to ask their legislators to vote for the bill and, via surveys, helped build a case for widespread public support for reform, helping to push wary lawmakers from the “maybe” column to the “yes” column.

Raimondo, as treasurer, addressing a rally of supporters for her pension legislation at the Statehouse, in Providence in 2011. (AP Photo/Steven Senne)

The act was fiercely debated in a special session of the General Assembly. The state recorded more than 30 hours of public testimony. Raimondo had campaigned on a platform of transparency, and all 30 hours were posted online and screened on public television. At times, the debate turned brutal. Cranston firefighter Paul Valletta Jr. testified that “the general treasurer cooked the books on this issue and she threw it on your laps. She wants you to destroy people’s lives.”

“I’m not saying there isn’t a pension problem, but it’s not a crisis,” Valletta added. The state branch of the AARP also protested pension reform, urging legislators to find another way to solve the problem. No other solution was found.

“At the end of the day, the General Assembly passed the law, with 90 percent [of the legislative members] voting for the bill,” Raimondo said. “So we did have consensus.”

Raimondo’s act won with a 57-15 vote in the House and 35-2 in the Senate. Those are extraordinary numbers on a controversial issue, even for a state dominated by a single party. At the time, Democrats held the House with a 65-10 majority and the Senate at 29-8-1. Overall, 77 of 94 Democrats voted for RIRSA. The only significant modifications to the original proposal were a commitment to re-evaluate the suspended COLAs every five years, and an incremental raising of the retirement age from 60, for state employees with at least 10 years of service, to 67.

Governor Lincoln Chafee signed RIRSA into law in November 2011. With the stroke of his pen, the state’s unfunded liability fell by $3 billion, and its annual payments to pension funds dropped by $275 million.


It was the first time that any state in the country made pension changes that affected current public employees. What’s more, despite opposition from many unions, not one Democratic legislator who voted in support of the bill lost their next re-election campaign.

The secret to selling pension reform? “Communication,” said Joy Fox, Raimondo’s deputy campaign manager who served as the treasurer’s spokeswoman.

That, and credibility. Raimondo’s ability to make this case was enhanced by her experience as a successful venture capitalist with sterling intellectual bona fides, and without the baggage of a career politician. That meant that her number analysis carried water; it couldn’t be dismissed out of hand.

It also helped that pensions had hovered on the periphery of Rhode Island politics for several years, giving Raimondo a head start on reform. And her standing as a Democrat undercut the narrative that only market-minded, anti-union Republicans are interested in fiddling with pensions.

But ultimately, the essential piece was keeping the conversation focused on the unbiased numbers — the fact that there simply was not enough money to make good on the state’s promises. “The bottom line is that you can’t argue with the math,” Newberry said. The fact that the state had not faltered in its payments to the pension funds dampened accusations that the funds were in trouble because the state had lapsed in its obligations. Raimondo said that her team put in an especially strong effort in working with public employees to educate them about the situation. “I made it really clear that I will go talk to teachers or state employees and say, ‘You guys did nothing wrong. You followed all the rules and now you’re told you won’t be paid. It stinks.’”

A Lawsuit That Could Derail Everything

To many public employees, Raimondo’s words are cold comfort. Her point that teachers and other state employees are the unwitting victims of the pension crisis is in fact the gist of a lawsuit filed against the state in 2012 by a coalition of public employee unions. The lawsuit charges that RIRSA breaks a contract to retirees. The plaintiffs, and other critics of Raimondo’s plan, argue that the state is solving its financial crisis on the back of its retired workers.


In 2013, a judge agreed that pensions are “an implied contract” and ordered mediation between union reps and state officials. Hoping to sidestep a trial, Raimondo and Chafee proposed a settlement with labor leaders in February that would tinker with RIRSA by lowering the retirement age from 67 to 65 and permitting current employees who have worked for the state for more than 20 years to keep their defined benefit pensions, unchanged. It also would exempt public safety workers from the new hybrid pension plans. The deal would protect 94 percent of the savings in the original plan.

More than 70 percent of workers and retirees voted in support of the settlement. But most police officers voted no — and that was enough to torpedo a deal and launch a new lawsuit, filed in April. “I could not sit back and let this happen without a legal fight,” Joseph Clifford, a retired high school history teacher and a lead plaintiff, told the Providence Journal.

Their skepticism may have been exacerbated by a withering report penned by former federal securities lawyer Edward “Ted” Siedle and paid for by AFSCME. The report rails against Raimondo’s decision, approved by the state’s Investment Commission, to put $1 billion of the state’s $7.6 billion pension fund into hedge funds. It describes the move as “blatant Wall Street gorging.” Implicit in Siedle’s critique is a personal attack against Raimondo, a finance industry veteran who raised hundreds of thousands of campaign dollars from her former industry colleagues.

The report accuses Raimondo of being a liar who sold out workers in order “to enrich herself and her hedge fund backers.” (Raimondo defended the hedge fund investment — a common but not uncontroversial strategy for public funds nationwide — as necessary to protect against future economic downturns.)

The “liar” accusation has peculiar resonance in Rhode Island, which has “a long and storied history of corruption in government,” said John Marion, executive director of the Providence chapter of Common Cause. One of the most popular candidates in the capital city’s mayoral election this year is Buddy Cianci, who has been twice convicted and forced to resign from office. He served four years in prison on racketeering charges.

As Raimondo’s campaign reached its summer crescendo — the new South Side office was the fourth of five campaign offices she opened across the state — she acknowledged that the pension story in Rhode Island is hardly complete. “We’re being sued, so we need to make sure the law stays in place, and is not undone by the Supreme Court,” she said.

“When we’re elected as governor, we will vigorously defend the progress we’ve made,” Fox added.

A trial is scheduled on September 15th — one week after the Democratic primary — and both parties are under a gag rule; they cannot discuss the case. Newberry, who doubles as a practicing attorney, said there’s little doubt that the case will wind up before the state’s Supreme Court. In August, a judge ordered that Rhode Island cities and towns where workers sued against the pension law must be added as defendants in the suit, because the final decision will greatly impact them. The state’s best defense at this point is that, while its new statute may undercut its commitments to public employees, it had a “legitimate public purpose” in instituting reforms that averted statewide crisis.

The stakes are high. “If they throw out reform, it would end up causing the legislature to present a billion-dollar tax bill, which is huge in Rhode Island,” Newberry said. “People would break out the pitchforks.”

“The whole point is that we could have waited and had more Detroits in Rhode Island.”


Patrick McGuinn, a Drake University professor of political science and economics who studied Rhode Island’s pension reform for Brookings, said the lawsuit is “absolutely” a “serious threat” to dismantling the state’s groundbreaking law.

“How the courts interpret the state’s constitutional and legal language around contracts, and the ability of legislators to make changes to the benefits of current and retired workers, will be crucial to the longterm survivability of the reforms,” McGuinn said.

Two Raimondo supporters walk past protesting union members outside a rally at which Raimondo announced her run for the Democratic nomination for governor Monday, Jan. 13, 2014 in Pawtucket, R.I. Raimondo’s event was protested by firefighters opposed to her signature achievement: a 2011 pension overhaul designed to save billions of dollars by suspending benefits and raising retirement ages. She faces Providence Mayor Angel Taveras in the Democratic primary on Sept. 9. (AP Photo/Michael Dwyer)

Another vital question: Will RIRSA actually stave off another Central Falls disaster? The law is narrowly tailored to state pensions, only requiring greater transparency for city pensions. McGuinn sees this as one of the great limitations of the reforms.

Meanwhile, city pensions are in a similar, if not worse, position. In the years since RIRSA’s passage, there has been no organized state-level follow-up program to address those broken pension programs and imperiled solvency. Raimondo said that she believes that the governor — whoever is in office in 2015 — needs to work directly with Rhode Island cities to confront the crisis. The city of Providence, she pointed out (cannily, given that her primary opponent is the city’s mayor) has only funded about 30 percent of its pension obligations.

“The whole point is that we could have waited and had more Detroits in Rhode Island,” Raimondo said, referring to the largest municipal bankruptcy in U.S. history, where pensions are playing a pivotal role. “We wanted to avoid that because bankruptcy is very painful.”

Immediate and Dire

Rhode Island isn’t the only state to have experimented with structural pension reform. Utah made a bold effort, while New Jersey and Illinois have instituted more limited changes. The Pew Center on the States indicates that between 2010 and 2011, when the impacts of the 2008 crash were still reverberating, 35 states made changes to their pension systems.

But these mostly related to future employees. Instituting change that affects current and retired employees is still largely seen as a non-starter. On the local level, all eyes are on the municipal bankruptcy in Detroit, where a federal judge is determining how the city’s pension obligations measure up alongside other creditors. Across the country, incremental changes come as pension costs veer out of control: The amount that state and local governments pay to pension systems nearly doubled between 2001 and 2010, reaching $96 billion. The costs increase every year, putting cities at risk.

Raimondo hopes her example gives political leaders elsewhere the nerve to take on pensions. While it is a complicated and difficult issue, the way to navigate it is fairly simple.

“Be realistic,” Raimondo advised. “Be honest and realistic. Don’t try to sugarcoat the issue or pretend the problem is smaller than it is, because if you do that, then people are going to get hurt. Someday, sometime, a person is not going to get their pension check, or they’ll have cuts to other services.”

It also can’t be done alone. Raimondo said that it is urgent to “invite everyone to be part of the solution,” not as a public relations strategy, but as a fundamental component of a reasonable solution. Building political will is essential to getting pension reform done, she said, though she acknowledges that, “it’s hard, very hard, because no solution is perfect.”

The Takeaway

  • For decades, state and local governments over-promised retirement benefits to their employees. Today, these governments are scrambling to figure out how they will be able to afford to deliver pensions to retirees without going bankrupt or cutting essential services.
  • A strong public campaign led by Gina Raimondo, then treasurer, helped Rhode Island pass one of the most comprehensive pension overhauls in the country, a reform now on hold pending the resolution of a lawsuit filed by public employee unions and retirees.
  • The reform called for cost-of-living adjustments (COLAs) for retirees to be suspended until pensions were at least 80 percent funded, increased the retirement age for current employees, and created a new hybrid contribution model that paired a smaller defined benefit pension with a 401(k)-style supplements. Supporters say the state can’t afford not to make the changes. Lawyers representing the unions and retirees argue the state is breaking a contract with its former employees.
  • If the reform is held up in court, Rhode Island will have earned big-time bragging rights— no other state has managed to agree on a plan for how to confront crippling pension debt.
  • A big question for Raimondo is whether she will be able to maintain popular support even as critics try to paint her an elite, out-of-touch finance industry stooge.
  • Having a background in finance may help a politician get stuff done but it’s not necessarily good for their image.

That’s true both in and beyond Rhode Island. As reality sinks in, the messengers don’t always come from expected corners.

“I think there is often the assumption that these reforms are driven by conservatives or business interests or with malice towards unions and without regard for the consequences for real people,” McGuinn said. “But the pension reform efforts in Rhode Island, Illinois and New Jersey … have been led by Democrat legislators who believe that without reform the pension systems are unsustainable and will collapse, and/or that the large and growing pension payments will require states to cut other essential services to citizens.”

Boil this down, and it means that the consequences for cities are immediate and dire. The bankruptcy judge for Stockton called pensions “a festering sore” that are slowing the city’s revival. Across the state of California, school districts face tremendous cutbacks if state officials don’t offer a “bailout” to the retirement funds of educators. In Chicago, the city’s required pension contribution jumps by more than 100 percent next year — a nearly $600 million increase that, the city says, equals the annual cost for 4,300 police officers or 3,750 firefighters, or the resurfacing of nearly 16,000 city blocks.

Back in Rhode Island, the coming gubernatorial primary will be a test of where political will lies. This is an election season that spotlights Rhode Island’s effort to build a political culture known for integrity, not glad-handing. This state that’s so dominated by one party — its legislature has been Democrat-controlled for more than 70 years — opted to eliminate straight-party voting last month. And only 10 years ago, Rhode Island was the only state in the union without the separation of powers between the executive and legislative branches, with the General Assembly holding the clout. This resulted in an enmeshed politics that, because it was weak on checks-and-balances, facilitated a deeply ingrained habit of corruption. This year’s candidates for governor have the opportunity to campaign in a way that affirms a strong and balancing executive branch, completing the fundamental triangulation of power in any healthy democracy.

At the same time, after a Super PAC called American LeadHERship, with funding from Raimondo’s old EngageRI backer in Houston, emerged to support the former treasurer, it looked like Rhode Island would become a target of outside spending. That prompted Common Cause to create a pledge, according to John Marion, that was signed by the Democratic primary candidates, committing them to disavowing outside spending. If outside funds were nonetheless spent on their behalf, they were obliged to donate 50 percent of the total to a charity. (Republican candidates were asked to do the same, but they declined. Common Cause will try to negotiate a similar pledge with the primary winners, Marion said.)

Despite the lawsuit against pension reform, Raimondo actually has more total union endorsements than her Democratic opponent, Providence Mayor Angel Taveras — though public employee unions have largely backed Taveras and wild-card contender Clay Pell, a lawyer. Anthony D’antuono, business manager for the Plasterers’ and Cement Masons’ Local 40, said in the union’s endorsement that “Gina’s detailed, workable plans to rebuild our infrastructure and get our economy moving are exactly what this state needs right now.”

What the state also needs? Vision. For all its other entanglements, pension reform is a nuts-and-bolts plan for the future. And this is, more than anything, what Raimondo wants for Rhode Island — whatever the results of the gubernatorial election. “I think sometimes we have a very defeatist attitude, like ‘we can’t do it,’” she said. “I think that’s wrong. It’s time for Rhode Island to have a comeback, and I think we have everything we need to be great.”

Our features are made possible with generous support from The Ford Foundation.

Anna Clark is a freelance journalist in Detroit. She has written for the New York Times, the New Republic, NBC News online, Pacific Standard and other publications. She is a political media correspondent for the Columbia Journalism Review. Anna is the editor of A Detroit Anthology and author of Michigan Literary Luminaries: From Elmore Leonard to Robert Hayden. A former Fulbright fellow, she is also the director of applications for Write a House. Her website is annaclark.net.

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Alex Lukas was born in Boston in 1981 and raised in nearby Cambridge. With a wide range of artistic influences, Lukas creates both highly detailed drawings and intricate Xeroxed ‘zines. His drawings have been exhibited in New York, Boston, Philadelphia, Los Angeles, San Francisco, London, Stockholm and Copenhagen as well as in the pages of Megawords, Swindle Quarterly, Proximity Magazine, The San Francisco Chronicle, The Village Voice, Philadelphia Weekly, Dwell, Juxtapoz, The Boston Globe, The Boston Phoenix, Art New England and The New York Times Book Review. Lukas’ imprint, Cantab Publishing, has released over 35 small books and ‘zines since its inception in 2001. He has lectured at The Maryland Institute College of Art, The University of Kansas and The Rhode Island School of Design. Lukas recently partnered with the The Borowsky Center at The University of the Arts in Philadelphia to produce an eight-color offset lithograph as part of the 2011 Philagrafika Invitational Portfolio. His work was also recently acquired by the West Collection as part of the 2011 West Prize. Steven Zevitas Gallery presented an exhibition of new works on paper this spring. Lukas is a graduate of the Rhode Island School of Design and now lives and works in Philadelphia.