May 2, 2014
A settlement agreement on Rhode Island’s pension reform litigation that was presented to pension system members for a vote has been rejected even though most groups overwhelmingly backed it. The vote was structured such that any one group of members could scotch the agreement if more than 50% voted against the settlement proposal. Sixty-one percent of police union members representing only 1% of eligible voters affected by the 2011 legislation voted against the agreement and so a trial to determine the constitutionality of the law is scheduled to start in September 2014.
As noted last month in an IIFS blog post, parties to a lawsuit challenging landmark pension reforms in Rhode Island reached a settlement that would have made some changes to the legislation passed by the state in 2011. These groups included both employee and retiree representatives, Governor Lincoln Chafee and Treasurer Gina Raimondo, who had all been in court-mandated mediation for over a year.
According to a statement from the plaintiffs’ group, only 29% or 6,755 of the full pool of 23,624 eligible voters on the settlement voted against the deal before the April 3 deadline. The unaudited results were as follows:
- Teachers – 7,442 eligible, 2,320 ballots received: 31% vote to reject
- Retirees – 6,840 eligible, 1,810 ballots received: 26% vote to reject
- State – 5,045 eligible, 1,697 ballots received: 34% vote to reject
- Municipal – 3,261 eligible, 504 ballots received: 15% vote to reject
- Fire – 619 eligible, 170 ballots received: 27% vote to reject
- Police – 417 eligible, 254 ballots received: 61% vote to reject
Judge Sarah Taft-Carter sent the parties back to mediation after the no vote to see if a settlement could be salvaged. In the meantime, Governor Chafee suggested that the state might go ahead with the proposed pension settlement without the police. However, several days later Governor Chafee and Treasurer Raimondo announced that the mediation was ended and that the parties are going to trial on September 15, 2014.
While some municipal and civic leaders have said that they prefer the original legislation to the settlement agreement and are pleased the case is going to trial, Moody’s Investors Service issued a warning that the failure of the settlement was a “credit negative” for Rhode Island and its local governments.