Fixing Rhode Island???s pensions
Rhode Island's teacher pension system is a mess. The annual cost of the retirement system has doubled since 2003 and will likely double again by 2013. Education Sector has released a report today looking at state treasurer Gina Raimondo's plan to stabilize the pension fund by switching to a hybrid plan and spreading the fiscal pain among taxpayers, retirees, current employees, and new workers.
Ed Sector's analysis hits the important high points of the crisis in teacher pensions: this is a crucial education policy issue (because it's eating up needed funds that no longer reach the classroom), that existing defined-benefit pensions mistreat the majority of teachers in favor of a select few, and that reforms ought to share the pain among stakeholders rather than soak new teachers.
The writers (rightly) single out Illinois as a bad example that Rhode Island and other states should avoid. As I noted a few weeks ago, the "reform" there essentially amounts to theft from all new teachers. The RI plan is going to be painful for a lot of people, but it's smarter and fairer.
Go check out the report. I know it's Friday, but it's a quick read. The folks at Ed Sector have done a great job of making this technical subject approachable and interesting.
? Chris Tessone
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About the Editor
Bernard Lee Schwartz Policy Fellow
Chris Tessone was a Bernard Lee Schwartz Policy Fellow and the Director of Finance of the Thomas B. Fordham Institute. He has strong interests in governance and education finance, especially teacher compensation and school facilities finance.
June 13, 2013