Government as Pension Program
Here’s an eye-popper: Cranston spends more than a fifth of its total budget on pensions (not including teachers). Nine municipalities spend over 10%.
While Rhode Island’s political leaders wrestle with state pension reform, there’s another big pension headache out there — the soaring cost of municipal pensions.
A new study by the business-backed Rhode Island Public Expenditure Council reports that the amount of money that communities spend on pension costs has increased nearly 50 percent in the past five years, from $101 million in 2004 to $149 million in the current fiscal year ending June 30.
But the raw amount, the exclusion of teachers, and the addition of state employees is not all:
The study found that locally administered pension plans were able to fund only an average of 45 percent of their obligations as of June 30, 2006, with an unfunded liability of $1.6 billion. That encompasses quite a wide range, from a Coventry police pension plan that is only 7.9-percent funded, to the Jamestown police pension plan, which is over-funded, at 123.9 percent.
In other words, as much as they’re spending, many cities and towns ought to be devoting more resources to pensions.
That’s if you look at it as a funding matter. If you look at it as a practical and moral matter, they ought to be devoting less to pensions. It’s time to bring public workers back to the real world.