General Treasurer Gina Raimondo has been looking at the state’s pension fund books.
She notes to the ProJo’s Kathy Gregg one bit of good news: the return on investment of the pension fund in 2010 was 12%.
Unfortunately, that annual return rate was very much an anomaly. This is compounded, as we know, by years of underfunding of principle, not to mention the original promise of extremely generous retirement benefits. (The origin of both of these rash decisions – don’t put enough into the fund; send more than necessary out of it – is the democrat controlled you-know-what.)
So, while none of this will come as a shock to even part-time observers of Rhode Island politics, the GT is correct to raise the alarm.

Looking back over the last 12 months, Raimondo said this disparity between money-in and money-out to more than 25,000 current pensioners was a projected $331 million. That drain reduced the year-over-year growth in the fund, which was valued at $6.8 billion in 2009, down to 6.6 percent, according to one of Raimondo’s top aides.
“A negative $300 million is a serious problem …. a multibillion-dollar math problem,” she said. “Every day we are in a hole.”

Meanwhile, on Thursday, we learned that

Moody’s Investors Service has begun to recalculate the states’ debt burdens in a way that includes unfunded pensions, something states and others have ardently resisted until now.
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The ratings agency said that in the future, it will add states’ unfunded pension obligations together with the value of their bonds, and consider the totals when rating their credit. The new approach will be more comparable to how the agency rates corporate debt and sovereign debt. Moody’s did not indicate whether states’ credit ratings may rise or fall.

“Moody’s did not indicate whether states’ credit ratings may rise or fall.” … um, yeah. Because rating agencies constantly add factors that have zero impact on the calculation of their ratings. We’ll just file that coy disclaimer in the “one step at at time; don’t give them the bad news all at once” category.
A year ago, Forbes ranked Rhode Island’s per capita unfunded pension liability as the worst in the country. Three years ago, the General Assembly’s own pension study report (upon which the G.A., unbelievably, refused to act despite the dire evaluations therein) indicated that, per capita, Rhode Island’s “pension fund debt and unfunded liability” at the time was the third worst in the country.
It appears – correct me if I’m wrong – that under Moodys revised rating system, if the state does not come to grips with its under funded, overly generous pension promises, the already onerous burden to Rhode Island taxpayers is going to get even heavier as the interest rate on the money we borrow rises. Accordingly (just so we’re clear that this rating revision doesn’t affect only the lowly taxpayer), the second and ultimate consequence of legislative inaction – the day when retirees’ pension checks start bouncing – will be accelerated.