Saturday, November 24, 2007

Rep. Loughlin II-"Because I Say So"

On Fri., Nov. 16, Representative Loughlin (Tiverton & Little Compton) authored "Guest View" in the "Newport Daily News" (no link). The Representative evidently feels no need for a fact checker before clicking on that send button. The headline reads: "Time has come for state to change pension system." He then proceeds to dump the State's defined contribution plan for teachers and state workers to a "defined-benefit" plan (401-k) for new hires (bill H-5447, Loughlin & Long). He laments "another do-nothing legislative study commission" studying this idea.

Now I've never met the Rep. and I'm sure that he's kind to small animals, generous to kids, & doesn't abuse his wife. But how about a bit of research? Instead what follows are the usual Republican ramblings about "Union bosses" (four times). Oooh, scary bad men dictating to mindless followers. Let’s stick to the facts, ma'am.

So here are the facts. House Speaker Murphy called for an analysis of the numbers & a review of other states' experiences in this area. This is a bad thing?

Actuarial data (you know - that fact stuff) says that switching new State employees & teachers to a 401(k) system would cost taxpayers $480 million more than the current system. The Governor's office paid for this analysis. Uh-oh, doesn't sound so good now.

The primary reason that the pension fund now costs the State monies, is the former practice of "underfunding." These were short-term budget solutions for which we will be paying 23 years until no more pension deficits.

The Representative exaggerates the number of states adopting such a plan & left out details. One state, Alaska, made an initial contribution of $450 million to the plan and towns/cities have had substantial increases in their contributions. Another just switched back because of the high associated costs. Few states (I found three) now have this kind of pension plan. Six states offer this as an option and fewer still have hybrid plans.

State pension fund investments often demand corporate and social accountability. R.I. withdrew investments from companies that overtly or indirectly aid in genocide in Sudan’s Darfur region. "Economically targeted investments," a type used by some of the nation's 2,400 public pension funds, are re-invested in the State- such as the Quonset Business Park.

Possibly figuring into this plan are financial management firms poised to administer millions of new accounts worth billions of dollars in fees.

Am I against pension fund 401(k)'s? No, but I do think that it bears some careful study by ALL of the stakeholders, not just Rep. Loughlin. We the people are invested in this and are not just mindless idiots fooled by some quick, glib remarks. Save the State money? Prove it and do the research.
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