June 2, 2011

From Whence the Pension Reform Problem in Rhode Island

Justin Katz

Ed Achorn's most recent column highlights how little has changed in the public discussion of pension reform. This snippet, from a 2005 column of his, caught my eye in particular:

"Robert Walsh, executive director of the National Education Association Rhode Island, responded to last week’s cries for pension reform by dismissing it all as a partisan plot.

"'Republicans support pension reform. Well, yeah. Where's the story? Where's the news?' he asked."

The photograph of an ostrich accompanying the essay is apt. Ultimately, there are no surprises, in this; it's just that Rhode Islanders have been told to ignore such problems until the checks are literally nearing the point of not being written and then to expect one-time fixes and tax increases. That's the cycle that our current collection of elected officials are likely to pursue now, and it's a cycle that simply has to end.

It was also interesting to come across the name of a politician whom Governor Chafee tiptoed through revolving-door ethics rules to hire, with Achorn describing a 2003 essay:

Many legislators dismissed growing annual pension costs as small potatoes. I wrote: "$20 million-plus is still worth debate in most people's books. And the costs are exploding: Pension contributions for state workers and teachers are slated to go up $60 million in the next year, says Mr. Carcieri. This would seem to present a crisis that cannot be ignored."

(Now, in 2011, of course, the state confronts pension costs growing by hundreds of millions of dollars a year.)

Steven Costantino, then vice chairman of the House Finance Committee, accused the pension reformers of trying to stir up emotions. "You simply can't cherry-pick an issue which is a hot button or a good sound bite," he said.

Frankly, the only hope for Rhode Island is if voters begin teaching politicians that there can be consequences for their actions, which lesson has thus far been left to public sector unions to impart.

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Unfortunately Justin far too many RI'ers are party to the problem. A quick look at the percentage of the populace employed in these sectors tell the story. Raimondo does not want to blame anyone and has come up with some potential fixes. The big question? Will the people most affected by the "fixes" buy into it? History tells us "NOT". It is rather like being a true believer investing in a leader who leads you down the wrong path (HINT: Hussein Obama and the Obamaniks). Denial is the only thing that keeps them going while the clock of reality ticks toward bankruptcy.

Posted by: ANTHONY at June 2, 2011 2:58 PM

"Steven Costantino, then vice chairman of the House Finance Committee, accused the pension reformers of trying to stir up emotions. "You simply can't cherry-pick an issue which is a hot button or a good sound bite," he said."

Wow. Let's start the list. After Cicilline's been brought up on charges of misrepresenting public fiscal matters, this guy needs to be next.

Posted by: Monique at June 2, 2011 4:45 PM

Justin. You have an independent streak. Why the reliance on Ed Achorn? You turn your nose up to all things mainstream media and the projo-- Why the Achorn? He could not find a blind squirrel on his best day. Just wondering.

Posted by: David S at June 2, 2011 5:45 PM

Raimondo has proposed a simple 3 step solution:
1. Raise retirement age to 67-immediately.
2. Suspend COLA's-immediately.
3. Reduce future benefits from 1.6%-2% to 1.2%.

These are NOT complicated. The GA could hold hearings this week and next and vote on them before month's end.
They ain't doin' it. Not in June, not in October. Bend over and get ready for some "superior behavior" as commie plagaristic scumbag Rudy Cheeks puts it.

Posted by: Tommy Cranston at June 2, 2011 7:48 PM

David, will you ever write something that contributes to the conversation? I'm getting the impression that you can't.

Posted by: BobN at June 2, 2011 8:15 PM

David S is obviously a stupid liberal. Is he seriously contending that Ed Achorn has not been ON THE MONEY!! with the charade going on? Only a stupid liberal could make such idiotic allegations.

Posted by: Mike Cappelli at June 2, 2011 8:49 PM

HMMM... short attention span on some of you commenters. Remember Ed's wife?
"Audit sought of Education Partnership’s records

01:00 AM EDT on Wednesday, July 9, 2008

By Jennifer D. Jordan

Journal Staff Writer
PROVIDENCE — The financial records of the nonprofit Education Partnership are in such disarray they will require a forensic accountant to review them, the lawyer appointed to sort out the organization’s finances said at a court hearing yesterday morning.

Among those owed money are 95 college students who were promised about $177,000 in scholarships that apparently have not been paid, attorney Allan M. Shine told Superior Court Judge Michael A. Silverstein. So far, about 30 of the affected students have contacted Shine directly, he said.

“As of now, your honor, the records are not in perfect condition … I think that is an understatement,” Shine said. “… We need to reconstruct records that are, as I say, less than complete. It will take us awhile to sort this out.”

The Education Partnership, an advocacy organization backed by local businesses, went into receivership last month, in part because several contracts to produce research and reports for municipalities and school districts fell through, said Shine. He was appointed permanent receiver by the court yesterday after serving as temporary receiver since June 18. At the hearing, Shine gave an update to the judge on what he has discovered about the organization’s finances.

Shine said that money from different sources — including federal grants earmarked for specific programs, grants from private sources and scholarship money –– apparently was mingled with the Education Partnership’s operational expenses. “There were no separate escrow accounts,” Shine said.

Mark Higgins, dean of the University of Rhode Island’s College of Business Administration and an accountant, said funds should be kept separate for legal reasons.

“Here at URI, every scholarship fund we have is a separate account,” Higgins said. “What I would have done in this case is set up as many separate accounts as possible. If you got a federal grant for an elementary afterschool program, you would not mingle that with another grant for middle school students, for example. For reporting purposes, you have to report what happened to that money. So if you co-mingle funds, that’s very difficult to do.”

Since 2005, the Partnership has administered the Louis Feinstein Memorial Scholarship, created 15 years ago by philanthropist Alan Shawn Feinstein in honor of his late father, Louis.

An attorney for Feinstein said his client was dismayed to learn that the scholarship money was not kept in a separate account, used solely for student aid.

It is unclear how much money is left in the scholarship fund, which began with $2.4 million in 1993. Feinstein said in a phone interview that records from a 2007 Education Partnership board meeting indicated $763,000 remained in the fund last year, $88,000 of which was already pledged to college students. However, at yesterday’s hearing, Shine said the organization had just $357,000 in cash.

“We understood that money would remain segregated,” said lawyer Mark B. Morse. “We remain concerned about the management of these funds and the failure to abide by the investment policy and … the scholarship guidelines. Mr. Feinstein is also concerned about the damage to his reputation because of the mismanagement of these funds.”

Shine said he has advised the Education Partnership board and former staff to not speak to the media. Calls by The Journal to Richard S. Mittleman, the bankruptcy lawyer representing the Partnership’s executive director, Valerie Forti, were not returned.

Kellie Randall, who graduated from Exeter-West Greenwich High School last month, says without the $10,000 scholarship the Education Partnership promised her, college may be out of reach.

Her scholarship would have given her $1,000 per semester for eight semesters, plus a $2,000 graduation bonus when she received her bachelor’s degree. She hoped to attend the Community College of Rhode Island this fall and transfer next year to Rhode Island College to study early-childhood education.

“My mom and I are talking about it and she really doesn’t want me to take any time off,” Randall, 17, said. “But my mom’s a single parent and there are three kids and if we don’t have the money, there is no choice. I will have to take the time off and just keep working and try to save money for later.”

Other creditors include Sovereign Bank, which lent the organization $305,000, and several teachers and instructors who said the Education Partnership never paid them for afterschool programs they provided this year at a Providence public school.

The state Department of Education said it is concerned about a $203,000 federal grant earmarked for afterschool programs the Education Partnership oversaw at the William D’Abate Elementary School. Apparently the last $25,000 installment the department gave the nonprofit this spring never made it to the teachers and instructors delivering the programs, several of whom have contacted the education department, spokesman Elliot Krieger said in an earlier interview.

Sovereign Bank received $25,000 from the Education Partnership yesterday as part of its financial agreement as a secured lender. Shine said another $10,000 will be used to meet the payroll of the nonprofit’s staff of approximately six employees, all of whom were terminated when the Education Partnership went into receivership. Forti was the group’s highest-paid employee, making $140,000 a year in salary and benefits, according to 2005 tax records. In addition, the landlord of 345 South Main St., where the nonprofit had its offices, is owed $50,000 in rent, Shine said.

Shine said his office has begun sending out letters to possible creditors and others who had business dealings with the Education Partnership.

“So far, between 200 and 250 people have been given notice and that number increases each day as more people contact us,” Shine told the judge.

The office of Attorney General Patrick C. Lynch is also concerned about the scholarship money and will review financial records and legal documents associated with the scholarship fund as they become available, said Assistant Attorney General James Lee, who attended yesterday’s hearing.

Creditors now have four months to make their claims to Shine.

A hearing to appoint a forensic accountant was scheduled at Superior Court for July 21, at 9:30 a.m.

Shine said creditors should contact him directly to place a claim: ashine@wszlaw.com or by fax: (401) 272-5728.

jjordan@projo.com
Ed has never commented on this . I do not take him at his word. Call me old school.

Posted by: David S at June 2, 2011 9:19 PM

David, I understand that you will use any tactic to express your hatred of Ed Achorn, but the article you posted is completely irrelevant to your comment. As such, it is a perfect example of the behavior that prompted my earlier post in this thread.

Posted by: BobN at June 3, 2011 7:14 AM

"Why the Achorn? He could not find a blind squirrel on his best day."

I don't care enough to follow Achorn on a regular basis, but through this blog I do know that he has been doing an excellent job covering the Iannazzi scandal in the state senate. So your statement is inaccurate, at least with regard to that important union corruption story.

"HMMM... short attention span on some of you commenters. Remember Ed's wife?"

What does Achorn's wife have to do with these issues? Certainly not enough to warrant reposting an entire article to the comments section.

David, your comments in this thread are the stuff of playground shouting matches and are only an embarrassment to your cause. It's like somebody shouting, "Fatty fatty fat fat!" every time Michael Moore makes an appearance. Stick to the issues at hand.

Posted by: Dan at June 3, 2011 9:26 AM

David S

It's funny that your question to Justin gets responded to by everyone but. So much for conversation. Dan and BobN have appointed themselves as gatekeepers to all discussion. Dan writes that your comments are "the stuff of playground shouting matches" but ignores the comment of Mike Cappelli, "David S is obviously a stupid liberal." Why the double standard?


"Bend over and get ready for some "superior behavior" as commie plagaristic scumbag Rudy Cheeks puts it."
That's the offering of Tommy Cranston. BobN , Is that comment on topic and in your words "contributes to the conversation". Again, why the double standard?

Posted by: Phil at June 3, 2011 6:37 PM

Don't quote me out of context Phil you marxist pig. Here is my relevant post:
Raimondo has proposed a simple 3 step solution:
1. Raise retirement age to 67-immediately.
2. Suspend COLA's-immediately.
3. Reduce future benefits from 1.6%-2% to 1.2%.

These are NOT complicated. The GA could hold hearings this week and next and vote on them before month's end.
They ain't doin' it. Not in June, not in October."

Posted by: Tommy Cranston at June 3, 2011 7:09 PM

Phil lies again. There is nothing about "gatekeeping" in my comments to David. I'm just pointing out the inadequacy of his comments, which are irrelevant and unsupported.

You Leftists can't expect your hateful propaganda to go unchallenged. But I think that you do.

Posted by: BobN at June 4, 2011 7:41 AM
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