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.

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