Projo Politics Blog

PROVIDENCE -- As the push to cut government spending begins in earnest in Rhode Island, the adminstrators of the state's Economic Development Corporation are proposing to eliminate the guarantee of 3-percent compounded annual increases to EDC retirees.

The elimination of these so-called cost-of-living adjustments -- or COLAs -- would only affect those who retire after Dec. 1, 2008.

EDC spokeswoman Melissa Withers said today that the agency stopped offering pensions to new employees several years ago.

What is up for discussion at Monday's meeting of the EDC board of directors, chaired by Governor Carcieri, is the elimination of post-retirement COLAs for those at the state development agency who remain eligible for pensions. The COLAs currently kick in when a retiree turns 65.

Of the 87 EDC employees, 73 are enrolled in the agency's old defined-benefit-plan available only to those hired before Dec. 31, 2005.

The 14 employees hired since January 1, 2006 are enrolled in a government equivalent of a 401k plan for private-sector employees. EDC contributes 4 percent of an employee's pay to the plan, regardless of whether the employee contributes. But it will also match dollar for dollar employee contributions of up to 3 percent of their own pay.

The elimination of the 3% COLA for future retirees is expected to reduce the agency's 2009-10 pension expense from $1,217,175 to $817,175, Withers said. "These dollars come directly from the EDC $6 million operating budget, making increases to the pension fund difficult to sustain as our operating budget continues to be cut,'' Withers said.

There was no immediate response from Carcieri's office about his stance on the proposal.

The state retirement system manages pensions for all retired state employees, public school teachers and some municipal employees. COLAs for those retireees alone ncreased by $12.8 million -- to $136.8 million -- in the year that ended June 30, 2008.

 Tags  COLA Economic Development Commission retiree Rhode Island

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