By Tim McLaughlin
PROVIDENCE, Rhode Island Feb 14 Rhode Island
officials on Friday said they reached a proposed settlement to
end six challenges to the state's sweeping pension fund reform,
a development that would remove road blocks to saving taxpayers
several billion dollars over the next couple of decades.
Under the settlement, the state's unfunded pension liability
would fall to $5.05 billion, down from an unfunded liability
that approached $9 billion before reform action was taken from
2009 to 2011. The state's reform had originally called for
paring the unfunded liability to about $4.8 billion.
The deal would include key elements of the state's 2011
reform act: an increased retirement age, inclusion of a
401(k)-style retirement plan, and suspension of cost-of-living
adjustments until the pension reaches a healthy funding level.
"I'm very confident this is going to be successful,"
Governor Lincoln Chafee said at a press conference.
The deal is subject to several layers of approvals,
including a fairness determination by a state judge, a vote by
state workers and retirees, and approval by the legislature,
Rhode Island's pension reform is considered among the most
far-reaching of any of the 50 U.S. states. Attorneys, organized
labor and many investors in the $3.7 trillion U.S. municipal
bond market have been awaiting the outcome of mediation,
including details of the settlement, for indications of what
kind of pension changes could potentially survive challenges in
The settlement could lead to savings of up to $5 billion
over the next couple of decades, Rhode Island Treasurer Gina
"It's a practical solution to a serious problem," she said,
adding that the deal will save the state millions of dollars in
legal costs. Chafee noted that the state had received five
unfavorable rulings on its reform before state courts.