"The State of Rhode Island has the worst state-funded pension in the country."
Helen Glover on Monday, October 24th, 2011 in an introduction to a radio interview
Talk-show host Helen Glover says Rhode Island's pension system is the most poorly-funded in the U.S.
(This story was updated on Oct. 31 to reflect the fact that General Treasurer Gina Raimondo has also referred to Rhode Island as "the worst" as recently as Sept. 8, 2011.)
Rhode Island has a pension crisis. Simply put, it doesn't have enough money set aside to cover the payments that it has promised its current and future retirees.
How bad is it? WHJJ talk show host Helen Glover declared on Oct. 24 that we are now first among the worst.
"The State of Rhode Island has the worst state-funded pension in the country. Of all of the systems, we're the worst," she said during her Oct. 24 show.
Are we really at the bottom of the heap?
When we asked Glover for her source, she sent along several articles. But before we get to them, a quick reminder about what is at stake.
Rhode Island’s state pension plans are paying $370 million this year to provide retirement benefits for government employees. If nothing changes, that amount will nearly double next year to $615 million.
According to state officials, the plan now has only 48 percent of the funds it needs to cover its pension obligations. The federal government regards 80 percent as a safe level.
Now back to Glover’s claim that Rhode Island’s system is the worst in the nation. One of the sources she supplied to us was a story on WPRI.com with this headline: "RI pension fund in worst shape of all, Pew suggests."
But the story compared the 2010 funding level for Rhode Island with Pew data from other states from 2009, when Rhode Island wasn't the worst at all -- five states had less cash in 2009 to cover their pension obligations than Rhode Island (which was at 59 percent). Illinois ranked the worst, funded at 51 percent.
The WPRI story noted what the headline didn't: that it was using data from different years. Yet when other websites picked up the WPRI headline, the story’s caveats were dropped.
Glover's sources included one such item, a five-paragraph story from BusinessInsider.com headlined, "Rhode Island's Pension Liabilities Are Now The Worst In the Country" that combined the WPRI story with an error-filled chart that, it said, came from Boston College's Center for Retirement Research.
When we went directly to the Boston College database and ran our own calculations, we found that it put Rhode Island pensions as being funded at 62 percent in 2009, not 48 percent as Business Insider reported. (And instead of being "the worst in the country," Rhode Island was ranked ninth from the bottom, a better ranking than the Pew report.)
So what do the latest numbers show?
At Pew, research director Kil Huh said the organization is still gathering 2010 data. The latest tallies from 4 of the 10-worst states haven't been released.
But Illinois' numbers, published in July, show that state has dropped to a funding level of 45 percent, keeping it at the bottom of the list -- so far. Two states that had worse numbers than Rhode Island in Pew's report on the 2009 numbers -- West Virginia and Oklahoma -- have not released their latest statistics.
So why did the funding percentages fall in 2010?
Huh said it probably comes from the lingering impact of the recession, which keeps pulling down the amount of money pension funds have been earning over the last five years. "The states are still accounting for the significant losses they experienced in the fall of 2008."
And in Rhode Island, the state retirement board voted in April to scale back its predicted rate of return for its pension investment portfolio. The assumed rate of return had been 8.25 percent per year; the board adjusted that to 7.5 percent. (The actual market return over the last 10 years has been 5.74 percent; 1.52 percent in the past 5 years.)
Glover also referred us to a recent Washington Post story that paraphrased Raimondo as saying that Rhode Island has the nation’s worst-funded pension system. (We also found a New York Times story that did the same thing.) But neither quoted her directly, and the Post story cited a per-capita comparison, not a funding level comparison.
Raimondo did make such a statement in the Feb. 24, 2011 edition of PBS NewsHour, saying the state had "the highest unfunded liability per capita of any state in the country."
But more recently, says Raimondo’s office, the treasurer has consistently characterized the funding level as "one of the worst" in the nation or "one of the worst" per capita. A search of Providence Journal stories supports that.
(However, after this report was published, Bob Plain of WPRO produced a tape from Sept. 8, 2011, in which the treasurer clearly and repeatedly characterized the funding of the state's pension system as "the worst," with the "highest unfunded liability per capita.")
Helen Glover said Rhode Island's pension system is the mostly poorly funded in the U.S.
Her statement was based on sources that either misread the numbers or mixed old data with new.
Using the latest 2010 numbers from Pew, Rhode Island ranks no lower than second from the bottom, and the state's standing may improve as other states report their figures.
And when we sought out other sources, such as Moody's and Boston College, we couldn't find any ranking that put Rhode Island at the bottom of the barrel when it came to pension funding.
That doesn't detract from Rhode Island's profoundly perilous pension problem.
But being in last place is a very specific distinction, and we're not there -- yet.
Because Glover was so definitive, we rule that her statement "contains some element of truth but ignores critical facts that would give a different impression" -- PolitiFact's definition of Mostly False.
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Published: Sunday, October 30th, 2011 at 6:00 a.m.
920WHJJ.com, "Pensions: Justin Katz," Oct. 24, 2011, accessed Oct. 24, 2011
WPRI.com, "RI pension fund in worst shape of all, Pew suggests," April 26, 2011, accessed Oct. 25, 2011
PewCenterOnTheStates.org, "The Trillion Dollar Gap Grows Wider," April 25, 2011, accessed Oct. 24, 2011
BusinessInsider.com, "Rhode Island's Pension Liabilities Are Now The Worst In The Country," April 13, 2011, accessed Oct. 25, 2011
4-Liability.com, "Rhode Island's Pension Liabilities Are Now The Worst In The Country," April 14, 2011, accessed Oct. 26, 2011
TheFinancialTimes.com, "Center for Retirement Research at Boston College: Individual State Pension Plan Assets, Liabilities and Funding Ratios," accessed Oct. 25, 2011
TheFinancialTimes.com, "Public Plans Database: Individual State Pension Plan Assets, Liabilities and Funding Ratios," corrected version, accessed Oct. 25, 2011
BC.edu, "Public Plans Database," Center for Retirement Research at Boston College, accessed Oct. 26, 2011
TheFinancialTimes.com, "Special Report: Best and Worst State Funded Pensions," March 24, 2011, accessed Oct. 25, 2011
Interviews and emails, Kil Huh, research director, Pew Center on the States, Oct. 25 and 28, 2011
WashingtonPost.com, "Rhode Island considers radical moves as pensions put state on brink," Sept. 5, 2011, accessed Oct. 25, 2011
NYTimes.com, "The Little State With a Big Mess," Oct. 22, 2011, accessed Oct. 24, 2011.
Interview and emails, Joy Fox, spokeswoman, Rhode Island General Treasurer Gina Raimondo, Oct. 25 and 28, 2011
PBS.org, "In Tiny Rhode Island, a Massive Public Pension Crisis Looms," Feb. 24, 2011, accessed Oct. 26, 2011
Moodys.com, "Announcement: Moody's report dimensions the pension and debt liabilities of U.S. states," Jan 27, 2011, accessed Oct. 26, 2011
Report, "Combining Debt and Pension Liabilities of U.S. States Enhances Comparability," (corrected from Jan. 27, 2011 edition), March 11, 2011, accessed Oct. 26, 2011
630WPRO.com, "Raimondo has also termed RI pension funding as the 'worst,'" Oct. 31, 2011, accessed Oct. 31, 2011
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