Rhode Island’s almost $10 billion state pension fund is in better shape than it was in 2011. That was when then-Treasurer Gina Raimondo spearheaded a plan to overhaul the pension. Raimondo said she wanted to shore up the under-funded pension, so the money would be there to pay future retirees. But public-employee unions sharply opposed the move and they questioned Raimondo’s motives. The overhaul moved ahead, and more than 10 years later, the pension plan is in slightly better shape. But some state employees and retirees remain angry about the loss of annual cost of living adjustments, or COLAs. The current state treasurer, former Central Falls Mayor James Diossa, wants to give retirees a one-time payment of $500, in a nod to their grievance. Is this a good idea? And why have retirees been unable to get access to documents explaining the skyrocketing cost of some pension investments? This week I’m going in-depth with Rhode Island General Treasurer James Diossa.
TRANSCRIPT:
Ian Donnis: Welcome back to The Public’s Radio.
James Diossa: Thank you so much, Ian, for having me.
Ian Donnis: You had some fiscal responsibilities in your former role as the mayor of Central Falls, but certainly it’s a lot more complex being the general treasurer of Rhode Island. What did you do to get up to speed and educate yourself about your responsibilities for that job?
James Diossa: I think one of the biggest pieces that helped me move into the role fairly quickly was having a very strong transition team who advised me on the team that I was going to have at Treasury. We kept a majority of the employees who were working under Treasurer Magaziner then, and I think that provided a lot of institutional knowledge, but also continuity. And they’ve all been doing a good job assessing me and informed me of the daily job, which is, you know, the pensions, the different programs, I manage, etc. So feel very strongly about the team, the work that we’re doing, and I can’t believe it’s already been four months,
Ian Donnis: A lot of development in Rhode Island is being slowed down by the higher interest rates. Is there anything the state can do to stop economic development from coming to a halt with these the effect of these higher interest rates?
James Diossa: We’re all very, very concerned. Obviously, we love seeing development happening, and but the, you know, the intentions of the Feds was to cool off inflation. And that’s why you’re seeing a bit of a slowing down, and not only consumer confidence, but also in real estate and other areas of the economy. I think, you know, government, especially in our state, you know, we have to look at, you know, what are the possibilities out there to continue development so that, if, for whatever reason, we do fall into a recession, we are prepared for it. But at this at this point in time, I know, it’s conversations happening at all levels of government. And I’ve been very aware and informed about, you know, what, what to expect if it happens to go into a downturn.
Ian Donnis: You requested introduction of a bill to give retired state employees in the state pension plan, $500 apiece, that would be a total of about $15 million from the state general fund. There are a lot of Rhode Islanders who are struggling to get by — they might say, you know, I could use $500. So is your proposal too arbitrary?
James Diossa: Look, you know, I came from a municipality that filed for bankruptcy, where people’s pensions were slashed, 50%. And so I truly feel for all the pensioners who are dealing currently, with inflation, you know, not only high rents, high food costs, everything is just more expensive. And some of these folks have not received any increase in their pensions. So I understand, I feel for them, and I feel that, more importantly, we should understand their struggle and provide a $500 stipend for the next fiscal year to alleviate some of the burden. But the other side of the coin is my fiduciary responsibility to the pension fund, which is a fund that’s over $10 billion. We’re projected to be out of critical status, which is 80% funded, by 2031. My advisors and my own assessment is that we need to stay the course so that this fund can get healthy, strong, and we can fully resume the COLAs in 2031.
Ian Donnis: Well, let’s talk a little bit more about the state pension fund, the management of which is your biggest responsibility as general treasurer. We can recall back when then-Treasurer Gina Raimondo spearheaded an overhaul of the state pension plan in 2011. She did not include municipal pensions in that, and you know this well as the former mayor of Central Falls. Some of these local pensions are very poorly funded. What is the solution for that?
James Diossa: Look, it’s been one of my priorities as treasurer is, you know — we just approved the report that showed some of the local administered pension funds. And some are doing okay, some are not doing great. And so what I’ve talking to my team about is reaching out to these communities, providing some expert support, and also asking if there’s any conversations to be had about joining our state pension system. You know, I did it before I left Central Falls, I thought that the state had not only the leverage of a bigger fund, but also the ability to hire experts to manage these funds. And I think that that’s a good path forward for some of these local communities. But it is a concern. And I value it because I was a former municipal elected official. And so I’m going to do a lot of outreach with my team to provide support.
Ian Donnis: We’re talking here with Rhode Island General Treasurer James Diossa. And treasurer, the Providence Journal recently reported on how a lawyer has been unable to get from your office documents explaining why investment expenses for the state pension fund quadrupled from 2012 to 2021, before shrinking a bit last year. Doesn’t the public have a right to see these documents, considering how this is a public pension fund?
James Diossa: Look, as you know, this is an issue that’s been dealt with, two past administrations, you know, that they haven’t supplied this information. And the reason why it’s some of that is proprietary information. And, you know we are fully aware of of informing people of how the pension has been managed. And I think that every treasurer has done an incredible job of taking transparency to a whole different level. If you go to the website, you’ll see that on a yearly basis, we publish the amount of fees, and how much we pay in fees on some of these funds. And I think we’ve done a good job of that. Unfortunately, some of this is proprietary information. And, and it’s information that, you know, it was agreed not to be shared.
Ian Donnis: Is that really appropriate for a public pension fund that this so-called proprietary information, shields it from view?
James Diossa: So it’s it’s pretty much the way I looked at, you know, some of these requests is, you know, some of these funds have, you know, what they would call their own strategies, and they don’t want other other folks to learn about this strategy of how they’re investing. But I think, overall, I will say that the pension fund is getting stronger. I think we’ve done a good job, and previous administrations have done an excellent job on transparency. The fact that you know, the fees are published online is important. And I will tell you that the state Investment Commission is a very stable board who have done an incredible job. I’m getting to learn to work with all them and really enjoy their expertise. And I think that should be an important note for the people of Rhode Island to understand that you know, you got good people evaluating and assessing this fund.
Ian Donnis: You’re backing a proposal to increase funding for the State Crime Victims Compensation Fund. Tell us about that.
James Diossa: It’s an important fund, unfortunately, I wish we didn’t have to use it. But reality is that there are victims of crimes. And because of the fund shrinking due to one of the sources of revenue being court fines, we know that the courts have been implementing a lot of diversion programs. And so the fund that normally we see some of these fees from some of these cases, is shrinking. And so we want to be able to provide adequate funding for people who have been domestically abused, sexually abused, or, you know, dealing with the issue of homicide. These funds, help families get back on their feet, whether it’s medical costs, funeral costs, crime scene cleanup, I think one of the biggest pieces of this bill is, you know, victims of rape, no longer have to — would have to go only to the police for a report they can go seek a medical expert to provide the the facts of their case. And so I think this is important because it takes away a hurdle for victims who don’t want to go to the police but want to seek their doctor and be able to get a medical report to prove that at the incident has had happened.
Ian Donnis: You’ve tried your four fellow state general officers in supporting increased restrictions on guns in Rhode Island. This is always a hot topic at the legislature and people turn out on both sides to offer their passionate arguments. What do you say to the other side that that this sort of legislation is penalizing law abiding gun owners, and it’s not going to affect criminals, because criminals don’t observe the law anyway,
James Diossa: Ian, I’ve been a mayor, for eight, I was a mayor, for eight years, I was on the front line, I oversaw a police department, who raised the concerns that, you know, if if we had to experience an unfortunate incident where there was such a case of a mass shooting, they know that they might be outgunned, essentially. And so this is a real concern. And for me, and for Sandra, we now have two young kids. Every time there’s a mass shooting anywhere in the country, I get a text message from Sandra or, you know, very concerned. And it’s a concern that I share as well. And look, you know, my support is that, you know, you don’t need these types of guns. We know that the guns that are being used on the streets sometimes are from people who are law abiding citizens that might go through a situation where they sell their gun in the black market. It happens. There’s information out there that show that and so I’m looking to try to minimize or mitigate the risk of any mass shootings here in Rhode Island. It’s happening all over the country. We’re seeing it. We’re the only country in the world that experiences such a thing.
Ian Donnis: Let me let me stop you there because we’re short on time. Sandra is your significant other, State Senator Sandra Cano of Pawtucket. She is part of a huge field of Democrats running for the open seat in the first congressional district. You have two young children together, what’s it like being connected to one of these candidates when there’s such a large field vying for this year?
James Diossa: Sandra has always been an inspiration to me and motivation if you’re going to learn more about you know how she came from Colombia to the United States on political asylum, and you’re gonna see a candidate that’s well rounded, well informed, who started off at the school committee, joined the council. Now is a leading state senator. I’ve been truly inspired by her work, and she’s been one of my biggest supporters and motivators in continuing in public service.
Ian Donnis: All right, that’s all our time. So we’ve got to leave it there. Thank you so much for joining us for it on general treasurer, James Diossa.
James Diossa: Thank you, Ian.
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A lot of Americans are tired of choosing between Democrats and Republicans. Despite that, alternative parties and third-party candidates face a steep climb in making inroads in American politics. Now, a centrist group known as No Labels is irritating the two dominant parties by getting on the ballot in states like Colorado, Arizona and Alaska. No Labels has some fans in Rhode Island, although the group does not appear to be very active here. The election of Donald Trump in 2016 nonetheless shows how millions of Americans are willing to rally behind an unorthodox candidate. Whether this is a harbinger of the future or just an aberration remains to be seen.
That’s our show for this week. Our producer is James Baumgartner.
I’m Ian Donnis and I’ll see you on the radio.
