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Policy: Budgets & Deficits

Settlement fails in Rhode Island pension overhaul

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Associated Press,Rhode Island,Entitlements,Budgets and Deficits,Pensions

PROVIDENCE, R.I. — A proposed settlement that would have ended the legal fight over Rhode Island's 2011 landmark pension overhaul, which has been a model for other states looking to rein in runaway pension costs, was rejected by one of the groups voting on it, officials announced Monday. The parties were ordered back into mediation.

Police union members, the smallest of the six groups that had to approve the proposal, rejected it, said Ray Sullivan, a spokesman for the plaintiffs. Sixty-one percent of police union members voted to reject the settlement.

The proposal overwhelmingly won approval from all of the other groups, including teachers and firefighters.

But according to the agreement, if more than half of any one of the groups rejected the proposal, the settlement process would end and the original lawsuits would proceed. A trial is scheduled for September.

But because it was rejected by the smallest group — police union members made up less than 2 percent of those eligible to vote in the first round — the judge "ordered both sides back into mediation to explore whether a settlement can still be reached," according to a statement from the plaintiffs.

The proposal, announced in February, was an attempt to resolve lawsuits filed by public-sector unions and retirees over the state's 2011 pension law. The deal would roll back some of the law's changes and provide modest benefit increases to retirees.

The 2011 pension overhaul was designed to save Rhode Island $4 billion over the next 20 years.

The outcome marks a defeat for Gov. Lincoln Chafee and Treasurer Gina Raimondo, who argued it was a good deal for all parties and preferable to continued costly litigation.

Spokespeople for Chafee and Raimondo couldn't immediately be reached.

Richard Licht, the director of administration, had no immediate comment Monday after the parties had an in-chambers conference with the judge in Kent Superior Court in Warwick.

The vote to reject was 34 percent for state workers; 31 percent for teachers; 27 percent for firefighters; 26 percent for retirees; and 15 percent for municipal workers.

The total number of ballots mailed out was 23,624. Those that were not returned were counted as votes in favor of the proposed settlement.

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