Open Letter to RI Municipalities: Tell us the Truth!

Open Letter to RI Municipalities: Tell us the Truth!

By mark - Posted on 19 April 2012


Dear Mayor / City Official,

“Truth in Numbers” was a key theme for the historic pension reforms that were implemented last fall in Rhode Island, and, as a concerned citizen, I am requesting that the same level of transparency be implemented when it comes to dealing with the pension and other post employment benefit (OPEB) problems facing our city. All public officials and citizens need to be made aware of the full extent of the liability as well as the true condition of our public finances in order to be able to make informed decisions about proposed solutions.

We all remember the public outrage when Enron and other corporations were exposed for conducting fraudulent accounting practices … and rightly so. But why should we be any less concerned about accounting malpractice when it comes to our public pensions?

We are all in this together. How our city handles this significant problem will impact each and every resident: from retirees, to municipal employees, to property and vehicle owners, to business owners, to students and to all those who receive city services.

In order to instill honesty in public finances the city should publish the data associated with its retirement system that is comparable to what is demanded of the private sector. This means:

1) The city’s pension liabilities must be valued according to a discount rate that matches the true market value of the debt. Even if this means conducting a second valuation of the liability based on this more realistic rate assumption.

2) An open accounting of the city’s OPEB liabilities

3) The city’s pension assets must be valued on a true market basis

4) The projected total benefit contributions expected to be borne by taxpayers for the next ten years must be based on these more realistic figures

We know the horror stories of how public pension debt may have been dramatically undervalued by state and municipal governments, by as much as a factor of three-to-one. The assets that are meant to support this debt are also not always reported according to market values. Therefore, taxpayers are in the dark about what they owe in terms of pension payouts to government workers and retirees. This impedes an honest discussion about spending and taxes that needs to take place for cities like ours to achieve good fiscal health.

We are asking you to enhance your relationship with your constituents and fulfill your fiduciary responsibility to us, the taxpayers, by promptly disclosing the true scope of the pension data requested above. We deserve nothing short of full “truth in numbers” when dealing with this critical matter of public finance.

Thank you for your service to our community,