POWIP Piece of Work In Progress – Former Abode of Dan Collins

“Uncharted legal territory”: No, it ain’t

I'm getting a bit tired of the abuse of language. "Unexpected!" "Unprecedented!"

To quote a drunk, fictional Spaniard: I do not think that means what you think it means.

A Rhode Island town finds itself in trouble... and the rhetoric is silly:

Central Falls receiver seeks 'significant' retiree concessions
1:52 PM Fri, Jul 08, 2011 | Permalink
Katherine Gregg Email

PROVIDENCE, R.I. -- With a legal fight still raging over the state's attempts to rein in the cost of its retiree health and pension benefits, Central Falls receiver Robert Flanders is seeking "significant voluntary concessions'' from retirees in the battered city he is trying to pull back from the brink of bankruptcy.

In a letter that went out Friday to retired members of the Central Falls police and fire departments, he requested a meeting on Tuesday, July 19, to discuss the potential for a cost-saving compromise that could help avert a bankruptcy that could jettison the city -- and it retirees -- into unchartered legal territory. [sic]

Go to the original story if you want details on the specific concessions, the legal threats, yadda yadda. I want to address the "uncharted legal territory" ...

Oh come now. This isn't uncharted legal territory. Prichard, Alabama already blazed this trail. The pensioners of Prichard were SOL when the town and pension fund went bankrupt in 2009. For almost 2 years the pensioners did not get paid. At all.

Here are several posts (some by me, some by someone else) on Prichard's plight:

• Prichard, Alabama and the Public Pension Endgame
• Public Pensions: When the Money Runs Out
• Pension Woes of Alabama Town a Warning to Others

The rest of the article is stuff we've seen elsewhere ... "Changing our benefits is unconstitutional!" yadda yadda. Well, municipal bankruptcy is constitutional, and then when the money runs out of the pension fund.... try to sue your pensions into existence. I'm sure that will work.

I can't find the link right now, but the last I heard of the Prichard pensioners, they got some sort of lump sum settlement of their pensions, but much less than they were owed if you went by the original promises.

If you want to take this court, public employees, you do have recourse to that venue, but you need to realize that you may get far less via that route than negotiating up front right now. You need to figure out what is actually supportable. Hire your own, independent actuaries. Project cash flows under a variety of scenarios.

Because yelling that the original promises must be fulfilled doesn't mean that they will be fulfilled. You need to figure out the likelihood that they will actually be paid.

Meep

Meep is a member of the Irish Catholic mafia, having a suspiciously high number of green-eyed, red-haired friends. While she doesn’t have red hair herself [except when she goes into the sun (rare for any vampire)], she does have green eyes. She’s a raving Papist and is a life actuary on the side [i.e., she counts dead people]. An amateur pain-in-the-ass [willing to go pro!], she likes covering retirement, mortality, math, and education issues.