PROVIDENCE – Patricia Serpa, the longtime state lawmaker carrying the banner this year for the legion of retirees who want their annual pension increases back, tells of the advice her father gave her when she was just starting her teaching career.
In 1970, he advised her to turn down a teaching job offer that paid more and instead to take a job with a school district that might pay less in salary, but paid into Social Security on its employees’ behalf.
The 70-something Serpa calls it one of the best pieces of advice her father ever gave her because, unlike thousands of other retired teachers in Rhode Island who worked in school districts that did not pay into Social Security, she has a cushion.
She gets $3,182 a month from her state pension, roughly $2,000 a month from her late husband’s pension as a retired Providence firefighter, plus Social Security, which pays “more than my pension.”
While it is too late to secure Social Security for today’s out-of-luck retirees, Serpa, D-West Warwick, on Thursday appeared before the House Finance Committee to pitch her bill to require that all public school teachers hired starting July 1, 2024, participate in Social Security.
Retired public school teachers without Social Security
Social Security is financed through a dedicated payroll tax. Employers and employees each pay 6.2% of wages up to the taxable maximum ($168,600 in 2024), while the self-employed pay 12.4%.
Enrolling new teachers in Social Security may not be easily done, quickly, for legal and political reasons, but as Serpa noted, many of today’s retirees worked in municipalities where neither they nor their employeers contributed to Social Security. The list includes:
Barrington (teachers); Bristol (teachers and police); Burrillville (teachers, Harrisville and Pascoag fire); Central Falls (teachers, police and fire); Coventry (teachers and fire); Cranston (teachers, police and fire); Cumberland (teachers and fire); East Greenwich (teachers and fire); East Providence (teachers); Foster-Glocester (teachers); Hopkinton (Hope Valley, Wyoming fire, Hopkinton police); and Johnston (teachers).
James Parisi, the lobbyist for the Rhode Island Federation of Teachers and Health Professionals, said initial research indicates the legislature cannot mandate Social Security for new hires only, “but there are other ways to do it.
“Maybe the General Assembly can mandate all the non-Social Security districts to reconsider it. Maybe you can require everyone to be in, but allow people to opt out, which we think makes some sense … [for] a long-term teacher” who’d get little benefit.
The potential political obstacle? “We raised this issue when Gina Raimondo was talking about pensions in 2011, and no one wanted to touch it,” Parisi said.
“This is their turn”
Before the hours-long, multi-bill hearing was over, a spokesman for state General Treasurer James Diossa conveyed support – perhaps for the first time – for legislation that would provide Rhode Island’s retired teachers and state workers with a one-time “stipend” equal to 3% of their pension or $40,000, whichever is less.
Diossa spokesman Rob Craven said the treasurer supports this bill over others because the money for it would come from the state’s General Fund, not the pension fund.
Serpa laid the groundnwork for a hearing – on another day – on her newly filed – and very different – bill to provide retired state workers and teachers with a 3% “cost-of-living adjustment” aka COLA on their base pension in the budget year beginning July 1, and uncapped future increases in keeping with the Consumer Price Index.
While her bill came in too late to make Thursday’s House Finance meeting, the long agenda gave legislators and other advocates for retired and active public employees an hours-long opportunity to argue for various ways to reverse the cost-cutting moves that then-state Treas. Gina Raimondo urged – and state lawmakers, including Serpa – approved in 2011 to rein in the skyrocketing pension tab.
The cost cut that haunts today’s lawmakers most: the suspension of the annual COLAs that once paid up to 3% compounded annually to those who were once allowed to retire at any age after 28 years on the job.
Lawmakers placed some curbs on those offerings in the years leading up to the dramatic 2011 overhaul, but not enough to avert huge cost increases. The overhaul saved taxpayers an estimated $3 billion, but retirees say they took the hardest hit.
“This is the year to help the retirees. This is their turn,” Serpa said. “It’s not hyperbole, but I’ve heard of some retired teachers, some who’ve never paid into Social Security, some who don’t have the benefit of a husband’s pension or Social Security who are borderline homeless.”
“A couple of teachers I’ve heard from are eligible for food stamps. That’s sinful,” she said, making a case for taking an initial $30 million out of the $11-billion pension fund, and more later, as required, to give the retirees annual pension boosts.
Other bills concerning retirees in RI
The Rhode Island chapter of the AARP put its weight behind a bill seeking the total repeal of state income taxes on Social Security.
AARP Director Catherine Taylor made this pitch: “More than one in five Rhode Island residents – 230,018 people – receives Social Security benefits. Annual Social Security benefits to Rhode Islanders pump at least $4 billion into the state economy.”
In fall of 2023,” she said AARP RI surveyed 700 Rhode Islanders age 45. “When asked, the majority (89%) of residents say they agree that ‘Rhode Island lawmakers should repeal the state tax on Social Security.’ This sentiment is consistent regardless of age, gender or political party.”
“Over half (55%) of Rhode Island adults believe Social Security will be a major part of or their only source of their retirement income.”
Out of the 29% of Rhode Island residents age 45+ who have considered living in another state for retirement, or are still unsure about it, nearly three in five say they are more likely to stay in Rhode Island if the Social Security income tax is eliminated. In addition, the majority of Rhode Island adults age 45+ say it is extremely or very important to have adequate Social Security benefits available in the future (91%).
