The Little State That Could

Straight-shooting Gina Raimondo overhauled Rhode Island's pension system in less than a year. Washington should sit up and take notes

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Christopher Morris for TIME

They say the truth hurts, and they are correct. Pain seeps from the cracks in retired Rhode Island teacher John Corsetti's voice as he laments what is happening to his pension: his check will no longer rise each year. His wife is sick; his adult son can't find a job in this crummy economy. "I contributed 9% of my salary for 31 years," he says. "Why are they stabbing me in the heart?"

And there's a wounded look in 52-year-old Tim Durnigan's eyes when he asks why the retirement age is being pushed forward after all his careful planning to stop teaching at age 55. "Do they know we're out here paying for a problem we had nothing to do with creating?"

Perhaps they and thousands of other Rhode Island public employees should never have believed in their pensions to begin with. Then it wouldn't hurt so much when the fantasy finally came to an end--the fantasy of ever more retirees' living ever longer lives, receiving ever growing checks from a half-empty fund. But it's hard to fault the workers; denial has been a state-sponsored pastime on the Narragansett for decades.

When the end of the fantasy came for Rhode Island--just as the end is nearing for broken pension systems in states and cities all across the country--the truth teller had her own ration of pain to bear. Gina Raimondo, a rookie politician who never got the memo about dodging tough issues, took one look at the cooked books and decided to take a stand. "It would be much easier for me just to tell you there is no problem," the Ocean State's general treasurer explained at a recent town-hall meeting. She chose the hard way because "this is about math, not politics," and Raimondo is very good at math and the state's math was disastrous. By some measures, Rhode Island's pension problem was the worst in the country; the entire state budget for an entire year would not fill the pension hole. Raimondo has sketched this ugly picture at more than a hundred meetings since taking office in January. Slowly, the math saturated a political system founded on this simple equation: You scratch my back and I'll scratch yours.

On Nov. 17, to the astonishment of nearly every observer of Rhode Island government, Raimondo's crusade culminated in a vote by the general assembly to fix the system. Not "fix" it as previous legislatures have done--with nods, winks, phony accounting and fingers crossed. But fix as in repair, cure or mend. The lawmakers risked their political lives to put the Rhode Island retirement system on solid footing by raising the retirement age, tying pension boosts to the health of the fund and partially replacing guaranteed benefits with something like 401(k) accounts.

This might be the most extensive public-pension reform in U.S. history, according to the Pew Center on the States. Such an unexpected outbreak of responsible leadership didn't just pull Rhode Island back from the brink, where it had been teetering like an American Greece. It also suggested that difficult, self-sacrificing decisions are still possible. And that's an important message not only for the petulant partisans of Washington, where the supercommittee has thrown up its helpless hands, but also for the dozens of states and hundreds of local communities whose retirement funds are short of their promises by an estimated $3 trillion all told. Change hurts, but it can be done. Ask Raimondo.

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