Embattled Rhode Island Pension Reformer Running for Governor

Gina Raimondo, the state treasurer whose pension overhaul drew criticism from unions, Rolling Stone, Forbes, and elsewhere, will be pursuing a higher office.

(December 19, 2013) – The treasurer of Rhode Island, whose three-year term has been fraught with controversy over pension reforms, has decided to run for governor. 

Gina Raimondo announced her campaign in a December 18 video.

“I know pension reform was—and is—a hard thing for many people,” she said, with a Christmas tree visible in the background. “But it was harder still to think about what would have happened to those pensions if we didn’t save them—which we did… It’s opened up the possibility that Rhode Island can make investments in its schools and in job creation—investments that would have been impossible just three years ago.”  

However, she argued that pension shortfalls are still too large to implement those investments, and "the best way to build on our work together over the last three years is to seek the Democratic nomination for governor.”

Under Raimondo’s leadership, Rhode Island cut $3 bullion from its unfunded liability by freezing the cost of living adjustments, hiking retirement ages, and shifting employees into hybrid defined contribution/defined benefit programs.

Simultaneously, the now-$8 billion public retirement system began rebalancing assets from traditional classes to alternatives. Raimondo, a former venture capitalist who helped establish Point Judith Capital, was severely criticized in Forbes and Rolling Stone for the increased fees this entailed—or “Wall Street Feeding Frenzy” as columnist and investigator Edward Siedle put it.

"There's no prudent, disciplined investment program at work here—just a blatant Wall Street gorging, while simultaneously pruning state workers' pension benefits," wrote Siedle in his blistering first op-ed about the new investment strategy. 

Raimondo defended the investment strategies as a diversifier and source of alpha to help remedy the fund's significant unfunded liabilities.

"Everything we're investing in are brand-name firms with a proven track record—and we always get the best fees,” her spokesperson said in a statement. “In consultation with our investment advisers, we negotiate wherever possible to make sure that the state of Rhode Island receives among the best fees of other investors."  

The treasurer’s fundraising will begin in earnest in January, according to her campaign manager.