PROVIDENCE, R.I. (WPRI) – Five years after a sweeping pension reform law passed, labor unions may be seeking to revisit the landmark legislation because it “cut too deep.”

On Nov. 18, 2011, then-Gov. Lincoln Chafee signed the largest overhaul of a state pension system ever seen in the country. It was designed to save hundreds of millions of dollars annually and roughly $4 billion over time, largely by freezing retiree cost-of-living adjustments (COLA’s).

The law – slightly altered last year through a settlement to end a lawsuit against it – calls on the state to review the health of the pension fund every four years to determine if retirees can see some sort of COLA increase.

Robert Walsh, executive director of teachers union NEARI, said the fifth anniversary of the law is revealing retirees who were “adversely affected and the legislature is going to have to factor that in.”

“I won’t be shy about going back to the legislature some day and saying, ‘Hey, history proved you cut too deep,’” said Walsh. “’Let’s start restoring things faster than the original plan.’”

He said union leaders don’t have any legislation pending but offered some ideas to “make the COLA’s come more rapidly.”

Among them: he said he may suggest lawmakers alter the statute to do a COLA review annually rather than every four years, or reinstate annual increases when the pension fund is 75 percent funded, rather than 80 percent as is called for now.

Walsh also floated the idea of taking money directly from the annual state budget – thus not touching the pension fund – to provide an additional payment to retirees to offset the COLA loss.

J. Michael Downey of AFSCME Council 94, the largest state employees union, also said labor leaders would be seeking changes to the pension law, but with an added element: no longer allow the General Assembly to touch the pension plan.

“I would love somehow to get the politicians out of my pension,” he said, adding that he’s not sure how to structure the retirement system to do that. “I will continue as long as I’m around as a union official and a taxpayer.”

“It is very frustrating what the politicians do with the pension [system],” he added.

But Democratic Gov. Gina Raimondo – who championed the pension reform law when she was general treasurer – said reopening pension reform would be a mistake.

“I don’t think that is a responsible thing to do,” Raimondo said in an interview. “We have a system that’s secure.”

She added: “This isn’t just about retirees, this is about the 13,000 state employees who go to work every day who are in their 20s, 30s, and 40s and who deserve a pension to be there.”COLA Review

The pension reform law will be back in the spotlight in 2017 because government retirees are expected to see a boost to their monthly checks.

As part of the court-approved settlement, the state will use a number of factors to determine if retirees will get a COLA on a portion of their pension. The original law called for a five-year review; the settlement shaved a year off that. (Retirees received two one-time $500 stipends, one shortly after the law went into effect and one a year later; however, those stipends did not add to their pension base like COLA’s do.)

Among the determining factors to calculate the percentage increase are inflation and how well the state pension portfolio performed.

The math is complicated, but the COLA cannot go higher than 3.5 percent or lower than nothing. (That is, there can never be a decrease.)

Evan England, spokesperson for General Treasurer Seth Magaziner, said the way things look now officials expect retirees to see a COLA increase. Updated numbers due out in December will determine how much the bump will be.

“COLAs will go in to effect for individual retirees in the month following the anniversary of their date of retirement,” England wrote in an email.

Outside the four-year review, there is a time when the increases can return annually.

It’s fluid, but the latest projections on the future health of the pension fund show retirees will see their cost-of-living increases return permanently by 2030. That is when actuaries predict the pension plan will be 80 percent funded.

For retiree Delores Bresette – who worked for 20 years at Rhode Island College – that doesn’t cut it.

“I’m 74 now, what’s that going to do for me then?” Bresette said. “I need it now; now is when I’m living.”

Bresette said she has felt the impact from the lack of a regular COLA because while her bills go up, her retirement check doesn’t.

“I planned for my future, which was supposed to include the COLA,” Bresette said, adding she is working a part-time job to help make ends meet. “I think it was very unfair, and I think the reason it was unfair is because [Raimondo] once said she would never take anything away from us and she did: she took my COLA.”

Raimondo said that looking back five years after the law was signed, she has learned reform is very “personal” for people.

“It’s harder for her, it’s less money in her wallet than she was expecting and there’s nothing easy about that,” Raimondo said. “I’m not the one to blame. The folks to blame are the ones that made the decisions before me which resulted in an unhealthy, unsustainable, underfunded system.”

Both Walsh and Downey said they share something in common with Raimondo: anger is directed at them from union members and retirees.

“People still are in shock that this change happened,” Walsh said. “To the extent that labor is supposed to be a watchdog on this, we get a lot of folks that say, ‘How could you have let this happen?'”Hedge Funds

Since the four-year review of COLA’s is at least partially tied to how well the state’s investments perform, Walsh said one byproduct of the reform law is that retirees are more focused than ever on the retirement fund’s portfolio.

And they are not happy about the dismal returns of high-fee hedge funds.

In 2011, Raimondo put roughly $1 billion of pension money into hedge funds, in what she says was an effort to minimize risk if the economy were to take a hit. In September, Magaziner announced officials will move more than $500 million of the money back out of hedge funds because of lackluster performance.

Asked if – looking back – she regrets the decision to pour more money into hedge funds, Raimondo said, “I think we made the right decision with the information we had at that time.”

“In the last stock market crash, the reason people got so hurt, and retirees lost so much money, is because the whole portfolio was correlated with the market,” Raimondo said. “So we had to do something to fix that and the products we picked were the best option we had.”

Magaziner said the state will reduce its investment in hedge funds from 15% of the pension portfolio to 6.5% over the next two years, moving more money into other types of investment vehicles.

Walsh said because the state portfolio is now tied to whether or not COLA’s come back every four years, people are looking at short-term returns rather than over a longer period of time.

“We’re now a quarterly-report-driven society where people get excited or depressed about the variations on the stock market on a day-to-day basis,” he said.Did it Work?

From a purely financial perspective, the pension reform law appears to have shrunk the state’s unfunded liability as it was projected to do in its first four years.

A review of actuarial valuations shows the shortfall in the pension fund for state employees has been smaller than originally predicted in every year since the law passed in November 2011.

As of the 2015 valuation, the actuarial accrued unfunded liability dropped to $4.37 billion, down from nearly $9 billion before the law. A new valuation is due out soon.

Raimondo said the difference has had a huge impact on the annual budget because the lower the unfunded liability in the pension system, the less money lawmakers have to come up with to contribute to it.

“I can’t imagine trying to balance this budget if we hadn’t done pension reform, I can’t even get my head around how painful that would’ve been,” Raimondo said. “[There would be] extremely high tax increases, big property tax increases … and just really painful cuts.”

Bresette said she thinks there were other ways to have secured the retirement system’s health, including re-amortizing the pension fund, which is akin to refinancing debt.

For current and former government employees, the biggest impact Walsh said he’s seen come out of the law is distrust.

“It has made our folks – government employees – very, very cynical about government,” Walsh said. “Because they had spent their whole careers – and this goes for retirees as well – believing in this promise, trust in government.” Tim White( ) is the Target 12 investigative reporter and host of Newsmakers for WPRI 12 and Fox Providence. Follow him on Twitter and on Facebook