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When Bill Clinton spoke at the Democratic National Convention in September, he gave the party faithful an arithmetic lesson — and stole the show. The former president poured scorn on the proposed plan of Republican presidential candidate Mitt Romney to both cut taxes by $5 trillion over ten years and reduce the federal budget deficit, exclaiming, “The numbers just don’t add up!”

Gina Raimondo knew what he meant. The Rhode Island treasurer, a venture-capitalist-turned-political-rising-star, was listening as a convention delegate and understood tough fiscal math. When she took office in January 2011 — she had won a commanding electoral victory after campaigning for fiscal and pension reform — her tiny state was struggling under a huge debt burden and ballooning pension liabilities. The $7.4 billion state retirement plan was only 50 percent funded and on course to run out of money as early as 2019. For decades Rhode Island officials had fitfully tried to reform the system, with little success, as workers and retirees fought to keep hard-won benefits that the state could no longer afford.

With focus and determination, a sure command of finance and a gift for forging consensus, Raimondo took up the challenge. She produced a blunt, hard-hitting report titled “Truth in Numbers: The Security and Sustainability of Rhode Island’s Retirement System” that made a stark case for pension overhaul:  Without drastic measures to rein in costs, the report asserted, the state’s retirement liabilities would devastate a wide range of government programs and ultimately bankrupt the pension plan itself, to the detriment of retirees.

Pension reform was not an easy sell in a state with a Democratic-controlled legislature and strong unions. But Raimondo traveled across Rhode Island, arguing her case with voters, legislators and union representatives in a series of town-hall-style meetings. Her campaign received a powerful boost in the summer of 2011 when Central Falls, a small city just north of Providence, became the first-ever Rhode Island municipality to file for bankruptcy, almost entirely because of its pension burden. The treasurer’s efforts secured a dramatic triumph when in November 2011 the state’s legislature passed a major pension bill by a wide margin and the reforms were signed into law by Governor Lincoln Chafee, a Republican-turned-independent and son of a longtime U.S. senator.

“I just could not live with myself for not fixing the retirement system, knowing at some point in time the well would run dry and someone would be told they don’t have a pension,” the slight and personable Raimondo tells Institutional Investor in an interview at her office at the state capitol. “Once people started to grapple with the consequences of not fixing the problem, they started advocating for change.”