“INSTEAD of reforming the benefit side, they forced cities and towns to fund to a certain level within 10 years,” said Cranston Mayor Allan Fung. “I would have to raise taxes substantially or cut services to meet it.”
As bad as the future looks for Rhode Island’s beleaguered state pension system, the future of plans like the one funding the retirement of 490 of Cranston’s police and firefighters looks even worse.
Closed to new members in 1995, the Cranston plan has assets to cover only 17 percent of a $300 million unfunded liability, far worse than the state system’s 48 percent funding level.
So with local leaders like Cranston’s concluding that measures in a proposed pension-overhaul bill may do more harm to their struggling local plans than good, the fate of those plans has emerged as a contentious second front in the battle over pension reform.
“Instead of reforming the benefit side, they forced cities and towns to fund to a certain level within 10 years,” said Cranston Mayor Allan Fung. “I would have to raise taxes substantially or cut services to meet it.”
Fung, who strongly supports the bill’s central reforms of the state system, is not alone in suggesting the measures designed to help cities and towns don’t get the job done.
Almost immediately after the bill was filed, Providence Mayor Angel Taveras said the plan did not give the capital city the tools it needs to fix its pension issues, which include a public-safety plan that has been singled out as one of the worst-funded in the state.
From Taveras’ perspective, the proposal simply doesn’t go far enough, spokesman David Ortiz said.
And the concerns extend beyond the state’s largest cities.
Coventry has three plans outside the state system that are all precariously ill-funded.
The worst off covers the town’s public-safety workers with only 16.5 percent of the total liability funded.
Coventry Town Manager Thomas Hoover estimates that without help, the public-safety plan will run out of money in 2021, while another plan for nonuniformed town workers will run out of money in 2028.
Like Fung and Taveras, Hoover said the current language in the bill does not help fix Coventry’s local plans and the town would have to raise taxes well beyond the state levy limit to meet the bill’s funding targets.
Of the central elements in the reform bill’s plan for the state-run pension plan, which is estimated to save the state system an immediate $3.2 billion, the most controversial measure is the proposed freeze in annual cost-of-living increases for most retirees.