Two More Steps Taken to Heal 'Critical' Police, Firefighters' Pension Plans
As East Providence waits for a ruling on its Google windfall, the Budget Commission takes two more actions to help stabilize the local retirement plans.
The East Providence Budget Commission took two more actions Thursday afternoon, Nov. 15, to help pull the city’s local police and firefighters pension plans out of critical condition.
The budget commission will begin paying 100 percent of the annual required contributions (ARC) immediately, and it will sit down with the police and firefighters’ unions to negotiate lower cost of living adjustments (COLA) and other terms of the plans for active employees.
Those actions will take place even as city officials wait for a decision from the federal Department of Justice on an appal of two previous requests to local and regional Asset Forfeiture and Money Laundering Section (AFMILS) offices to use the Google "windfall" money awarded to the police department for the police pension fund. Those requests were turned down.
"The appeal has not been denied yet, and we are hoping for an approval" to use more than $52 million of the $60 million windfall to the police department to cover the total unfunded liability, said Graczykowski.
The Google money comes from the company allowing online Canadian pharmacies to place ads that targeted consumers in the U.S. East Providence and North Providence police provided significant time and resources in that investigation and were rewarded for their efforts through the asset forfeiture section of the justice department.
“We’ve asked for a waiver to use the Google money for police pensions,” said Graczykowski, which is not allowed under terms of the federal program. “But we’re hoping that we can use this windfall one time to stabilize the underfunded police pension plan.”
Right now, the two pension plans have unfunded liabilities of more than $112 million, which leaves the two plans at only about 31.4 percent of what is needed for future payouts.
Any local pension plan that has less than 60 percent funding is considered in "critical status" by the state.
Mike Fallon of Fallon Pension Actuaries in Wellesley, Mass., presented 5 options to the commission for a “funding improvement plan for 2012.” They ranged from applying the Google payment only to the two options adopted by the board to moving the local pension plans into the RI Municipal Employees Retirement System (MERS).
A resolution authorizing the improvements to the pension plans with the two options selected at the meeting was part of a packet of information handed out before the commission meeting. So, the decision made on Thursday went into effect immediately.