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East Providence Urged to Pad Pension, Benefit Liability

The city is paying about $6.1 million a year to fund the pension plan's annual required contribution (ARC).

To boost the city's bond rating, R.I. Director of Revenue Rosemary Booth Gallogly recommended East Providence start aggressively funding both pension and Other Post Employment Benefits (OPEB) liability at Thursday's budget commission meeting.

East Providence is paying about $6.1 million a year to fund the pension liability's annual required contribution (ARC). The school department pays about $3.4 million a year; the city side pays about $2.7 million. To avoid deficits in the future, members urged city administrators to start paying more than the minimum ARC. 

"It's going to more than what you're paying now," said Michael O'Keefe, chairman of the commission.

Only a handful of communities are making strides to fund Other Post Employment Benefits (OPEB), said Gallogly. Collectively across the state, there is $3.5 billion in unfunded OPEB liability that has accumulated over 30 to 40 years, she said.

O'Keefe asked if a community trust could be set up to service clusters of municipalities; Gallogly said it was a possibility. So far, East Providence, like other municipalities, has not allocated money toward OPED liability; only within recent years has Rhode Island established a system to fund that liability.

"East Providence isn't alone," she said.

Collectively across the state, unfunded liability for locally administered pension plans has increased $200 million to $2.1 billion, according to 2010 statistics. 

City data including information regarding beneficiaries and realistic mortality rates will be imperative to the OPEB analysis. Configuring that data can be challenging, as it was when sorting out Central Falls' finances, said Gallogly.

"It's complicated stuff," she said. "When the state made progress, it was viewed as very positive [to the rating agencies.]"

O'Keefe also addressed the school department's ability to secure a $9 million bond, plus $800,000 to pay for , that will renovate the high school and quell Rhode Island Department of Health (DOH) concerns. He included a November letter from DOH that reports the high school is in . 

"We have to figure out this issue quickly," O'Keefe said.

Fiscal Overseer Maj. Steve Bannon asked if there was a backup plan should the city fail in securing bonds. 

"This has to work," said Interim Superintendent Edward Daft.

First Southwest, a finance firm, is expected to analyze the most cost-effective way for the school department to secure bonds.

At the end of the meeting, O'Keefe met with union department heads in private meeting.

Veteran January 20, 2012 at 01:47 PM
There's a lot of talk, but the overtime keeps rolling in. Bring on the receiver to clean up this mess. Mr Mayor, city council, your fired, have a good day!!!
Bruce Zarembka January 20, 2012 at 03:16 PM
The more this commission looks the more they will continue to find. Finally we have professionals that know what they are doing. More so they don't allow the local political machine of the Democratic Party (and one big party it has been for these clowns) to play into any of these decisions. As I watched this weeks city council meeting on TV, I found it interesting as to how low key and professional it was (other than some of the blowhards that come up in the public comment portion of the meeting that love to hear themselves talk.) When people that know what they are doing, those on the council that have no clue have finally realized it is better to keep their mouths shut, for they must have finally realized how rediculous they have looked over the past year. All I can say is thankfully we have this commission looking at things objectively and professionally. Hopefully this has woken up the resident of this city and they will do the right thing next November...and that is to get rid of about two-thirds of the city council and school committee. It's time to move forward!!
Sharon Rivers January 20, 2012 at 03:45 PM
I agree with both Bruce Zarembka and Veteran. We needed a Budget Commission and to be Flanderized a long time ago! By the way, Daft never fails to disappoint. I love how he answered the question posed to him by Bannon about a back-up plan. "This has to work". Is that a plan? I guess if we all look at the asbestos laden broken floor tile in the high school and say, "It just can't be harmful", then it won't be.
Govstench January 22, 2012 at 04:24 AM
The financial issues need to be straightened out by an outside concern - the commission. The Democrats have always been the tax and spend gang and they will drive government into the ground. The high school needs to be completely gone through and asbestos abatements by qualified personal need to be done sooner than later. I still wonder where all the "Townie Pride" is today. Sad.
Rags 1 January 22, 2012 at 05:11 PM
Local communities can no longer afford education as one of its major goals. Because of Federal and State mandates and the expanded nature of special education and lack of money commmitment to go along with the 15 minutes of fame, we need statewide consolidation, consolidation, consolditation all all school districts and get one tax bill for education like many counties in the US, many of which are bigger than Rhode Island. Get real. The Commission is only a band-aid and really doesn't think out of the box with any new ideas. Old ideas and recurring past mistakes makes it basically a drug store temporary fix.
Arthur Dolloff January 31, 2012 at 09:25 PM
No matter what is wrong we still need to take care of daily needs. That said there seems to be a new light being shined on the problems we have. I say we because we all have allowed this problem to grow. Not one political side or the other is at blame as a matter of fact it has been the nepotism of the whole political system that has perpetuated the loss of accountability that keeps balance of a healthy system. Mike DiGioia has come to the table with fresh ideas and apparently little political baggage. He is willing to put forward an effort to stem the problems of the old system and start changing the future of business in EP and I salute him for his efforts. Until we have transparency and accountability in this government there will always be under table deals and waste. The High School is in serious disrepair; maybe the city can use tax credits for EP businesses willing to give the city a bargain on the work performed. There is more than one way to get the needed results. And this can apply to other areas were creative thinking, not money spending, can achieve good results. Keeping the light on the clowns will only make them work harder to wield their nefarious deals but bombarding them with good alternative ideas will force them to eventually quit, be fired or go with the flow of public opinion. Never loose sight of the fact that corruption cannot grow in the light of public knowledge. Consolidation is an extremely good way to get rapid resuilts.
Arthur Dolloff January 31, 2012 at 09:41 PM
If Ed Martin could run the school department well enough to get a school named after himself maybe we should take a real hard look at how he did business. Consolidation of services is a sure way to save. So is privatization. There is going to be suffering, how long it lasts and how many it affects is not a simple call, but a call that must be made. We all have suffered at the hands of government in some form. Wall Street losses, pension losses, property value losses, wage and quality of life have hurt us all. How much longer we suffer these losses is a matter of choice. Either we take a hard line and start on a new track or we continue to be beaten by a broken system. The choice is ours.
Jim March 28, 2012 at 03:31 AM
I have my 1988 EP tax bill for my former home.It was divided about 50% for municpal purposes and the other 50% for schools.I'll bet if you look at your current property tax bill the school portion will be much higher than the municpal part.Also teachers salaries and benefits account for over 90% of the school's portion of your tax bill.Oh,I forgot to mention that teachers work 6 hours a day for 180 days a year.So what is the largest problem in the cities' budget? I'll let you decide for yourself.It's not only EP but the whole state.I like the consolidation of services idea so that the whole state can benefit.Good luck getting concessions from the teachers.
Rags 1 March 28, 2012 at 05:55 PM
If you judge the educational process by how much the school department's tax bill shows and not the students and scores and national averages reaching goals, then the approach is flawed. We need a state-wide consolidation, one tax bill, specific goals and objectives both for treachers and students, and commit to education as a direct means to meet this economic recoverty and its need for specific training. Not everyone needs to go to college, but many are needed with advanced job skills. Lets get to work.

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