Central Falls receiver proposes slicing some pensions in halfJuly 19th, 2011 at 11:45 am by Ted Nesi under Nesi's Notes
Bob’s pension would be sliced almost in half – from $40,037 to $21,217 – under the retirement overhaul the cash-strapped city’s receiver outlined Tuesday. All retirees’ and current employees’ benefits would be reduced, though no pension would be cut below $10,000 a year.
It’s hard to imagine anybody agreeing to such a steep cut voluntarily, but receiver Robert Flanders warned that if any group of retirees fails to accept the proposal, the city will be forced into Chapter 9 bankruptcy and pensions could stop getting paid altogether, Prichard-style.
Fittingly, the heated meeting was held inside a sweltering auditorium at Central Falls High – itself a symbol of the city’s financial woes, since state taxpayers have foot the bill for its school system for two decades now.
“We understand that we are asking for great and presumably unanticipated sacrifices, but there is simply no money to continue on the current path,” Flanders said. The goal is to cut the city’s retiree costs by between $2 million and $2.5 million annually.
It will be a hard sell. Retired policeman Michael Long questioned the legality of Flanders’ proposals, and won the meeting’s first round of applause – and a standing ovation when he finished speaking – when he said the retirees will “take our chances in a court of law” rather than agree to these major concessions.
Central Falls’ pension plans offer more generous benefits than most similar plans, with few of the restrictions – mandatory minimum retirement ages, double-dipping rules, COLA limits – seen elsewhere, according to Stephen Lisauskas, an expert from UMass Boston’s Collins Center for Public Management who spoke at the meeting.
The technical details of the reductions were outlined by Dan Sherman of Buck Consultants. They range from increases in the retirement age and a switch from compounded to simple COLAs, to a cut in the value of a disability pension from 66.75% of salary to 50%.
The changes wouldn’t be limited to pensions. Flanders wants to consolidate the eight different health insurance plans offered to Central Falls’ workers into just one starting Aug. 1, and he wants retirees to go on Medicare once they reach age 65.
“We’re in a horrible dilemma as to how to close this gap, and we’re trying to do this in the fairest way we can,” Flanders said. “We’re willing to explore alternatives – this is not set in stone,” he added later.
Retired policeman Long questioned why Flanders was asking for so much sacrifice from retirees, saying city taxpayers have not been hit to the same degree. Flanders said taxpayers were tapped out after a 20% tax hike last year and a roughly 4% one this year.
Another retiree criticized Governor Chafee, House Speaker Gordon Fox, the state’s congressional delegation and other leaders for not attending the meeting. A third expressed concern that his pension could wind up not being enough to cover his annual health insurance costs under the new medical plan.
That retiree said he retired just a few weeks ago, then asked Flanders whether he could revoke his retirement. “I’m perfectly healthy, 44 – I want to go back to work,” he said. Flanders declined to respond directly.
A 70-year-old retiree said he could not afford Medicare or Medicaid and wanted to stay on the regular Blue Cross plan, which won’t be allowed. “Are you just going to throw me to the wolves?” he asked.
(photo: Ted Nesi/WPRI)