Union wins suit against Pawtucket; mayor reveals $2.3M deficitJanuary 13th, 2012 at 6:39 pm by Ted Nesi under Nesi's Notes, On the Main Site
PROVIDENCE, R.I. (WPRI) – Rhode Island’s largest public-sector union declared victory Friday in a lawsuit against Pawtucket, just hours before the mayor revealed the city is running an unexpected $2.3 million deficit.
Superior Court Judge Sarah Taft-Carter ruled Jan. 5 that Pawtucket cannot force retired school employees to start sharing the cost of their health insurance premiums because they are entitled to the benefits stipulated in the contract that was in effect when they retired, according to Council 94.
The contract guaranteed all retired school employees age 58 or older family health insurance coverage from Blue Cross & Blue Shield of Rhode Island until they became eligible for Medicare at age 65.
A spokesman for Grebien was not available for comment on the suit. Rhode Island’s municipalities owe $3.5 billion in retiree health benefits to their employees. Providence is awaiting a decision by Taft-Carter in a different suit on whether the city can move retired employees to Medicare when they reach age 65.
Council 94 filed the lawsuit after the city began charging the retired school employees for part of the cost of their health insurance premiums in 2007. A decision in 2010 by Superior Court Judge Jeffrey Lanphear “did not fully resolve the dispute,” Council 94 said, which is why it went before Taft-Carter.
Taft-Carter found that the retired Pawtucket school employees’ health insurance from age 58 to 65 is a vested benefit, “and thus they cannot be altered by the defendants without plaintiffs’ consent.” She made a similar ruling in Council 94′s favor last fall in a case challenging changes made to state pensioners’ cost-of-living adjustments.
“The court’s decision represents a significant victory for retirees by affirming that employers cannot unilaterally cut retirement benefits,” J. Michael Downey, Council 94′s president, said in a news release. “We look forward to having the court determine the appropriate remedy for these retirees.” It’s unclear how much that could cost.
Separately, Grebien on Friday ordered all city employees in Pawtucket to get prior approval “on a case-by-case basis” before spending money after discovering the city is running a $2.3 million for the current fiscal year, which ends June 30. Pawtucket’s budget was $205 million in 2010-11.
The city began the 2011-12 fiscal year with a deficit projected at $13 million, which Grebien’s office said was later eliminated. The mayor said he is “optimistic” the new deficit can be tackled with “rigorous fiscal management.” Grebien defended his budget in a speech last May he titled “Saving Pawtucket from Bankruptcy.”
Pawtucket is the latest to join the list of Rhode Island cities struggling to get their finances under control. Providence has yet to fully eliminate its $110 million deficit for 2011-12. East Providence is now under direct state oversight. Woonsocket’s school department recently disclosed a surprise deficit, and Central Falls remains in bankruptcy, as well.
An earlier version of this post incorrectly said the lawsuit involved benefits for retired teachers; it involves benefits for retired school department employees, excluding teachers.
(photo: City of Pawtucket)