Local 1033 wants out of city pension system; Taveras opposedMarch 13th, 2012 at 6:00 am by Ted Nesi under Nesi's Notes, On the Main Site
By Ted Nesi
PROVIDENCE, R.I. (WPRI) – The biggest municipal union in Providence wants out of the city pension system.
Donald Iannazzi, business manager for Local 1033 of the Laborers’ International Union, is pushing Mayor Angel Taveras to let his members out of the city’s severely underfunded pension system, saying they shouldn’t get the same treatment as police and fire retirees in light of sacrifices they’ve made already.
In a Feb. 29 letter to Local 1033′s retirees, Iannazzi suggested “separating the [Providence] Retirement System so that the money, invested by our members and the city for our members, can only be used to pay benefits for our members.” The city’s pension system currently pays benefits for all City Hall, police and fire retirees out of one commingled pool of funds.
Iannazzi confirmed the letter’s authenticity on Monday. ”Providence is incapable of managing its own pension system,” he told WPRI.com. “I think that has been proven over time.”
Taveras met with Local 1033 officials last month and rejected the proposal to partition the city pension system. “As we have expressed, Mayor Taveras is opposed to making that move, which would not solve Providence’s pension problem and, if anything, might make it worse,” spokesman David Ortiz told WPRI.com.
Union may call on lawmakers
Iannazzi’s proposal could have a dramatic impact on Providence’s pension system – which was only 32% funded as of June 30 – by draining it of assets. Local 1033 retirees’ average benefit is $26,200, excluding tiny midcentury pensions, and few receive cost-of-living adjustments, or COLAs. The city also contributes to both Social Security and a union-run pension plan for them.
The union’s “fallback plan” is to ask the General Assembly to pass legislation moving Local 1033 out of the Providence pension fund and into the state-run Municipal Employees Retirement System (MERS), an idea Iannazzi already floated in November.
“While the state system has implemented significant reductions on future accrual and suspended COLAs, at least we know that the state system will be in existence for many decades ahead,” Iannazzi wrote in his letter. He criticized Taveras for at first refusing to meet with 1033 to discuss the plan and then rejecting it.
Treasurer Gina Raimondo “is interested in exploring viable options” to move locally run pension plans into the state-run system, spokeswoman Joy Fox told WPRI.com. “However, she has said all of these plans are unique and complex. Proper study and analysis is required to determine if moving into MERS is appropriate for these plans.”
‘Doing too much, too fast’
Iannazzi expressed exasperation with Taveras for using “the ‘B’ word” – bankruptcy – at a press conference last month, less than a year after signing a new contract with Local 1033 that included concessions. ”If you can find me the Angel Taveras of March of 2011, we can deal with this very complicated issue and real issue,” Iannazzi said.
“I have suggested to [the mayor] that he and his people are doing too much, too fast, and that is leading to compounded failure,” Iannazzi said, pointing to police and fire retirees’ recent legal victory blocking the city from moving them to Medicare. He noted that Local 1033′s members first agreed to use Medicare back in 1986.
Iannazzi dismissed Taveras’s call for retirees to negotiate a deal by May 1. ”If somebody thinks we can have a grand fix to Providence’s pension woes in 45 days, then that’s not serious thinking,” he said. Iannazzi also said he has the legal authority to negotiate on behalf of 1033 retirees because nearly all of them remain union members in retirement.
In his letter, Iannazzi said Local 1033 has been pushing for pension reform in Providence for at least 15 years, pointing to a series of concessions his members have made: reducing the benefit accrual rate from 2.5% to 2% in 1996; raising the retirement age to 60 years old; and requiring a minimum of 30 years of work to get a pension.
Police, fire on their own
“The fact remains that all of these changes were implemented for Class A members only and the city, including Mayor Taveras in his 2011 contracts with police and fire, continued to ignore the drain on Providence’s Retirement System and not take stern and necessary measures,” Iannazzi wrote.
“I’m the first to profess I do not know what the get well-plan is for Class B, for uniformed officers,” Iannazzi said Monday. “I leave that to my sisters and brothers who represent Class B actives and retirees to come up with that get-well plan.”
“I am not going to attack Class B members – they need to come up with their solution,” he added. “I have full confidence in their leadership, both active and retired. But I will take every action that is required to responsibly meet the needs of our members and the security of our retirees and active work force. And if that requires legal action to partition the system, then we will do that.”
Local 1033′s leaders declined to attend Taveras’s high-profile town hall meeting with city retirees earlier this month. “We will not accept the mayor’s unilateral ‘get well plan,’” Iannazzi wrote in his letter, because in addition to “suspending the ridiculous COLAs granted to police and fire retirees,” Taveras wants to change health coverage for retirees.
“We will not agree to implement the mayor’s perceived cure, do it without a comprehensive plan and work out the problems after real people suffer adversely and unnecessarily,” Iannazzi wrote, adding that the city “recklessly” mismanaged some retirees’ medical coverage recently.
Iannazzi emphasized that point again on Monday: “We will not change health care for retirees outside of collective bargaining, and I cannot say that any more sternly or seriously.”
(photo: City of Providence)