Providence police, fire retirees say they offered pension cutsMay 2nd, 2012 at 1:12 pm by Ted Nesi under Nesi's Notes, On the Main Site
The Providence Retired Police and Firefighters Association is not happy with the Taveras administration.
City officials have failed to publicize the retiree association’s “counteroffer or alternative suggestions at helping the City of Providence save face and avert bankruptcy after years of fiscal mismanagement and failing to properly fund the retiree’s [sic] pension fund,” according to a letter from the group distributed to reporters on Wednesday by Andrews Law Offices in Providence.
The retiree group says its plan would have suspended all retirees’ cost-of-living adjustments (COLAs) for multiple years and eliminated the compounded 5% and 6% granted in 1989, saving the city almost $5.65 million per year, according to an actuary they hired.
The retirees also say they offered to settle a lawsuit headed to trial this month by allowing the city to move current retirees to Medicare at age 65, “while essentially keeping retiree health benefits intact.” They say the offer would have saved more than $2 million but the city rejected it.
Based on the retirees’ estimates, the two measures combined would save the city almost $8 million a year. Mayor Angel Taveras had said retirees needed to match the level of savings reached under the City Council plan he signed on Monday, which saves an estimated $16 million to $19 million a year.
However, the retiree organization acknowledged that because it is “not a bargaining agent, it cannot bind its members or non-members, though it can negotiate with the city and make recommendations.” The letter also claims the mayor’s chief of staff was considering increasing city taxes by $10 million as of April.
Separately, the deep-pocketed advocacy group Engage Rhode Island that gave crucial support to last November’s state pension overhaul came out in support of the changes in Providence. “We believe that the new ordinance constitutes a comprehensive approach to reform,” EngageRI said in a statement.
Update: A closer look at the numbers shows the retirees are only offering about a third of the savings Taveras said he needed. The letter lumps together pension and Medicare changes for almost $8 million in savings. But the pension changes on their own only save $5.65 million, an the mayor said he needed $16 million to $20 million in pension savings to balance the budget. He also originally wanted as much as $12 million in Medicare savings, while the retirees here say they offered about $2 million.
Update #2: David Ortiz, a spokesman for Taveras, issued this statement responding to the retirees:
We’ve negotiated in good faith with police and fire retirees to reach an agreement that protects the pensions retirees currently receive while achieving the savings needed to prevent Providence from eventual bankruptcy. The representatives that police and fire retirees designated to negotiate on their behalf have not presented an offer that comes close to achieving these savings.
The Taveras administration is moving forward to address Providence’s structural budget imbalance and put Providence on a sustainable fiscal path before it is too late. Providence’s taxpayers, active employees and largest tax-exempt institutions have all reached agreements that have the savings needed to help save the city. We have been unable to reach such an agreement with retirees. If Providence is forced into bankruptcy because of a failure to act, retirees would lose much more than annual raises.
The full text of the retirees’ letter is posted after the jump. If the city responds, I’ll post it here.
PROVIDENCE POLICE AND FIREFIGHTER RETIREES OFFERED CITY PLANS THAT WOULD SAVE $7.5 MILLION
Plan Would Eliminate 5% and 6% COLAs And Switch Retirees to Medicare
Though the Providence Retired Police and Firefighter Association (PRPFA), like its active brothers and sisters, does not believe in negotiating in the media, the City’s recent leak of its “offer” regarding the COLA issue and other concessions, has necessitated a public response. The City alleges it was not the source of the leak, but it is clear why they would want the offer to be made public.
Because the PRPFA is not a bargaining agent, it cannot bind its members or non-members, though it can negotiate with the City and make recommendations, as was suggested by Mayor Angel Tavares. It is interesting that the City would leak its “offer” and not the PRPFA’s counter-offer or other alternative suggestions at helping the City of Providence save face and avert bankruptcy after years of fiscal mismanagement and failing to properly fund the retiree’s pension fund.
The PRPFA has, at its own expense, hired an actuarial consultant who formally worked for Buck Consultants, to provide insight on various concessions and the savings it would generate for the City. The City fails to tell the media that we have made generous and substantial offers of concessions to the City to help not only in the short term, but begrudgingly, in the long term as well.
After consulting with its actuarial consultant, the PRPFA offered the City a plan that included a multi year suspension of all retiree COLAs, as well as a significant reduction in the percentage amount of the COLA once reinstated. Once reinstated, the retiree COLA would mirror what the City recently negotiated with active Police and Firefighter unions. Had the City agreed, the PRPFA plan would have immediately eliminated the 5% and 6% COLAs that the City consistently trumpets as reason for its “Black Hole”.
According to its figures, had the City accepted the PRPFA plan, it would have immediately saved the City upwards of $5.65 million dollars per year this year, and in perpetuity.
And although the PRPFA and the City head to trial on the City’s attempt to switch retirees to Medicare later this month, the PRPFA also offered to settle that lawsuit. After consulting with healthcare cost and plan experts, the PRPFA devised a plan whereby the City would be allowed to switch current retirees to Medicare at age 65, while essentially keeping retiree health benefits intact. That would have generated over $2 million dollars in savings. The City summarily rejected that offer as well.
The City has consistently said that it needs $22 million dollars to avert fiscal disaster. The PRPFA plans alone would have immediately generated nearly $8 million dollars of that amount. We should not be asked to sacrifice more, nor will we. Especially in light of the fact that the City does not intend to put any portion of the $8 million dollars back into the pension fund to reduce its unfunded pension liability, but instead into its General Operating Fund.
The Mayor also hails the recently announced deal with Brown University as historic. The PRPFA disagrees with the Mayor’s exuberance. An additional $3 million dollar payment from an entity that owns over $1 Billion dollars—yes $1 Billion dollars—in tax exempt property is quite the deal for Brown University, not the City of Providence. Brown does, however, get to maintain its continued status as Top Tax Evader in the City of Providence.
During a negotiating session with the PRPFA on April 17, 2012, the Mayor’s Chief of Staff told the PRPFA that the City was not ruling out a tax rate increase, admitting that the City had looked into the feasibility of a $1.00 tax rate increase that would immediately generate $10 million dollars for the City. We now question why the Mayor’s Chief of Staff made that remark in light of the Mayor’s alleged promise not to raise taxes.
Understand that the PRPFA stands firm behind not only valid contracts but more importantly numerous Rhode Island Supreme Court decisions that have cemented the benefits of our members and non-members, all of whom served with pride for the City of Providence for many years often sacrificing their health, family, and as we so recently know, their lives. The City’s continued attempt to balance its past (and probably future) fiscal mismanagement on its Public Safety Retirees and their widows is not only unfair, but also a betrayal to each of us who laid our lives on the line.
And though the Mayor consistently calls us Public Safety Retirees, he should really call us what most of us are—Senior Citizens. The vast majority of whom are not eligible for Social Security or have the ability to work any longer. Providence Police Officers and Firefighters have always sacrificed for the City of Providence. We are willing to do so in retirement also. We are not the reason the City is in dire financial straights—that would be because of fiscal mismanagement—but we are being asked to sacrifice the most.
Because the City has rejected our nearly $8 million dollar offer and The City Council has passed legislation to eliminate the COLAs, we have no choice but to take our fight back to Court. The PRPFA does not want to return to years of litigation, but the City once again has left us no choice. Instead of making the difficult decision to take our offer, the City and the City Council did what past administrations have done—kick the can down the road for the next administration to try and solve. One thing is for sure, the City’s actions have halted any attempt to reach a deal with the PRPFA.
We would therefore urge every voter in the City of Providence and statewide to call your Local and State Legislators to suggest that they reach an agreement with the PRPFA instead of costing the City hundreds of thousands of dollars in legal fees and years of litigation.