Providence Mayor Angel Taveras got an early Christmas present on Thursday from Moody’s Investors Service.

In a research note, Moody’s analyst Tom Compton praised the tentative settlement on pensions and retiree health benefits that Taveras has negotiated with the city’s unions and retired workers. The police and fire unions, as well as the two department’s retirees, have all voted to approve the deal.

“The changes offer significant relief to the highly leveraged and fiscally stressed city,” Compton wrote. It will reduce the fixed costs – pensions, retiree health benefits and debt service – that made up about 22% of Providence’s operating-fund spending in 2011-12.

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By Ted Nesi

PROVIDENCE, R.I. (WPRI) – Providence’s retired police officers and firefighters filed suit against the city Thursday over their pensions – and Mayor Angel Taveras is elated.

Read the rest of this story »

Michael McDonald reports for Bloomberg News on pension woes in Providence and elsewhere:

It has been more than 20 years since Gilbert McLaughlin ran the fire department in Providence. Yet the former chief stands to be biggest loser as the capital of the smallest U.S. state flirts with insolvency.

McLaughlin hung up the phone when Bloomberg called him at his home in Warwick to ask about his pension. Also, I wonder where Paul Doughty learned McLaughlin will get more than $700,000 at age 100?

By Tim White

PROVIDENCE, R.I. (WPRI) – The head of public safety in Providence says the city’s investigation into accidental disability pensions awarded in the early 1990s has revealed there were repeat doctors who would routinely sign off on injuries sustained on the job, the Target 12 Investigators have learned.

Read the rest of this story »

Due to an editing error, an earlier version of the headline on this post incorrectly said a single doctor awarded 16 accidental disability pensions with 6% COLAs on the last day they were available.

Former Providence Fire Chief Gilbert McLaughlin could wind up making nearly $800,000 a year if he lives to be 100. And even if he doesn’t live that long, his pension might, Tim White reports:

Also, try our interactive WPRI.com COLA calculator and see how much you could get on 6% a year.

Providence City Council President Pro Tempore Terrence Hassett and his colleague Councilman John Igliozzi caused a major stir this afternoon by abruptly calling for major changes to the far-reaching pension ordinance they helped pass unanimously on Monday.

The two veteran Democrats want to scale back the ordinance’s freeze on cost-of-living adjustments (COLAs), which actuaries estimate could save the city more than $15 million a year as officials scramble to avoid bankruptcy. They said they’re still working on a proposed amendment.

Hassett’s about-face is especially surprising considering he cast three separate votes in favor of the pension bill in recent weeks – one in committee and two as part of the full council – meaning just a few days ago he signed off on the same changes he now opposes.

“Pension reform is necessary, without question, but to severely challenge the financial security of police and fire personnel upon their retirement in such a dramatic manner is not what I am willing to permit,” Hassett said. Igliozzi characterized their actions as a “profile in courage,” GoLo’s Dan McGowan reported.

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Iannazzi, right, with Taveras

By Ted Nesi

PROVIDENCE, R.I. (WPRI) – The leader of Providence’s largest union leveled his toughest criticism yet at the city’s police and fire retirees this week, saying their alleged intransigence killed a potential deal with Mayor Angel Taveras to stabilize the troubled pension system and suggesting they do not understand the gravity of the situation.

“Some individuals, acting in a manner that I characterize as irresponsible, have suggested that no changes to the retirement system can occur and that we stand back and let the inevitable (city insolvency) occur,” Donald Iannazzi, Local 1033′s business manager, wrote Tuesday in a letter to his members. “Local 1033 has never acted irresponsibly and will not start today.”

Iannazzi confirmed the letter’s authenticity after WPRI.com obtained a copy. It says Local 1033′s negotiating team “agreed in principal to a tentative agreement” that would have suspended cost-of-living adjustments (COLAs) for retirees receiving less than $40,000 in exchange for no changes to medical benefits. The union’s agreement was contingent on police and fire retirees signing on, he said.

“Response from too many retirees receiving 5% and 6% compounded COLAs was that they would rather fight to the end, even if the end caused a failure in the retirement system and in the city,” Iannazzi said.

Joseph Penza Jr., the attorney representing the Providence Retired Police and Firefighters Association in negotiations with the city, disputed Iannazzi. “I have no idea where he got that information from, absolutely none,” Penza told WPRI.com. “I don’t know who he’s quoting. We’ve been negotiating with the city. … That mantra, if you will, does not come from us.”

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By Ted Nesi

PROVIDENCE, R.I. (WPRI) – The Taveras administration has begun discussing possible solutions to the city’s pension problems with retired police officers and firefighters, but it’s unclear what will happen next with retirees from Local 1033, Providence’s largest municipal union.

At a high-profile town meeting with retirees on March 3, Providence Mayor Angel Taveras asked them to form committees that could negotiate cuts in pension benefits with the city. He asked them to appoint the committees by March 25, which was Sunday, in order to have a deal in place by May 1.

Asked on Monday for a status update, Taveras spokesman David Ortiz told WPRI.com the administration “has already begun conversations” with the Providence Retired Police and Firefighters Association, which represents some but not all former public-safety personnel.

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Over the past week and a half or so, a number of local reporters, including yours truly, have been receiving emails from a few people claiming to be retired Providence firefighters. I say “claiming” because these individuals haven’t signed their real names, so we can’t check whether they are who they say they are.

Still, with Mayor Taveras planning a big meeting with the retirees in early March, I thought it would be illuminating to post excerpts from two of the emails. (Robert Jarvis, president of the Providence Retired Police and Firefighters Association, has not returned multiple messages from WPRI.com.)

Here’s part of a Wednesday email from “John Tavares,” the most frequent correspondent (emphasis mine):

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By Tim White

PROVIDENCE, R.I. (WPRI) – The city of Providence cuts more than $2.2 million in checks for retirees collecting a tax-free accidental disability pension every month, according to financial records obtained by Target 12.

In all, records reveal Providence pays $7 million a month in pensions, and 31 percent of that money goes to 566 retirees who were hurt on the job.

According to records, 19 percent of Providence retirees collect an accidental disability pension. More than half of those checks are cut to city firefighters who were hurt on the job, totaling nearly $1.5 million a month.

Many city and town leaders were hoping the new pension reform legislation would have given them the ability to reduce disability payouts for future pensioners. But the provision was removed at the 11th hour.

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• Interactive: Town-by-town map of pension payouts across Rhode Island (Nov. 15)

And now for a story with a backstory.

Tim White and I just posted this article on WPRI.com:

At the eleventh hour, the Taveras administration has blocked former Fire Chief George Farrell from receiving a $15,131 check for 28 sick days he didn’t use during his four years on the job, the Target 12 Investigators have learned.

But Farrell will still receive a separate $27,196 check for 51 unused vacation days, David Ortiz, a spokesman for Mayor Angel Taveras, said Tuesday. The city is required to make that payment under state law, he said.

Both payments were scheduled to be made this coming Friday. But the administration did a partial U-turn on Tuesday and announced that Farrell would not be paid for the unused sick time after all.

“In accordance with city ordinance, the Taveras administration is ending the longstanding practice of paying out non-union employees who are ending their employment with the city for unused sick time unless approved by the City Council,” Ortiz said in a statement Tuesday afternoon.

It will be the second time Farrell has cashed in accrued days off during the last five years. He also got a $74,516 payment for unused sick and vacation time upon his retirement as city fire marshal in 2006, a year before former Mayor David Cicilline called him back to serve as chief.

You can read the full piece here.

As you may have guessed, we were set to publish an earlier version of this story, reporting the former fire chief would get a $42,326 payment on Friday for both unused vacation time and unused sick time, when we got a midday call from the city saying the sick time payout wouldn’t happen after all.

We don’t know exactly what happened between last week, when we were told both payments were scheduled for this Friday, and today. But it’s clear someone in city government called an audible.

The Taveras administration is warning that city firefighters could be the next group of workers to face layoffs in Providence.

“The clock is ticking,” Melissa Withers, a spokesman for Mayor Angel Taveras, told WPRI.com on Thursday. “We’re running out of time. This has to get resolved.”

No layoff notices have been issued to fire personnel and there are no plans for a press conference to announce such an action on Friday, she said.

But “the mayor has said on the record everything is on the table for everybody, and people who think they’re immune need to think again,” Withers said.

Taveras is seeking a $6 million cut in the fire department’s budget for 2011-12. The administration is seeking the same amount of savings in the police department and has already announced plans to lay off 60 to 80 police officers to achieve that.

“We have to get to $6 million,” Withers said. “There’s nothing else we can do in terms of that number. The number is the number. We’ve got to get there.”

In a piece headlined “Sauro’s rehabilitation regime,” the paper of record’s editorial board says the city needs to take action in the wake of our disability pensions investigation:

WPRI-12 captured quite a fitness show the other day with a hidden camera, though it may have made taxpayers wince. …

On video, [Sauro] showed no sign of having a shoulder injury or being unable to work. Indeed, what reporter Tim White and WPRI discovered merits the criminal investigation now being conducted by the Providence Police Department, with help, if needed, from the State Police and the state attorney general’s office. This is big money. …

The system exists to help those legitimately injured on the job and unable to continue in their occupation; but it needs to be monitored closely and objectively to ensure that the public is not being fleeced by those who are not incapacitated and merely want a steady gusher of tax-free money.

That Providence has failed to do. A weak-tea “reform” in 2008 by City Councilman John Igliozzi required pensioners to recertify that they are injured. But the measure has no real teeth, and no independent doctor makes an evaluation. …

Providence, in part a ward of Rhode Island taxpayers, faces potentially catastrophic budget problems, as does the state. Weeding out fraud could save millions of dollars a year.

Mayor Taveras, the City Council and state officials should act immediately to make sure that those on disability pensions are actually disabled and to push for prosecution of those who are stealing public money.

A day after it made the front page of the Projo, more fallout from last week’s Target 12 investigation:

The city firefighters union is strongly supportive of Public Safety Commissioner Steven Pare’s new investigation into questionable disability pensions awarded over the last 10 years, the union’s president said Thursday.

Paul Doughty, president of Local 799, told WPRI.com his 10-member executive board met Wednesday and unanimously supported a broad examination of disability pensions in the city, including that of retired firefighter John Sauro. …

“It’s really an affront” to all firefighters, Doughty said. …

Doughty said it shouldn’t take a news outlet’s investigation to prompt the city to take action. “Channel 12 is now going to drive the policy decisions of the retirement system of the city of Providence apparently, and that is a horrible way – it’s very reactionary, and it’s unfair,” he said.

Read my full story on WPRI.com.

“Feel the Burn.”

No, it’s not Linc Chafee’s old wrestling slogan – it’s tonight’s exclusive Target 12 investigation into a questionable disability pension being collected by a retired Providence firefighter.

Tim White will have all the details about what we’ve uncovered at 10 p.m. on Fox Providence and 11 p.m. on WPRI 12. Make sure you tune in, then read his full story online – here’s the opening:

A retired Providence firefighter collecting a tax-free disability pension for an on-the-job shoulder injury is a dedicated weightlifter, an undercover Target 12 investigation has discovered.

John Sauro, 48, of Cranston, retired from the fire department in October 2000 and was awarded an accidental disability pension for an injured right shoulder. He takes home about $3,800 a month tax-free in pension payments. The city also pays $1,800 a month for his health insurance.

Undercover video taken by Target 12 show Sauro working out at a local gym over a week’s time. It reveals him doing an exercise routine that includes lifting 205 pounds on an incline bench, performing shoulder exercises with a 150-pound in dumbbells, and hanging by his arms to do leg raises.

Asked why he could no longer perform his duties as a firefighter even though he was a weightlifter, Sauro said he was disabled “as far as being a firefighter.”

Disability pensions are a much bigger story than any one retiree, though – and it’s something that’s getting more attention in light of Providence’s financial crisis, as I explain in my companion WPRI.com story:

Among retired Providence firefighters, John Sauro is far from alone in collecting a tax-free disability pension rather than a normal one. In fact, he’s in the majority.

Accidental disability pensions will make up more than half the $29 million the Providence Fire Department spends on pension payments this year, according to an analysis of payroll records by WPRI.com.

City records show 58 percent of all firefighters or their families received a disability pension for being hurt on the job as of January – 329 out of 569. All but 10 of those are tax-free. That’s up from 56 percent in 2008, when Target 12 last ran the numbers as part of our Probing Pensions investigations.

Those numbers raise as a red flag for Providence Public Safety Commissioner Steven Pare. “It seems high and that’s concerning,” he told WPRI.com, saying he would still be concerned if the fire department’s accidental disability rate was 30 percent to 40 percent, let alone 58 percent.

You can also watch extended undercover video we’ve posted online. And Tim will have a follow-up to the investigation tomorrow at 6 p.m. on WPRI 12.

This post has been revised to correct disability pensions’ share of all fire department pensions.

The Projo took a look today at the 75 state retirees whose pensions are worth $100,000 or more a year, tackling a topic Tim White addressed at length as part of Target 12′s “Probing Pensions” series in 2008. Here’s an excerpt:

They include: a slew of retired judges; a former state budget officer; a state police superintendent who now has a $150,000-a-year job as public safety commissioner in Providence; and a former House speaker who had to fight the attorney general to get any pension at all.

For those in this class, pensions range from the $100,078 paid to former House speaker and one-time state court administrator Matthew J. Smith to the $195,000 paid Joseph R. Weisberger, retired chief justice of the Rhode Island Supreme Court.

Altogether they are costing state and local taxpayers $9.68 million, which is $3.25 million more than it cost the system to provide $100,000-plus pensions to 50 people only two years ago. …

The average pension paid a retired state employee was $26,508 and a retired teacher, $42,054, a year ago, according to state retirement director Frank Karpinski.

But not all pensions are created equal.

Municipal disability pensions are more lucrative for beneficiaries and more costly to taxpayers – because they aren’t taxed. And that changes the picture significantly, as we reported in 2008:

At first glance, you’d think the state’s top pensioner is former Supreme Court Justice Joseph Weisberger with a monthly pension payment of $15,495 a month. Think again.

Target 12 also requested what he pays in federal and state taxes: $5,700 a pay period, meaning just over $9,700 dollars a month goes into his wallet. Which means the new, undisputed pension champion [pdf] is a retired Providence firefighter.

Former chief Gilbert McLaughlin catapults to the top with a tax-free accidental disability pension, bringing home an astounding $12,991 a month. Again, that is tax-free.

Those numbers are from 2008, so let’s try to update them.

As Tim and I noted last month in our report on Providence’s $15 million disability pension bill, McLaughlin’s tax-free pension has grown by about $20,000 over the past three years, from $155,892 then to $175,162 now.

If Weisberger is still paying an effective tax rate of 37%, as he was when our report first ran in 2008, that would mean his actual take-home pay from his pension is around $122,850 a year.

So Weisberger winds up with roughly $72,150 less than the top-line figure in the Projo story – and $52,312 less than MacLaughlin, who gets to keep every penny of his pension. Just something to keep in mind as you compare and contrast all these numbers.

Bonus fun fact: Providence currently has 20 retirees who receive pensions of $100,000 or more, compared with the 75 six-figure pensions at the state level.