PROVIDENCE, R.I. (WPRI) – The working group Mayor Jorge Elorza formed last year to study Providence’s nearly $1-billion unfunded pension liability has met just two times, but city officials say they’re hopeful a “grand bargain” over retirement obligations can be reached with the city’s unions and its retirees.
The first two meetings of the group, held on Nov. 10 and Jan. 31, have also not included representatives from the Providence firefighters’ union or the Providence Retired Police & Fire Association, according to Emily Crowell, a spokesperson for the mayor.
City officials invited Paul Doughty, president of president of Local 799 of the International Association of Firefighters, to attend future working group meetings after Eyewitness News asked why his union wasn’t included in the initial meetings.
“I’ll meet with them, but I find it very difficult to believe that I would even consider any pension changes at this point,” Doughty said. “The time for pension changes would have been in the collective bargaining agreement.”
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As of June 30, 2016, Providence’s pension system was just 25.28% funded, with an unfunded liability of $985 million, according to an audit released earlier this year. The fund paid out $108.1 million to retirees during the year, about $17.8 million more than it took in from employee contributions and investment income.
A settlement reached between the city, its public employee unions and the retirees in 2013 requires Providence to make at least 95% of its annual required contribution (ARC) to the pension fund each year, a figure that is projected to grow from $73 million in the current fiscal year to $110 million by 2027.
Elorza, a Democrat, has repeatedly said he wants to strike a “grand bargain” over pension obligations, but he has offered few details about how a deal can be reached. In a December interview, the mayor said his office had been “laying the groundwork” for such an agreement for more than a year, suggesting one option might be to freeze cost-of-living adjustments (COLAs) until the pension system is healthier.
Elorza and other city officials are also actively exploring ways to generate revenue from Providence’s water supply, potentially through a sale or lease agreement. The city’s financial advisors have recommended that revenue derived from the water supply should be earmarked for the pension system. Any changes to the water supply would likely require General Assembly approval.
Crowell, the mayor’s spokesperson, said representatives from the administration and City Council, the state, Local 1033 of the Laborers’ International Union, Local 1339, which represents school clerical workers, the police union and the Providence Teachers Union have attended the first two meetings of the working group.
As the conversation evolves, Crowell said “other representatives will be invited to join this very important discussion.”
Tom Johnston, who represents the Providence Retired Police & Fire Association, said he has not heard from the city regarding the working group. Although Johnston doesn’t have the authority to negotiate on behalf of retirees, he can advocate on their behalf. He has also registered as a State House lobbyist.
Johnston said he thinks the city should seek to secure more revenue from the city’s nonprofit hospitals and colleges, a proposal Elorza included in his legislative agenda this year. He said any attempt to alter the city’s current pension agreement will result in litigation.
“Times have changed and we must be fair not only to the retired police and firefighters but also to the taxpayers and most importantly the children who attend a school system in need of repair,” he wrote in an email. “These children are the city’s future.”
As for Doughty, who does have the ability to negotiate potential pension changes for his active members, Crowell said he was invited to join last summer but never responded to city officials. The invite came while Doughty was negotiating a new five-year contract with the city. The deal included no pension changes.
Doughty acknowledged the city may have reached out to him, but not leading up to the meetings in November and January.
“They can come back to us in five years,” Doughty said.