PROVIDENCE, R.I. (WPRI) – A seven-member board chaired by Mayor Jorge Elorza that is charged with overseeing Providence’s pension investments has cancelled four of seven monthly meetings since December, including one scheduled for Thursday at noon.
The stated reason for the Providence Board of Investment Commissioners’ decision to cancel meetings in December, February, April and June: “Lack of quorum,” according to Victor Morente, a spokesperson for the mayor.
In other words, a board that includes three individuals who work in City Hall – Elorza, finance director Larry Mancini and city treasurer James Lombardi – and whose 22 meetings since 2015 have lasted on average 31.5 minutes couldn’t find four members to meet on the days of the four canceled meetings. By comparison, the State Investment Commission has met at least once a month since August 2015.
Other members of the city’s investment board include City Councilman John Igliozzi, Normand G. Benoit, John Winkleman and David Hirsch.
“The board has conducted official business adequately throughout this period,” Morente said, referring to the four meetings that have been cancelled since December. “Recently, a new member was sworn in to take on the role of a former member who could not attend the meetings regularly. This should help with the quorum moving forward.”
Thursday’s meeting was canceled in part because of Elorza flying to Miami for the twice-annual meeting of the U.S. Conference of Mayors, which begins Friday. Elorza, who co-chairs the conference’s Immigration Reform Task Force and is acting chair of the Hunger and Homelessness Task Force, is scheduled to speak on two panels related to those issues on Saturday.
Back at home, Providence’s pension system remains among the worst-funded in the state at 25%, with an unfunded liability of $985 million as June 30, 2016.
The city’s investment board is not responsible for the policy decisions city leaders have made over the years when it comes to contributing money to the fund and has no say over the employee agreements that determine the monthly payments retirees can receive upon leaving their city jobs. The board generally makes investment decisions based on the recommendation of its longtime advisor, Wainwright Investment Counsel, LLC.
Wainwright’s performance is considered strong. In an update given to the board last month, the firm said the total market value of the city’s pension fund was $278.1 million as of April 30, with an 11% rate of return compared to the same point last year. The city’s annual assumed rate of return is 8%.
City officials are currently considering Wainwright’s annual fee from $165,000 to $265,000, the firm’s first raise since 2006. According to the firm, the city’s three-year return pension fund investments is 6.23%, the average five-year return is 10%, the seven-year return is 9.7%, and the 10-year return is 6.4%. The firm said Providence has outperformed 97% of its peers over the last decade.
The challenge the city faces is that its pension payments to retirees have significantly outpaced the amount contributed to the fund. Since 2005, the city has contributed $662.6 million, but withdrawals topped $911 million. The fund’s total market value has dropped from $341.8 million in 2006 to $278.1 million in April.