High court may decide benefits

Whether financially strained municipalities should be allowed to claw back retiree benefits will likely be answered by the state’s highest court, where three distinct suits appear headed.

How the Supreme Court decides the question could set an important precedent for Rhode Island municipalities dealing with looming financial crises stemming from vastly underfunded, long-term benefit obligations.

Locally administered pension and other post-employment benefits such as health care are underfunded in Rhode Island by at least $5.6 billion, according to state documents and Providence Business News research.

Unsure how to tackle these issues, local lawmakers are watching closely as retirees in Cranston, Providence and Woonsocket ask the courts to decide whether municipalities should be allowed to break pre-existing contracts.

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Cranston for years underfunded its pension system for public-safety workers and in 2012 was headed for bankruptcy, as liabilities greatly exceeded set-aside assets.

Cranston Mayor Allan W. Fung then decided to freeze all cost-of-living increases for police and firefighter retirees’ pensions. The move led 75 retired police and firefighters to opt out of a class-action lawsuit to form the Cranston Police Retirees Action Committee and sue Fung, alleging infractions to constitutional contract clauses.

Superior Court Judge Sarah Taft-Carter ultimately ruled in favor of the city, saying Fung’s decision was justifiable given the fiscal circumstances.

CPRAC is appealing that decision to the state’s high court.

In Woonsocket, however, retired police officers are fighting a unilateral alteration of health benefits made in 2012. Superior Court Judge Jeffrey A. Lanphear earlier this year ruled in favor of the plaintiffs.

Woonsocket has appealed that decision to the Supreme Court.

The Cranston decision is to pensions, in many ways, what Woonsocket’s suit is to health care.

The Providence case, however, comprises elements of both. It asks whether the city and former Mayor Angel Taveras acted legally when freezing cost-of-living increases for pensions and clawing back some health care coverage for retirees.

City officials expect a decision from Taft-Carter soon. Regardless of the outcome, the losing party is expected to appeal to the Supreme Court, where the three cases are expected by representatives of affected communities to receive final judgement together.

Fung said a high-court ruling “will provide a blueprint for municipalities that may be facing similar issues.” •

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