PERSONNEL DECISION: Cranston Mayor Allan W. Fung has proposed a plan that would freeze cost-of-living increases and cap future increases at 3 percent, but the changes have yet to be adopted by the City Council.
If the first step toward a solution is admitting you have a problem, then 2012 has seen progress for Rhode Island’s distressed, locally run, municipal pension plans.
One year ago, Rhode Island made national headlines when it cut benefits and reorganized its state-run retirement system to rein in runaway pension costs.
And although local plans were left out of that overhaul, the move has spurred cities and towns to address pension plans that have been neglected for decades.
Whether these new efforts will prove successful is still in doubt, as communities’ budget and legal challenges have not changed.
But the debates over solutions that have taken place at town and city council meetings this fall show communities are no longer blissfully unaware of the problem.
“We have inherited a problem no one has addressed in 20 years,” said Pawtucket Mayor Donald R. Grebien about his city’s police pension plan, which is $145 million short of the cash needed to cover obligations to current and future retirees. “How do we balance that? We will present four options that do no less than what the state does and one will be our preferred option.”
Perhaps the most significant development in the fight over local retirement benefits took place in Providence this spring, when city workers agreed to a package of pension changes that included suspending cost-of-living increases and requiring retirees over 65 years old to join Medicare.
The deal ended a court battle challenging the city’s authority to cut pension benefits and may have emboldened mayors elsewhere to push hard for similar changes to their local plans.
When the state overhaul was passed, Gov. Lincoln D. Chafee pushed to include provisions in the law that would give municipalities power to unilaterally cut benefits in a similar way the state did.
But most of those provisions were removed from the pension bill, and then again from the state budget.
The only part that did survive was a set of guidelines for cities and towns with distressed local plans, those less than 60 percent funded, to come up with recovery plans to stabilize them.
This week the plans were due and, while some communities didn’t make the deadline, most with drastically underfunded pension systems have now formulated recovery plans, even if they haven’t been agreed on, implemented or submitted.
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