Audit: Providence ends FY22 with $827K surplus, $40M pension investment loss

THE CITY OF PROVIDENCE ended fiscal year 2022 with an $827,00 surplus but lost $40 million in pension investments, according to a recent audit report. Pictured is Providence City Hall. / PBN FILE PHOTO/CHRIS BERGENHEIM

PROVIDENCE – The city ended fiscal year 2022 with an $827,00 surplus, according to a recently published audit by accounting firm CliftonLarsenAllen LLP.

The surplus money from higher tax revenue and federal aid through the American Rescue Plan Act was used to boost the city’s reserves, or rainy day fund, to $29.6 million – the highest level in more than two decades, according to the audit report.

It’s also the seventh consecutive year the city has run a surplus, according to a memo from Chief Financial Officer Lawrence Mancini included with the audit report.

However, the city’s overall net position, which includes capital assets, infrastructure and all government funds, decreased by $45 million as of June 30, driven primarily by its pension and other postemployment benefit payments, according to the audit. Like investors nationwide, the city’s pension investments took a hit amid recent market volatility, losing $40 million in pension investments over the year.

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Meanwhile, the pension obligation continues to swell, with annual payments expected to grow faster than the yearly increase in city revenue. Total pension liability stood at $1.7 billion as of June 30, with just 23% funded.

Mounting pension payments and a still largely unfunded liability have been a focus of city and state lawmakers in recent years. A plan to borrow $500 million through a pension obligation bond received the go-ahead from city and state lawmakers, and voters, last year, but rising interest rates have stopped the city from issuing the bonds.

Mayor Brett Smiley told PBN previously he wants to look at joining the state pension system to eliminate administrative costs and, potentially, increase the city’s return on investment. Smiley has also said he’s still open to the pension bond plan if interest rates drop down again.

The full report is available online.

Nancy Lavin is a PBN staff writer. Contact her at Lavin@PBN.com

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