Tall task: Grebien plans six-week sprint to pension fix

Tall task: Grebien plans six-week sprint to pension fix

City's financial future depends on it, says mayor

PAWTUCKET - Mayor Don Grebien has the unenviable task of gaining support for his pension fix plan that calls for a multi-year freeze on pay increases for retirees, a similar freeze for active union members when they retire, and bigger payments from city taxpayers.

It might be a tall order even if city leaders had another six months to get it done, but state officials' deadline for a plan to fix the city's broken police and fire pension system is just six weeks away.

Grebien has said that if his administration is unable to get the support of the City Council and the backing of those vested in the system by May 1, the city could lose millions of dollars in state aid that is directly tied to submitting a plan. That would head Pawtucket down the path of bankruptcy, according to the mayor.

But the going is slow.

The head of a newly organized retiree association last week told Grebien that the mayor’s “request for relief” from retirees in the form of giving up pay increases “is without merit” given the failure of past city officials to adequately fund their pensions.

The mayor is also struggling to get concessions from the active union workers, meaning the city could be in for a lengthy court battle even if the council does approve the plan.

Grebien, speaking to more than 100 retired city workers last week during a pension summit in the Tolman High School auditorium, told them he’s seeking a “shared effort” between retirees, active union members, and city taxpayers to address Pawtucket’s pension issues, “because that’s the only way we’re going to correct this problem.”

The mayor’s three-piece plan for addressing the city’s unfunded pension liability of $144.8 million calls for:

• Freezing retirees’ guaranteed annual cost of living raises, or COLAs, for three years.

• Seeking similar agreements with active police and fire union members for when they retire. There are other items being discussed as part of ongoing contract talks with the unions that could also have an impact on the pension system, according to Grebien.

• And increasing the city’s annual contribution into the pension system by 3 percent for each of those three years. By the third year, taxpayers would be putting in an annual contribution of $13.2 million, up from $12.1 million this year.

If officials “do nothing” about fixing the pension plan, said Finance Director Joanna L’Heureux, the city will face a cumulative deficit of $40 million over the next five years, which would have a devastating impact on taxpayers.

Grebien, who is set to present his pension fix plan to the Pawtucket City Council at its meeting Wednesday night, concedes that there are big challenges ahead. If council members decide they don’t like his plan, or if active union employees refuse to accept the numbers he is asking for, said the mayor, “it changes everything.”

City Council President David Moran said he’s not sure what the council will do on the pension improvement plan. Moran said he expects the council to take its time as it considers whether to approve it. Six weeks is not very long to consider the impacts of such a fix, said Moran, and there are no guarantees that pensioners will accept the plan.
“This is a first for us,” said Moran. “We’re going to go slowly, take baby steps.”

Tony Pires, director of administration for Grebien, told The Breeze that the only requirement from the state is that the improvement plan be approved by the council and submitted to the Rhode Island Pension Commission by May 1.

“We fully expect that the council will be able to provide approval within the timeframe,” he said.

The state’s Critical Plan Empowerment Act that Pawtucket and other municipalities like it are now under requires that local pension plans deemed to be in “critical status,” or funded at less than 60 percent, return to the under-funded pension plan at least 50 percent of the savings gained from suspending COLAs.

Jerry O’Connor, the chairman of the newly formed Pawtucket Public Safety Retirees Association, spoke at length last week about the failure of past city officials to fund the pension system for police and fire employees. O’Connor wanted to know what the pension plan would look like today if city officials of the past had kept their promises to fund it. The answer, according to officials, is 80 percent funded instead of the 35 percent it is at today.

O’Connor told Grebien that the retirees will take Grebien’s recommendations “under advisement and get back to you.” Presidents for both the police and fire unions could not be reached for comment.

O’Connor and the retirees are particularly upset about a three-year period, from 1994 to 1996, when then-Mayor Robert Metivier and the City Council at the time put no money into the public safety pension plan. Grebien said that he can’t do anything about what happened in the past, but what he and pensioners can do now is work together to get the pension plan back to a 60 percent funding level by 2025.