Google payout pushes police pension fund to 95 percent

Google payout pushes police pension fund to 95 percent

Saves taxpayers more than $1 on the rate

NORTH PROVIDENCE - The town's police pension fund, which was once funded at less than half, is now almost fully funded thanks to a trio of cash infusions totaling $20.6 million from the North Providence Police Department's $60 million winnings from Google.

New Finance Director Justin Cambio told The Breeze that the pension fund, which sat at a paltry 45 percent funding level prior to the payments into it, is now at 95 percent, according to an executive summary from Milliman, the town's actuary.

The payments approved by officials from the U.S. Department of Justice not only helped the men and women with a direct stake in the pension fund but the taxpayers who help finance it, according to Cambio.

Without the massive cash infusion, taxpayers' annual contribution into the fund would have jumped from $1.7 million to about $2.3 million, representing a 3 percent tax increase, or "well north of $1 on the tax rate," according to Cambio. That, in "its simplest form," is how the Google payment impacts the town and its people, said Cambio.

For the owner of a home valued at $200,000, with a 20 percent homestead exemption factored in, an increase of just $1 on the rate would have meant an increase on his or her annual tax bill of $160. An increase of $1.50 would have meant a tax increase of $240.

Due to the $20.6 million payment from Google, the town's unfunded accrued liability, which once looked nearly insurmountable, dropped from $16.6 million to just $1.8 million, according to the actuary's summary.

It almost goes without saying that the active and retired police officers in the North Providence pension system were the biggest beneficiaries from the pension fix, said Cambio, as they were not asked to help address the problem out of their own pockets.

North Providence Police officials have so far received approval from the Department of Justice to spend $22,160,000 of $60 million total won last year as part of a settlement with Google over illegal advertising practices. North Providence Detective James Watts assisted with the investigation of Google, helping to build a case against the search giant for distributing online ads for Canadian pharmacies that were illegally marketing prescription drugs to Americans.

The approval of $20.6 million to fix pensions last winter was the first expenditure from the Police Department's $60 million winnings from Google. Since the pension fix approval, officials from the Department of Justice have also given the nod to a $1.26 million purchase of 32 new police vehicles and $300,000 for a police substation and new community police officers at Notte Park/Camp Meehan.

It was Mayor Charles Lombardi who insisted that none of the Google winnings be spent until after the town got approval to fix its police pension fund, which was previously among the worst in the state.

Lombardi lobbied hard, with the help of Sen. Jack Reed and others, to get the approval, eventually getting the go-ahead after months of letters and phone calls back and forth.

The benefit to taxpayers was too great not to push hard for the pension fix, according to Lombardi, who said Monday that he is "elated" about the results of the payments.

"That was the reason we fought so hard for the nine months to encourage or convince the Department of Justice that that was the most responsible way to spend some of that money," he said. "The word we kept hearing was that it was our persistence that got this done."

Even two years before the approval from the Department of Justice, town officials were already doubling their payment into the police pension fund because they knew the importance of doing so, said Lombardi. It was the moribund pension fund and deficits in the School Department that were keeping the town's bond rating down, said the mayor. Since the big fix, and subsequent bond upgrades, town officials have been able to refinance existing bonds for an additional $60,000-$70,000 in estimated savings.

Now that all of the $20.6 million has been injected into the police pension fund, North Providence "will start to see a real return" on the "investment" soon, said Cambio.

The reasons the police pension fund isn't funded at 100 percent are varied, said Cambio. Even if one or two extra people retire unexpectedly, the actuarial assumptions will change dramatically and thus change the funding status. Officials "can never been 100 percent accurate" when figuring out pension liabilities, said Cambio, but North Providence officials came pretty close.

Comments

Lets not forget that the town was nearly $900,000 behind in its contribution to the pension system. The reason they had to double up on their payments was to play catchup for being in the rears to begin with. Don't get me wrong. I'm glad my taxes won't increase to secure this fund and I believe the police are entitled to the pension promised to them. But it sounds to me like the Town Hall takes no responsibility in its liabilities and excesses in spending, such as legal battles, but can't wait to jump on a bandwagon (google settlement money) and say "see how we've saved the tax payer from an increase". Come on really. ?