Raises approved, but discussion centered on retiree costs

John Howell
Posted 6/18/15

After nearly two hours of discussion, during which the efforts of city employees were extolled, yet the issue of escalating retiree costs acknowledged, the City Council approved Monday contracts …

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Raises approved, but discussion centered on retiree costs

Posted

After nearly two hours of discussion, during which the efforts of city employees were extolled, yet the issue of escalating retiree costs acknowledged, the City Council approved Monday contracts basically giving municipal employees, fire and police 3 percent raises for each of the next three years.

Council ratification came on a 7-1 vote with Ward 9 Councilman Steve Merolla voting no. Councilman Thomas Chadronet was not in attendance.

While the terms of the contracts were not public prior to council action on the budget, as all the agreements had not been approved by union memberships, funding at an additional $1.4 million in salaries and benefits is a part of the budget. Over the three-year term of the agreements, the added cost to the taxpayers was placed at $4.1 million by City Finance Director Ernest Zmyslinski.

“We believe these agreements are fiscally prudent,” interim chief of staff William DePasquale said in presenting an overview of the three contracts. As the three bargaining units went without pay increases over the past three years, DePasquale said the net effect of the agreements amount to an annual 1.7 percent pay increase if looked at over six years. He also observed that because the police and fire forewent raises in the past three years, the unfunded liability of the Police/Fire I pension plan was reduced by $30 million. He also pointed out the three unions agreed to alter the benefit packages of new hires after July 1, restricting them to individual, rather than family, health insurance after retirement.

This concession is an acknowledgement of other post-employment benefits (OPEB) costs than pensions, which city consultants Jefferson Solutions project at $263 million. To fund the liability, Jefferson Solutions said the city would need to make an annual recommended contribution (ARC) of $23.1 million.

Merolla, who cast the sole dissenting vote, questioned if the city has a plan to address this problem.

“It’s up to the mayor to come up with a proposal and bring it to the council,” he said.

City Solicitor Peter Ruggiero said the city is not funding OPEB and the contract provision is a step toward addressing the issue.

“The facts are the facts and there is no plan,” he said.

Merolla responded that it is nice to give city workers a raise to show “we’re behind them” but he questioned, “How can you say here’s a raise when they’re losing their retirement?”

The administration budgeted $200,000 for an OPEB trust that the council led by Ward 4 Councilman Joseph Solomon and Merolla cut from the budget. The administration then sought to allocate $50,000 for consultants to work on developing a plan, which also failed to gain council approval.

Despite those developments, Ruggiero said that in time there would be a collective movement to address OPEB.

The wait wasn’t long. Union presidents Detective Sergeant Eric Falcofsky of the FOP and Scott Small of the municipal employees union, who urged approval of the agreements, said they were prepared to help address the issue. And Ward 1 Councilman Steve Colantuono said the mayor is looking to bring bargaining unit representatives and the council together.

Asked about a committee study yesterday, Mayor Scott Avedisian said a committee would need actuarial support and expert advise.

“I don’t know how we would fund that,” he said, referring to the council’s rejection of efforts to fund a trust or a study.

Ruggiero said an ordinance would be needed to make changes in retirement benefits. He said out of the 11 proposals Jefferson Solutions suggested as means of addressing OPEB the city is already paying for Medicare Part B for retirees over 65 years old, which represents a savings over the city plan. Among other suggestions offered by Jefferson Solutions is health care co-pay for retirees, buying out benefits, capping benefits, installing a “narrow network” HMO and reforming the benefits of incumbent employees.

Citizen Roy Dempsey, a regular at council meetings, urged the administration and the council not to lose the moment.

“What we need now is to have leadership,” he said. “What we don’t need is one councilman [a reference to Ward 5 Councilman Ed Ladouceur] forming a committee. Every year we wait the problem gets worse.”

As for the contracts, Ladouceur said he couldn’t see balancing the budget on the backs of city workers and that it is up to the council to make cuts elsewhere so as to afford raises. In particular, Ladouceur said he would look to trim overtime costs and reduce the 90 paid sick days teachers are entitled to.

Ward 4 Councilman Joseph Solomon, whose legislation is responsible for giving the council contract ratification powers, said his major concern is that employees within different departments are treated fairly by the mayor.

Ruggiero pointed out that negotiating teams met extensively and that the administration took hard stands.

“We don’t agree with anything easily,” he said.

City Council President Donna Travis said the unions deserved the contracts.

As the presentation unfolded, firefighters, police and municipal employees who filled the chambers listened thoughtfully, giving Falcofsky an extensive applause after he detailed what sacrifices department personnel made to control costs and how the membership stands ready to assist in addressing OPEB.

Yet, Merolla wasn’t comfortable.

“It’s easier to make promises you can’t keep,” he said, “than to tell them what they don’t want to hear.”

There was no mention during the hearing of the impact the raises would have on about 130 non-union city employees. Traditionally, raises to this group have followed what union members win. Avedisian said yesterday non-union workers would receive similar raises with the exception of those whose benefits are set by ordinance. That includes Avedisian’s own pay as well as that of the City Council and appointed board and commission members. They won’t receive raises.

Funding for those raises was not budgeted; however, Avedisian said, under the state budget approved by the House, the city will receive an additional $100,000 in state aid. Avedisian placed the financial impact at $200,000 over three years.

Comments

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  • RoyDempsey

    Not sure why you thought I was referring to Councilman Ladouceur Mr. Howell. My point was a general statement that at this point in time action and leadership is needed. The unions appeared to ready to get involved, sometimes when committees are formed that momentum is lost.

    Thursday, June 18, 2015 Report this

  • Reality

    Like usual Fast Eddie tries to confuse the issue.....Fast Eddie Ladouceur has no control over the school contracts but he has control over the fire dept budget. Let's see how he addresses the fire overtime.

    Thursday, June 18, 2015 Report this

  • davet1107

    Reality, you are spot on. Plus, if he took the time to understand, he'd know that every teacher does not get 90 days of sick time. He, like the rest of the council, are clueless about schools.

    Thursday, June 18, 2015 Report this

  • allent

    taxes are paid primarily to support city govmn't workers. if there's anything left, maybe a tiny stretch of road here and there will get paved and possibly a sidewalk or 2 might even get plowed.

    Friday, June 19, 2015 Report this

  • AbundanceOfCaution

    Merolla needs to start with his own lifetime health insurance. Still no copay last time I heard

    Friday, June 19, 2015 Report this

  • Norm88

    Ward 5 Councilman Ed Ladouceur is a liar like the rest of them maybe more so. Let’s be honest the City Council, School Committee, and the Mayor should all get a vote of no confidence and send them ALL packing (in a perfect world). They all should be ashamed of the job they do!

    Friday, June 19, 2015 Report this

  • bendover

    Chapter 9 is looming, not whether, but when. Nobody is talking about a potential death cross of property assessments and real estate comps. Look in your own areas, look how close the assessments are to asking prices of single family homes...Track the foreclosures and short sales. We are also about to become the 3rd largest city in the State; TRANSLATION: People are leaving Warwick for elsewhere. Look at the retail store vacancies...What does this all mean, you might ask? Where is the revenue going to come from to fund these future budgets? You are lucky if you have 3 people on that council who can even begin to understand the numbers involved, the rest are unsafe at any speed. Time is not on your side for solutions.

    Friday, June 19, 2015 Report this

  • wwkvoter

    It is a clue that the auditor said the OPEB costs are unsustainable even with a tax increase using most of the maximum allowed, and also that the road budget is a pittance, far less than needed to have workable roads. Solution? Hand out raises and articulate NO PLAN for these legal obligated trends (other than giving free lifetime single health insurance to new hires, instead of lifetime family health insurance!). How high can the property taxes go to keep up before the property value tipping point? CF lost control of the schools, and went bankrupt, only to still *raise* property taxes 19%! The ONLY thing that has saved the situation here for a few extra years is declining school enrollment and the city "leadership" did not even capitalize on that by reducing schools in a timely manner. Bottom line, taxes will go up, and to one extent or another property values will drop, and people will leave. You guys keep talking about Chapter 9. Well I have news for you it will be numerous councils, numerous budgets and numerous tax increases before that level of crisis is reached. Who knows what will happen, but it probably will not crash to the ground like the Hindenburg, nor will any affordable solution appear. It looks like bigger and bigger tax bills while schools and roads slowly crumble and other services are curtailed. The best solution for those who cant accept that reality is probably to simply bite the bullet and relocate out of RI to a better fiscally managed place.

    Sunday, June 21, 2015 Report this