Another financial challenge to the tune of at least $2.6 million has found its way to the doorstep of Warwick City Hall, this time related to pension reform within the Warwick Fire Department that, as it turns out, was never actually codified into either of their last two collective bargaining agreements.
Pension reform was thought to have been implemented in 2011 through city ordinance and then enshrined in subsequent collective bargaining agreements between the city and the IAFF – the union representing the Warwick Fire Department. That ordinance was proposed by former Mayor Scott Avedisian, and was unanimously supported by the city council, who passed it into local law.
The ordinance would split union pensions into two systems – Tier 1 and Tier 2 – with Tier 2 pensions requiring an additional five years for firefighters and other municipal workers to earn their pension, and reduce the compensation rate by 3-4 percent of their pay, with the goal of creating a more sustainable system that wouldn’t put the city in financial peril down the road. Tier 2 supposedly applied to all municipal employees hired after the measure was passed.
Negotiations for the 2012-15 collective bargaining agreement with the fire department came and went, and it was assumed the firefighters had been placed in the new pension system. But when newly hired firefighters began to see the affects of the pension reform in 2014, they filed a grievance, stating that the reform was in violation of their contract.
“That was never collectively bargained for,” Fire union president Michael Carreiro said on Tuesday.
A ruling from the American Arbitration Association released on Monday found by a 2-1 decision that they agreed with Carreiro and the fire union, and that the supposed agreement to place new firefighters hired after 2012 into the new pension system was not valid because it was not actually written into the contractual language.
But how could that be the case?
“It means that Scott Avedisian and his administration dropped the ball on what was good, effective pension reform for the city and its taxpayers,” said Mayor Joseph Solomon during a press conference from City Hall on Tuesday. “During the negotiations for the 2012 through 2015 and the 2015 through 2018 contracts, the union and Mayor Avedisian did not include the Tier 2 pension language in the contract.”
More puzzling to city officials is how the language to enact the Tier 2 pension system wound up codified in the contract language for both the police department and municipal workers’ collective bargaining agreements for 2012-15 and 2015-18. Only the fire department contracts were devoid of the provision.
“It could be suspicious, it could be coincidental,” Solomon said. “I'll leave it to you to decide.”
Regardless of whether it was a mistake or a more “mysterious” omission on the part of the Avedisian administration, as Solomon refused to commit to define it either way, it will put the city on the hook for what Solomon reported to be $2.6 million in pension money that is now owed to make 45 firefighters, who have come onto the department since the 2012 agreement was ratified, whole.
It is a gaffe that Solomon said the Avedisian administration had multiple chances to remedy or at least diagnose, but failed to do so. Solomon – agreeing with the city’s partial arbitrator, attorney Vincent Ragosta, who dissented the decision – said that the city should have taken the fire department to interest arbitration regarding the ordinance when they refused to sign onto it. Instead, as Ragosta put it in his dissent, the dispute “lay in the proverbial weeds” until the department eventually filed the grievance and led to today’s complicated situation.
“Given the needs for pension reform, the Avedisian administration would have had a compelling case to make in interest arbitration. They did not. In addition to the option of interest arbitration, the city had two opportunities to insist that the Tier 2 pension language be included in fire contracts. They did not,” Solomon said.
“This would have ensured that this critical pension reform was in place to save our taxpayers money and make our pension systems themselves more sustainable,” Solomon continued. “Instead, that was left on the table. While pension reform made it to the one-yard line, the prior administration fumbled the ball. They did a disservice to the city, and its taxpayers by not defending this pension reform.”
It is not immediately apparent the process by which the city will have to pay back that money. It is even less apparent how the city will feasibly find another $2.6 million in its budget when it already faces a structural deficit that could amount to $18 million, not to mention a school department that is projecting another $12 million in increased expenses next year and has yet to come to terms with an agreement with the city to close its own approximately $4 million budgetary gap for the fiscal year that ends this June.
Solomon said that he had saved about $750,000 by enacting broad cuts across all departments, and that the city would be utilizing zero-based budgeting this spring to squeeze savings wherever possible. However, he once again firmly denied he would seek a supplemental tax bill or to raise the tax levy above the statutory 4 percent cap.
The fire department is still without a successor agreement to their contract that ran out last July. Solomon said that he would be abiding by the 2011 ordinance that separated the pension systems for negotiations to come in the future. However, as the fire department has demonstrated, this does not mean that pension reform will be a simple act to accomplish.
“We have difficult times ahead,” Solomon said. “As new contracts come forward, we will need to look at additional pension reform measures. The city council and myself, together with all our unions, will need to tighten our belts going forward to enact meaningful changes to our pension system that will act as the foundation for a more fiscally responsible future.”
Solomon said at the press conference that he had discussed the possibility of appealing the arbitration board’s decision, but was not ready to commit to saying he would or would not be doing so at this time.
City Council President Steve Merolla prefaced the news that broke on Tuesday morning shortly after learning about it prior to Monday night’s City Council meeting. He spoke at length about the development at the onset of the general meeting about the frustrations caused by the development. He pointed blame towards former city solicitor Peter Ruggiero – who was legal counsel for the city at the time of both fire union contract negotiations.
“People need to understand that when bills come due, that they weren't created in this case with this administration or this council,” he said. These were mistakes made six years ago, and representations that were made confidently by city solicitors that the meaning of language and the intent of the language that they had negotiated meant ‘X’ – and it didn’t.”
Merolla, who voted against both fire union collective bargaining agreements in 2012 and 2015, said that the council must rely on testimony from lawyers, like Ruggiero, who represent the city’s interest, especially when it pertains to complex issues like collective bargaining agreements and pensions.
“Most of the council members are lay people, not attorneys,” he said during a call on Tuesday. “If someone trained in labor law says to me, ‘This provision means this, and they’re going into the Tier 2,’ then you say fine.”
Merolla went so far as to levy accusations of criminal wrongdoing regarding the situation.
“I’d like to see an appeal on this,” he said. “To me, a fraud was perpetrated. You can’t come before the council and say ‘This is what this means,’ when it doesn’t.”
Solomon, who put forward legislation which passed in 2006 to ensure that the city council would be given authority to ratify contracts negotiated by the mayor, echoed the disappointment that the city council – which he was a part of during both of the last fire contract negotiations – was not given the proper information with which to make their decision.
“We assumed, shame on us, that as it was contained in the police contract and as it was contained in the municipal contract, that it was also contained in the fire contract,” he said. “Should we have doubted that the law was not going to be followed? I think not. Not when we're all playing on a level playing field. I think that the situation is this one was mysteriously left out, or accidentally left out. How does it get included with two bargaining groups and not the third bargaining group? I'll leave it at that.”
Carreiro said the decision by the Arbitration Association was a vindication of their position.
“We're pleased by the ruling,” he said. “We've always been trying to work on resolving this while not burdening the city's taxpayers. We're honored and hopefully they're putting in the change according to the CBA. Our primary concern is to protect and serve the citizens of Warwick to the best of our ability.”
But Ragosta argued that the union’s decision to grieve the pension reform in order to procure their more lucrative benefits for at least the time being was going to produce a significant financial burden that not only affected taxpayers as a whole, but the firefighters themselves.
“Ironically, the financial fallout of the panel's decision will not help the Union, as the City's ability to pay for salaries, health care and various other direct and indirect components of firefighters' total compensation will be substantially impaired by the estimated $2.4 million impact of the cease-and-desist and make-whole awards,” Ragosta wrote.
“The panel's arbitral ruination of the pension fund amendments simply fuels the avarice of the Union and unwinds the City's efforts to maintain an affordable and sustainable pension for its firefighters,” he continues. “And so, to the Union it must be said, be careful what you wish for.”
Ruggiero and former Fire Department Chief Ed Armstrong did not return calls for comment on this article. Avedisian declined to comment.