While practically all talk about pension reform has centered on the state’s pension plan, the Rhode Island Public Expenditure Council (RIPEC) has released a report calling for a committee to study municipal plans that would then recommend legislative changes.

As usual with respect to pension reports, the news was grim. In the past five years, the amount of money that local municipalities spend on pension plans has increased by just about 50 percent—from $101 million in 2004 to $149 million in the current fiscal year ending June 30. And those numbers don’t include money devoted to pension plans for education employees, which are part of the state pension plan but are about 40 percent funded by municipalities.

The city of Warwick, according to the report, spends the second highest amount of money from its budget on pension costs, making up 17.3 percent—with only Cranston devoting more of its budget to local pension plans. The city spent $20.3 million on pension costs and that number excludes what city taxpayers contribute to education-related pensions.

The numbers from the report represent figures from actuarial studies completed prior to last autumn’s stock market crash—meaning without a sustained market rally, municipalities will be forced to contribute even more taxpayer dollars to keep the pension plans afloat.

The state currently contributes about 7 percent of its budget to maintain the pension plan. City Personnel Director Oscar K. Shelton said that Warwick’s pension plans, with the exception of Police and Fire I, stack up favorably when compared to other local plans.

“Whatever the actuaries tell us to put into our pension plan is what we put into our pension plans,” said Shelton. “Let’s face it, if we only made half of the contributions it would look like we were only spending half that percentage on pensions.”

Shelton also noted that many communities throughout the state have chosen to under-fund their plans, paying less than 100 percent of what the actuaries recommend. That means the pension plans will either fail, or those communities will have to contribute far more money in the future to keep them afloat.

Shelton also said that communities that have a lean budget, which he argues is the case in Warwick, will have larger portions of their budget dedicated to pensions because they’re spending less on other things.

As of the latest actuarial data, which is outdated because it doesn’t reflect the market tumble, the city’s municipal workers’ plan is funded at 81.4 percent. The latest actuarial data available was dated July 1, 2006. The city will receive a new actuarial report later this year.

With respect to police and firemen, the data is mixed. The Police and Fire Pension I is funded at just 27.2 percent, which Shelton attributes to under-funding by previous administrations from decades ago. That system is practically “pay as you go,” he said.

The Fire Pension II, which encompasses more than half of the current fire department, is 97 percent funded. The Police Pension II is 105 percent funded.

The latest actuarial data from the Police and Fire pension plans is dated July 1, 2008. (Again, prior to the stock market crash.)

The average funded ration for local pension plans throughout the state is just 40 percent. The state pension plan, prior to the crash, was funded at 55 percent of its total liability.

Shelton said the city is open to having its plan studied, as the RIPEC report suggests.

“I have no objection to doing a study of the municipal pension plans but I would object to the state taking over healthy pension plans,” he said.

Susanne Greschner, the policy director at RIPEC, said that Shelton has a good point with respect to funding pension plans.

“Obviously, going towards fully funding your pension is most important,” said Greschner.

Greschner said that while some communities are in better shape than others with respect to pension plans, there needs to be reform statewide.

Those reforms, as outlined in the report, include considering increased employee contributions, and no less than 100 percent of the annual required pension contributions.