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Woonsocket Retirees Offered Choice Between Static Pensions, Uniform Healthcare And Bankruptcy

Pensioners asked to accept frozen payments, enroll in Medicare as third part of deficit fix.

 

About 200 pensioners and beneficiaries crowded into Woonsocket High's auditorium Monday to hear a tough choice: accept frozen pension payments and new health care or take their chances with a city bankruptcy.

The 700-person capacity room (only 185 signed in as retirees) had few open seats and a handful of people standing in the back as Rosemary Booth Gallogly, RI's director of revenue, laid out the details on their part of the solution to the city's deficit, which also includes sacrifice from taxpayers (the new supplmental tax) and city employees (union concessions on healthcare).

The retirees' part in the plan to make up the city's $14.5 million deficit requires:

  • Suspension of Cost of Living Adjustments (COLAs) - meaning pensions frozen at their current rate but not cut.
  • Transfer of eligible retirees to Medicare by March 31st. Ineligible retirees will be switched to a standardized city health plan until they reach eligible age. 

If retirees don't agree to those terms, Galloogly said, that would leave the city leaning on employees and taxpayers alone to solve the deficit, which she said the Woonsocket Budget Commission would not do. Instead, she said, they'd most likely move the city into receivership. 

As City Finance Director Thomas Bruce warned last week, Gallogly said pensioners would likely wind up with a cut to their benefits in receivership - as much as 50 percent. "In Central Falls, the payments were cut up to 55 percent," Gallogly said.

If all three elements of the deficit fix don't fall in place before June 30, the deadline for sending out tax bills, Woonsocket will find itself in the same boat as last year, when $12 million in state aid had to be advanced by the Budget Commission to keep the School Department afloat, again with the likely alternative of recievership.

Retirees expressed skepticism that the city would live up to their part of the bargain, which in itself involved reneging on elements agreed to in past collective bargaining deals.

Donald Gosselin, a police retiree, asked Gallogly what guarantee retirees had that the city would make good on the now diminished pension promises. Gallogly recommended that retirees organize and hire a good attorney to arrange a binding agreement with safeguards and checks to make sure the city stays on top of its pension obligations in the future.

The city has an admittedly poor record on living up to its obligations. Woonsocket's pension plan is critically under-funded at 56.7 percent ($58 million of a $98 million total obligation) as of July 1, 2012, under the 60 percent threshold set by the state. Also, the city's Other Post-Employment Benefits (OPEB) - or health care obligation - stands at $210 million, which the city has essentially failed to fund.

Gallogly said a monitoring process will be put in place to make sure the funds are properly supervised in the future. Pension plans state wide would be in better shape if they had been monitored and supervised carefully in the first place, she said.

Making the pension plan whole has to be done in the next five years by state law, but Gallogly said the city will ask the General Assembly to approve giving them 16 years to do it. Even so, the task will also require the suspension of COLAs.

"I think it's unreasonable to make the suggestion to us that we go out and find an attorney when the time table for this is roughly three and a half months," said Jim Marvel, a former water department employee. 

Gallogly said she and the Budget Commission would work with fire department, police and municipal employees to organize negotiations. "I think paying our legal fees would be a nice start," Marvel said.

After the meeting, Marvel said the retirement benefits the city is now renegotiating were offered to the retirees while they were working in lieu of higher wages that they're not going to get at all now. He also expressed frustration with the timing of the news. "This has been going on for a long time and they call us in a year into the process," he said.

Nelson Aldrich February 26, 2013 at 03:57 PM
Woonsocket borrowed 90 million (probably from Wall St. investment banks) at 6% interest to fund it's pension plan.Then it lost approximately 37 million of it by sending it back to Wall St. There,i just delivered part of the "Occupy" missing message.
Paradis February 26, 2013 at 05:24 PM
Can somebody please explain why only some "work sessions" allow public speakers while others don't? I sat through a work session on a matter that will infringe on my rights, treat some of us as second class citizens and cost us money, but those of us who would be affected weren't allowed to say a word. It took a lot of restraint to refrain from blurting out comments about all the bull being spewed by ignorant, other than truthful speakers involved.
Peter Maranci February 27, 2013 at 08:49 PM
Isn't it strange that "binding" agreements are only actually binding on the powerless and weak? Why aren't the public officials who failed in their responsibilities out of greed, corruption, or incompetence being sued for every penny that they have? Why should they get to walk away with their assets intact, when their irresponsibility (or worse) has cost so many people everything they ever had? Seems to me that if the City is going to default on its obligations, the pensioners should at LEAST get a lien on City property. Not to mention an unbreakable commitment from the City to live up to the full terms of their agreements when (or if) things ever improve!
Marc Beauregard February 27, 2013 at 09:18 PM
I think its awful that the Pension Investment Board has invested the pension money like they did. Mr. Richard Lepine is a proffesional right? Its absurd to keep over $20 million in a money market at Citizens. And this guy gives advise? My barber knows more about investing.
ANTHONY RYAN February 28, 2013 at 02:53 AM
20 MILLION DOLLARS IN AN ACCOUNT AT CITIZENSBANK EARNING LESS THAN 1 PERCENT WHILE PAYING BOND HOLDERS I THINK 6 PERCENT. THE DOW IS NEAR ITS ALL TIME HIGH. I AM WILLING TO BET THE BOND FUND WOULD BE CLOSE TO EQUALLY BEFORE THE LOSES IN 08. LEO FONTAINE CRITICIZED MENARD FOR HER BOARD BEING TO RISKY, RISKY OR NOT HER PEOPLE WERE TRYING TO GET THIS FUND TO PAY ITS EXPENSES AND BRING THE PENSION FUND TO A LEVEL THAT WOULD MAKE THE SYSTEM SOLVENT. LEO BEING THE MONDAY MORNING QUARTEBACK THAT HE IS CRITICIZED HER INCLUDING AT AM TIME THAT WAS VERY INAPPROPRIATE. LEO'S BOARD HAS NOT INVESTED THIS PENSION FUND IN A WAY THAT WOULD INCREASE THE VALUE HE ALWAYS TAKES THE CHICKENS ROUTE. IN MY OPINION THE MAYOR SHOULD BARE ALOT OF THE RESPONSIBILITY FOR THIS FUND NOT PRODUCING ANY GROWTH. I AM LOOKING AT MY STATEMENTS FROM 5 YRS AGO AND I AM EVEN AND AHEAD IN SOME CASES. THIS MAYOR NEEDS TO BE MORE AGRESSIVE AND STOP TAKING BABY STEPS TO FIX THE PROBLEMS IN THIS CITY... BY THE TIME LEO COMES TO ANY CONCLUSIONS ITS ALREADY OLD NEWS
give me a break May 21, 2013 at 09:31 PM
stick it to em take the last option BANKRUPTCY

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