East Providence Budget Commissions hears pension improvement plan

EAST PROVIDENCE — Tops on the agenda of the East Providence Budget Commission meeting Thursday, Nov. 15, was a discussion of a proposed pension improvement plan to help rectify what is the city’s huge $100-plus million unfunded liability.

Part of the reason why the Commission is in East Providence, its task of closing the gap on the liability is one of the last significant pieces of business the Commission needs to undertake.

Michael Fallon, of Fallon Pension Actuaries in Wellesley, Mass., presented the Commission with a detailed document that included five options for funding the pension to the 60-percent minimum required by the state for the city to be cleared from so-called “critical” status.

The Commission ultimately adopted a resolution to proceed with two of the five options — fully funding the Annual Required Contribution or “ARC” and attempting to curb yearly costs through negotiations.

The first option chosen, one the Commission has already instituted, would be for the city to fully fund the ARC. The Fiscal Year 2012-13 ARC payment is just over $7.5 million. It’s projected to grow to just under $8 million in FY ’13-14. It should be noted the city has not fully funded its ARC payments in well over 10 years.

The second option, again something the Commission through its legal counsel is currently attempting to do, is to renegotiate its contracts with the police and fire unions. Key topics subject to negotiation are expected to be reducing the annual Cost of Living Adjustments (COLAs) and changing the percentage of payments early retirees receive.

Still in the mix but far from a certainty is the use of some $49 million of the city’s $60 million Google settlement money towards its unfunded police liability.

East Providence and North Providence have petitioned the U.S. Department of Justice for permission to use a portion of the cash its due from the investigation for purposes other than what was originally intended.

If given the go-ahead, Mr. Fallon said the city’s unfunded liability to police officers would just about be cleared, though the gap with the firefighters would still need to be addressed.

TANs update

City Manager and Budget Commission member Peter Graczykowski along with City Finance Director Malcolm Moore led an update on the need to secure Tax Anticipatory Notes (TANs) to fund operations.

Mr. Moore told the Commission he had been in touch with Webster Bank and the First Southwest Co., both of which backed the city’s TANs last fiscal year. East Providence is seeking somewhere between $20 and $25 million in TANs to cover its costs through the first quarter of its current fiscal year.

The December payrolls are a significant expenditure the city incurs at this point every year, which requires the need to borrow. Last year when the Commission took over control, it petitioned the General Assembly to give East Providence its state aid early, which was supposed to be a one-time only move. The Commission remains reluctant to seek another advance from the legislature.

Mr. Moore said he was told by one of the lenders, First Southwest, that the process could be finished by the middle of December at the earliest.

School news

Interim School Superintendent Dr. John DeGoes requested the vacant School Department Director of Transportation post be filled. The superintendent stressed requirements put upon the School Department by the Commission to possibly close a school and overhaul its busing schedule required the position be staffed immediately.

Dr. DeGoes said he would like to bring back recently-retired Transportation chief Ray Linneman to resume his former role. After a discussion, the Commission eventually agreed to post the job as a part-time position. It also mandated the person who fills the post can not earn more than $30,000 a year.

Of note as well, Dr. DeGoes withdrew a request to increase an art teacher job at East Providence High School from a two-day to a three-day position.

More Bradley payments

John Cimino, who continues to serve in the Finance Department as a contracted employee, told the Commission the city was informed by Bradley Hospital it was still owed some $90,000 beyond the $4.5 million East Providence recently paid the institution.

Chairman Diane Brennan at first balked at the notion the city was still in arrears to Bradley. Mr. Cimino said he asked whether the recent “settlement” between the sides hadn’t accounted for all the money the city owed. Bradley representatives reminded Mr. Cimino there was no settlement, that East Providence had in fact only paid what was contractually required.

Mr. Cimino said upon further investigation the bills from the years 2009 to 2011 were indeed in need of payment.

“To see something from Bradley reappear is very disturbing,” Mrs. Brennan said. She also wondered how, after exhaustive talks with Bradley, these outstanding bills could have been missed.

In the end, Mr. Cimino said, and the Commission agreed, the $90,000 would be seen by the city as “full and final payment” for any outstanding debts to Bradley.

Spirited exchange

Some sparks flew during the meeting when Mr. Graczykowski and Mr. Moore requested to post and fill the position of Purchasing Agent be filled.

This riled out-going City Councilman and Commission member Bruce Rogers, who said it went directly against the consolidation measure (Question 10) the voters just approved on the Nov. 6 ballot.

Mr. Moore stressed the position was more than about just purchasing, saying the person would also act as a staff accountant and do budget analysis. Commission Fiscal advisor and state employee Rob Eaton was asked by Mrs. Brennan to offer his thoughts. He told the Commission some “90 percent” of his work deals with purchasing and that it was time the city began to take back that responsibility from the state.

The Commission ultimately agreed to an edited version of the request, which would include the other duties Mr. Moore mentioned beyond purchasing. The top salary a potential employee could earn from job would be just over $74,000.

Next meeting

The Budget Commission holds its next meeting on Thursday, Nov. 29, at 3 p.m. in Room 306 in City Hall. Following the meeting at 5 p.m., the Commission will host workshop for all incoming elected officials with representatives from the state as well as the Rhode Island Department of Education.

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