East Providence Google dollars are intended for pensions, not public coffers


EAST PROVIDENCE — The Google case settlement money freed up to East Providence by the United States Department of Justice Friday, Jan. 11, is for use to fund the city's police pension liability, not to fill the public coffers. That is the understanding of all involved, including City Council President James Briden.

Mr. Briden, who also has a seat on the East Providence Budget Commission, was present at a press conference called in North Providence Friday afternoon where U.S. Senators Sheldon Whitehouse and Jack Reed announced the decision made by the DOJ and U.S. Attorney General Eric Holder.

Both municipalities will be allowed to put large portions of their settlement shares ($60 million) towards filling the huge holes in their unfunded police pensions.

"As I understand it, there is a very specific use for the money. The $49 million will go directly to the police pension fund," Mr. Briden explained. "They really made an exception for us to allow East Providence and North Providence to fund our unfunded police pension liability."

The Google money is key to the city both in the near and far terms.

According to figures recently presented to the Budget Commission, the city owed the East Providence Police pensioners well over $50 million. Friday's decision, coupled with the roughly $16 million in Annual Retirement Contributions (ARC) the Commission has earmarked the last two fiscal years, means the city has just about filled the unfunded gap.

The Budget Commission was working under the assumption it would take upwards of $8 million annually over several years to make the entire city pension fund, including the police, whole. The Google money not only significantly plugs the huge lingering shortfall, it should also cut down on the city's future ARC payments.

Those things are extremely important for East Providence's finances going forward. Money originally directed to the police pension can now likely go towards filling the roughly $50 million more in remaining unfunded pension liability the city has accrued over the last decade. It should also accelerate the East Providence's credit standing with rating agencies.

"It looks like the ARC payments could be reduced by $2-plus million dollars going forward, though it could be less than that," Mr. Briden said.

He added, "Of significance as well, it allows East Providence to move closer to attaining long-term financial stability. The past couple of years have been difficult. We deserve to have something really good happen to us and it has happened.

"Friday's decision and the application of this money I think can be a real catalyst for us to finally move forward. I guess you could call it a turning point for our city."

The influx of Google money could spur a resolution to the ongoing larger overall contract talks between the Commission and the police union. It's not known, however, if it will speed up the Budget Commission's departure from the city as some have hoped.

"I don't think anyone really has any sense of that right now," Mr. Briden said of the Commission's ending its active oversight. Per the legislation enacting the Budget Commission, the state will still be involved in East Providence's finances for a period of five years after the Commission leaves.

"I really appreciate what Governor Chafee, Rosemary Gallogly (Director of Revenue for the State of Rhode Island) and the Budget Commission have done for us over that last 14 months," Mr. Briden continued. "I think when we look back on this experience, we'll find they really helped us make necessary changes to make us more sustainable going forward.

"The key is they've created a centralized management structure, which has really made us more efficient. They've introduced a methodology that we need to maintain for the most part going forward."

Imperative for East Providence going forward is to continue to fully fund its ARC requirements, which the last several City Councils refused to or couldn't do. East Providence's overall unfunded pension liability has reached over $100 million because the city hasn't made its full ARC payments for the better part of 10 years.

Now that it has caught up on the police side at least, Mr. Briden said the city must maintain its obligations or contend with the prospect of future state intervention.

"History has a way of repeating itself," Mr. Briden said. "We don't want to find ourselves in a position where 10 years from now a Budget Commission is put back in place. I think what happened Friday can help prevent that from happening to us in the future."



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Jim McGaw

A lifelong Portsmouth resident, Jim graduated from Portsmouth High School in 1982 and earned a journalism degree from the University of Rhode Island in 1986. He's worked two different stints at East Bay Newspapers, for a total of 18 years with the company so far. When not running all over town bringing you the news from Portsmouth, Jim listens to lots and lots and lots of music, watches obscure silent films from the '20s and usually has three books going at once. He also loves to cook crazy New Orleans dishes for his wife of 25 years, Michelle, and their two sons, Jake and Max.