Jean Bouchard is an account specialist in the city finance office. She knows what city employees have done to ensure the city’s financial stability. She knows the city’s four pension plans, how they are funded and that the Police/Fire I plan started in the 1960s is in a “crisis” status. And, as a member of the State Pension Review Commission, she has seen what other municipalities are faced with.
Bouchard is also president of the Warwick Municipal Employees Union, a local of Rhode Island Council 94 AFSME, CIO. She attended Monday’s City Council meeting where the city’s actuary was quizzed on the viability of the city’s pension plans.
Bouchard sat in the back row. A Warwick native, mother of two daughters and grandmother to two, Bouchard was disheartened by what she was watching.
“When you listen to what is happening in other communities, it’s a real eye-opener,” she said. “They,” she said of workers in those municipalities, “have been paying week after week and they think they’re fine. Some cities have done bad things.”
What has Bouchard discouraged is that critics of Warwick’s situation – and the fact that the now closed Police/Fire I plan, meaning no new employees are entering the plan, faces a $242 million unfunded liability – fail to recognize the viability of the three other plans. In addition, she feels that people have lost sight that Warwick has a plan to deal with Police/Fire I.
“We are getting this negative spin from a few people,” she said.
She feels that spin has overshadowed what municipal employees, including police and firefighters who are in other unions, have sacrificed in order to maintain financial stability. When former governor Donald Carcieri cut out much of the aid to cities and towns midway through the fiscal year, municipal employees forwent contracted wage increases and other benefits, averting a city deficit or a supplemental tax bill. Last year, after an initial challenge, the municipal employees union agreed to pension reforms that reduce benefits of those employees hired after July 1, 2012. Also, last year, the city’s three unions agreed to three-year contracts with no pay increase, the “three zeros,” as the administration has dubbed it.
Because benefits of retirees in the Police/Fire I plan are linked to the pay of active members of the two forces – when active members get a pay raise, retirees get a similar increase – the “zeros” dramatically reduce future payments to retirees. That action is projected to reduce the unfunded liability by $20 million.
“The city of Warwick has one wallet,” said Bouchard.
Her point is that the situation must be looked at as a whole, and that the condition of one plan shouldn’t be used to project the entire picture.
Unlike other communities, Bouchard points out that Warwick “has always had an actuary.” She also notes that the city, in recent decades, has consistently funded its pension plans. She takes pride in that fiscal responsibility.
Nonetheless, she said city workers are anxious, if not scared, about what’s happening in other communities.
“I think people are alarmed that people who are paying every week [into their pensions] are going to get hurt,” she said.
She wants to reassure workers that this is not the case in Warwick.
“We’re lucky [that] the city has kept its fiscal house in order,” she said. “Our pension is our life savings.”
James Cenerini, Council 94’s legislative-political action coordinator, also attended Monday’s council meeting. He called Warwick’s situation “relatively healthy” compared to others.
“This local [Council 94] has stepped up time and again to help,” he said.
He said the way some council members asked questions to Joseph Newton, the city’s actuary, imply that the city is mishandling pensions. Without naming names, he said these people are “twisting things.”
“Is anyone looking at the sacrifices we’re doing to make it work?” he asked.
He noted that retirees in the municipal plan have not received a cost of living adjustment since 2009, as COLAs in that plan are tied to investment performances.
Asked why anyone would want to project a picture of financial gloom for the city if, in fact, conditions aren’t as bad as they say, Cenerini answered, “Pensions get tied up into politics.”