October 30, 2014
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Union president feels ’spin’ distorts worker sacrifices
JEAN BOUCHARD

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.”


Comments
37 comments on this item

With all due respect to Jean Bouchard, her statement, "the condition of one plan shouldn’t be used to project the entire picture", is absolutely wrong. That's exactly what needs to be done in the city. And the best way for me to argue my assertion is by this analogy.

Let's say you have five credit cards. Four of the cards have a small balance on them but the last card has a huge balance many times that of the other cards. If you devise a plan to put more dollars toward paying down the last card it could cause you to short change the necessary payments to the other cards. Also how will diverting all these dollars toward that one card effect other ongoing expenses in the home budget. For example expenses for kids medical, saving for college, home repairs, the need for a new car, unforeseen emergencies. Do you just cut them or ignore when the water is pouring through the leak in the roof?

My point is you need to understand the total liabilities in the city and how much it will cost to fund all these plans in the short term and longer term 5, 10, 15 years from now. You also need to forecast future budgetary expenses for the things we need to operate the city and schools today and at least five years from now.

To simply put a plan together to fund the one credit card may look good on paper but when all things are considered it may not work.

The proper study can be performed to determine if this plan will work with everything considered. And if the administration and council can show based on reasonable assumptions that the police/fire I plan and all other expenditures can be met without taxing every property owner and business out of Warwick, I will be the first to publically say I was wrong.

Let me be specific when I discuss other expenditures. That includes providing current employee with annual Cost of Living (raises) increases. To simply tell employees they will not get a raise as a policy to reduce pension liabilities is wrong. The current employees should not be the only party to make concessions. Taxpayer have also been part of the solution. Each year they are paying more in taxes.

But the one group that the mayor is afraid to ask for concession is the retired members. They need to be contacted and a discussion needs to take place that will allow the city to suspend COLA's in all plans until they are funded properly. Providence has already done this and several other communities are proposing the same thing.

The municipal pension plan which looks at the performance of the plan should be used as a model for all other plans in the city when determining COLA payments. Why? Because Police II and Fire II retired members are getting a compounded 3% COLA for the next three years and all active employees are getting zero. That's simply not fair.

Jeannie.....if I understand Mr. Merolla's assertion, the employees contributed NOTHING to their retiree healthcare benefits but yet these benefits are costing the taxpayers millions each year. Is that your definition of shared sacrifice ?

Could you also tell me what percentage of salary do the taxpayers contribute yearly to these socalled model plans i.e. police and fire II and muncipal plans? My employer stopped his 3% match to my 401k plan years ago. What is your match....Jeannie?

The retirees won't step up unless the city is going bankrupt. Thats what it took in Providence, and now some of those retirees may opt out of the deal and sue the city. If that happens I hope the whole deal is nullified and Providence goes bankrupt. I wonder how the Providence retirees would like to have their pensions cut in half.Central Falls went bankrupt and the earth stayed on its axis. If Providence got a chance to renegotiate its contracts and rework its debt it might set the course for the rest of the state. Or the retirees can shut up and pitch in just like the unions, business community, and taxpayers have.

In my humble opinion Ms. Bouchard, the BEST way TO PROTECT the workers of this city IS to look at the "situation as a whole". If not, buying into a plan to fund police and fire 1 without considering the overall financial impact on this city could in fact impact other municipal workers, taxpayers and retirees. This is the time to open the process, projected revenues and expenses of this city, for study, analysis and if required, adjustments. Better to have these actions under city control, where the stakeholders could be part of the process.

Nowhere in this aricle is a very fundamental questions being asked: "Why do public sector pensions exist in the first place?!" To be a true model, Warwick needs to move to a defined contribution plan over the next, say, 10-15 years so that the city (i.e. taxpayer) is not on the hook for city employees throughout their eintire life expectancy, and then that of their spouse. City workers should be paid a fair and reasonable wage commensurate with their production and expertise using similar positions in the private sector as a basis of economic comparison. This includes retirement benefits (e.g. 401k vs pension) and health care. The time has come to put an end to all this pension deck-chair rearrangement and simply phase out the entire plan.

Nowhere in this aricle is a very fundamental questions being asked: "Why do public sector pensions exist in the first place?!" To be a true model, Warwick needs to move to a defined contribution plan over the next, say, 10-15 years so that the city (i.e. taxpayer) is not on the hook for city employees throughout their eintire life expectancy, and then that of their spouse. City workers should be paid a fair and reasonable wage commensurate with their production and expertise using similar positions in the private sector as a basis of economic comparison. This includes retirement benefits (e.g. 401k vs pension) and health care. The time has come to put an end to all this pension deck-chair rearrangement and simply phase out the entire plan.

John you make a valid point, however how do you expect to have that conversation when we can't even get Mayor Avedisian and most members of the City Council and the city employees to agree that we have a potential problem that needs further analysis to forecaste overall expenses and revenue for both the city and school budget over the next 5, 10, and 15 years to determine if we can fund all expenses while staying within legal property tax caps.

I wonder where the boy wonder Danny Hall is on this important issue. He is a "republican" and should be screaming from the roof tops, but he is silent again. What a surprise as he drives around the state trying to solicit votes for his nomination as republican chair. Can you speak Danny??

First of all John, you can't just do away with pensions. You can start fresh with new hires, but switching to a defined contribution (401k) would have to be negotiated not just installed. The new hires in the fire department are already in a second Tier 2 system with much different retirement qualifications.

Steve, Fair enough. Which is why I'd recommnd a transition over 10-15 years. New hires? All employees under age 30? Pick one. But it should include all city employees, including teachers. I would also include a city match on employee 457 or 403(b) plans. They don't know it, but employees would end up better off, including a transfer of wealth to the next generation. But asking taxpayers to be on the hook throughout life expectancy is fiscal insanity.

Jeanne....still waiting for your answer where is the negative spin.....city workers and their spouses get lifetime healthcare without paying a dime towards it......I understand it will cost the taxpayers over $300 million.....I don't wonder why the taxpayers are furious.

Waiting for your answer Jeanne.

If COLA's are the driving force behind the unfunded liability and COLA'S need to be frozen then the municipal plan is in good shape since there has not been 1 since 2009. An example of thenegative spin could be the retiree heathcare number. Merolla said it's $400 million, Reality said over $300 million and I think the Beacon had it at $250 million. Not sure what the real number is but observing Merolla I know his figure is wrong. That type of intentional number inflation gives rise to the negative spin she's referring to.

Hey Gordon.....whether it is $250 or $400 million....how is it going to be paid for ?????? Why haven't the workers contributed to it ???? Are you suggesting it shouldn't be even mentioned ?????

This is one taxpayer who didn't even know we provided such a lavish benefit. Disgusting..............

At the council meeting the administration expressed hope Warwick gets $600,000 from the State to sure up some of the liability.

Well.. [ pause here] Why not use $600,00 of the 2.3 million surplus CLAIMED.

Jean expressed Warwick has a plan to handle the pension plan that is in crisis but when the public wants to ask at a council meeting just how that will work out for the taxpayer, the public gets the door slammed on them because the account specialist in the city finance office [Bouchard] is also president of the Warwick Municipal Employees Union, a local of Rhode Island Council 94 AFSME, CIO

Conflict of intrest? It is for us taxpayers.

The democrat Mayor is totally untransparent stonewalling taxpayers. Yes I said democrat. Union democrat.

Other Post Employment Benefit (OPEB) facts - [Lifetime healthcare benefit]

According to the official documents produced by Jefferson Solutions reported dated July 1,2010 for the financial ststements June 30, 2011.

The Present Value of Future Benefit Payments:

City: $313,421,358

Schools: $60,020

Total: $373,441,436

The Unfunded Actuarial Accrued Liability is:

City: $240,497,738

Schools: $42,722,906

Total: $283,220,644

Annual required Contribution:

City: $21,325,553

School: 3,930,043

Total: $25,255,596

Why is city liabilities so much larger tha schools?

Benefit payment period: City, lifetime. Schools age 65

Covered Spouses and dependents: City Yes, Schools No

Participant Contribution (co-pay): City None, Schools 20% to 60%

Years of service required: City 10 to 20 years, Schools 20 to 30 years

Earliest Retirement age: City, uniform emplyees can retire once they have 20 years of service, Others at age 55 Schools: proferssional employees need 20 to 30 years of service. All other employees need to be age 62 resulting in a maximum benefit payment of only 3 years.

What would the liability be if the city adopted the current school requirements? We don't know because the Mayor refuses to pay to find out.

@GordianKnot:

Your assumption, "If COLA's are the driving force behind the unfunded liability and COLA'S need to be frozen then the municipal plan is in good shape since there has not been 1 since 2009", is wrong. Here is why.

Using my credit card example from my first post:

If one of the cards has a $100,000 balance on it and because the balance is so high I decide to not make any future charges on it so I don't increase the outstanding balance; that doesn't mean my finances are in good shape. It means that whatever the balance on the card is, it still needs to be paid regardless if other issues arise that require funding from my current budget. It also means that I may not have the funds available from my annual budget for those other needed purchases or repairs.

Bob, city has mandatory retirement at 60 for uniformed employees.

Read the unbiased opinion (sarcasm) from James Cenerini, Council 94’s legislative-political action coordinator . " 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.”

This quote printed by the unbiased Warwick Beacon. (more sarcasm)

I see it this way ... The council member was untwisting not twisting.

I side with the councilman because my evidence was seeing the taxpayer getting the door slammed in their face and was clear proof the administration prefers a one-sided look at the facts.

Also, if the taxpayers really are 'crazies' then the Administration would love to have used the public forum to prove them crazy but they didn't because they are not ('crazies'.)

James Cenerini, Council 94’s legislative-political action coordinator is a biased hack that gets only his opinion printed. Let's see a printed report from the side of the councilman and the taxpayer.

The council always votes down any opportunity for citizens to talk about the taxpayer's sacrifice so why should the taxpayer care about the public unions sacrifice.

I mean if you really think about it isn't it clear why the ordinary taxpayers can't stand the sound of the whinning from them anymore and we don't accept partial sacrifices.

We are fed up, mad as hell, and were not going to take it anymore. Balance you budget!

Steve it doesn't matter what the retirement age is. Once a uniform employee retirees the healthcare benefit is for free for the rest of them and dependents life.

The city cannot afford to pay the existing pension benefits alone. Adding free lifetime healthcare will hasten our path toward insolvency. The unions need to realize that they cannot have it all. By doing an analysis that can be proven.

Your not getting a raise because the Mayor knows we can't afford to pay pension COLA's (Isn't it strange how that becomes active employee responsibility and you not getting a raise?) Why not break the link between COLA payment and raises? The Mayor is afraid to even discuss this option.

So tell me how are taxpayers going to afford a 3.75% increase every year for the next twenty years as contained in the Police/Fire I funding plan? If you get future raises the retiree get future raises and more money will be needed. Read my response to the editorial on this topic.

It does matter bob, current employees pay 20%. Retirees pay nothing as you know. If your not retired you are paying for health insurance. I'm making your point I know. I get it. You guys can't keep throwing out 62-65 as a retirement age when we are forced to leave at 60 and yes we have guys that are forced out.

Steve am I missing something and totally misreading the sentiment? Why aren’t the current employees upset about this?

At the point you are in your life I would assume you are young most likely with kids. Your annual expenses are probably growing at a fast pace. Shouldn’t the consideration for a COLA include you and not only someone who retired and is in their fifties and still working making an income with another job and paying nothing for healthcare?

Shouldn’t we also consider what is reasonable and practical in terms of the burden on the taxpayer?

Can we afford all these benefits? And yes I understand they were negotiated, but just because you have had far superior people at the table, (look at the curent cast of characters in elected office in Warwick) could it be possible that they did such a good job winning these benefits over the years that they in fact created an unsustainable system of benefits that can’t possibly be paid for while maintaining current employment levels and current services?

Aren't you concerned that at some point jobs could be lost? Aren't you concerned that wages could be flat for years? I would be.

Is the answer simply “TRUST AVEDISIAN” and his un-vetted pension funding plan?

Again it's not for current employees to negotiate with retired employees. They retired with benefits that they planned on. If the city wants to call them that's the cities problem. Im concerned for all the above that you mention. It's not my job to tell the retirees anything. Im surprised you somehow think it is.

In a few more years, my daughter graduates and the rest of you chumps can pay these thieves. I'm sure not because I'll be GONE!

Steve I’m asking rhetorical questions. I know it’s not up to you personally to ask the retirees to step up to the plate and I appreciate you blogging your thoughts. At least I can get one prospective from a Warwick employee.

Ms. Bouchard says the municipal employees are worried but sadly I think she is taking the wrong approach thinking that one plan doesn’t affect every other in the city.

I would presume that if the rank and file firefighters started to make noise that the union leadership who represent you would do something to address their conerns. Maybe they have and I should keep my mouth shut. But I just see this "We trust Scott Avedisian mentality".

The Providence firefighter union President, I think his name is Paul Doughty, told the retirees they need to make concessions. That was a huge risk on his part. But it led to negotiations with the mayor and I believe the courts rules that the COLA payments can be reduced and suspended until the plans meet certain funding levels. I think it preserved jobs along with strengthing the pension system in Providence.

I don't see that happening in Warwick when in fact it is one of the things that needs to occur.

But what do your colleagues think about the situation?

It’s seems they view me and many of the others as the enemy when in fact what we are doing by questioning all these assumptions is a benefit to every Warwick employee.

Are they all content with just believing the MAYOR?

Why would we "make a noise". So in 15 years when I retire I have to worry about the current workers selling me down the river for all that I achieved because they feel like it. I understand, things need to change, the city is much better managed then providence and when and if the retirees need to be brough in I'm all for that. But I'm not gonna call them up and say I know you worked hard for thirty years but I need a raise so pay up. That may sound drastic to you but that's what they fought for AND GAVE UP STUFF FOR. Have you read contracts from the last thirty years and looked at the positions and other gains that were given up. It's not all take take take as most of you would lead us to believe.

Here is a news flash for all of you Avedisian lovers. The Mayor, Scottie boy, has secured himself a position at Roger Williams University. He is leaving, may not even finish this term. Take this to the bank as he knows that the house of cards is going to fall and he will be gone. In 2 years you will all hate him due to him bankrupting the city and your pensions. In the meantime, he will be sitting fat and red faced at RWU.

Is that your big news?

Why do you bother to discuss the issue with Steve D ? He like all the city workers that are in denial. Guess the same denial was expressed in Central Falls, Woonsocket and West Warwick a few years ago.

When the ship is sinking Stevie D will be on desk screaming but Avedisian said everything was fine. He is hopeless so don't waste you time with him.

Good one reality, we are all so lucky to have a Rhodes Scholar like your self in this city.

Local 94? Isnt that the same group of thugs that demanded thief Ken Naylor get his job back with back pay after he was caught red handed stealing. Same gene pool. Where were the StevieD,s of the world condemming that crap?

Be careful when you read the Beacon editorial.....Mr. Howell finally states the obvious.....colas and penstion increases for Police and Fire I and II have to be stopped. Amazing the Beacon has seen the light. Avedisian must be furious. His pension's proposal is now even questioned by the Beacon.

Next the viability of retiree healthcare coverage will be exposed as not doable.

Where do you guys work? I'm sure there is a percentage of workers that are lazy thugs. We have them too. If you own a 7-11 I bet out of the four employees you have one is a kzy thug. Mr naylor should be with out a job, he stole and that's that. Yes we are public servants and in the publics eye, but percentage wise we have the same amount out derelicts and deadbeats as any job on the street. I won't defend them because they should be prosecuted and if found guilty put in jail.

This "union president" is still living in the dream world of the past. She may not be considering me, a taxpayer, but she should because I am joining the others who have left or are strongly considering leaving for these reasons. No one said the workers are anything but good decent people (except kenneth naylor et al), but most are pretty good people. But they are overcompensated in toto, meaning we cannot afford the pay, benefits, sick leave, OPEB, and pensions array the unions have won over the years. That means that its time to do a walmart roll-back. Or else we risk a slow spiral and they'll end up there anyway. We need a balanced plan that is affordable to the taxpayers. We RI have the 6th highest tax burden and the second highest unemployment rate. Think about that, and lets get this back in balance FOR the good municipal employees and their families, not against them.

And a defined benefit pension is NOT a "life savings". That would be a 401k which is where we are headed and where we should have been all along. Cranston has just started new hires on 401k defined contribution NOT defined benefit.

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