Facing financial reality


To say that summing up the city’s financial liabilities for its healthcare and pension plans is a daunting task would be an understatement. Our front-page story has attempted to paint the complex picture as accurately as possible while recognizing that, with such an immense topic, capturing every facet of nuance is simply not feasibly in the scope of one singular piece of journalism.

What we draw as perhaps the most important takeaway from the discussions is that Warwick, like many municipalities across the nation, is grappling with an uncomfortable realization – that retirement benefits promised to generations of the past are not financially stable or sustainable at the level they currently exist going forward indefinitely.

Even if the scary numbers – the total OPEB liability of over $350 million and pension liability of around $330 million – don’t necessarily mean those bills are due tomorrow, they are indicators that costs associated with city employment are becoming overly burdensome to the financial health of the overall city, especially considering those numbers are reflective of a relatively small work force consisting of 1,649 employees (938 of which are retired employees).

The conundrum is that employees who have worked towards earning their benefits – rightfully so – do not want to entertain a notion that they are to blame for the financial woes of the city, and will fight to keep those benefits from being diminished. On the other side, however, newer employees risk not being able to collect on those benefits if the city is unable to generate revenue sufficient to fund those benefits packages, which, at these levels, does not seem possible.

What must happen now is an honest dialogue between city administrators and union leaders – one which takes into consideration the fact that the vast, vast majority of dollars generated in the past 15-plus years have gone to funding retirement benefits, and the city has been forced to run operations, fund the schools, buy equipment and try to maintain failing infrastructure with the scraps that remain.

Nobody who has worked hard for the city as a member of any city department should want to see this happen. There is no guarantee that this historically prosperous moment in time being experienced in the stock market will continue, and there is no mathematically possible way for tax dollars to keep pace with the climbing costs associated with healthcare premiums along with the other litany of increased expenses elsewhere.

There must be room for compromise, otherwise those who worked so hard for so many years do face a risk of losing everything – which, call it alarmist if you will, is a real possibility if the city is not able to reign in these costs. The city’s infrastructure is not going to magically stop failing, and it will not magically cost less money to operate a school district.

This past summer showed how close the city came to having a crisis that would have affected thousands of students through no fault of their own. It showed how little wiggle room there is should some serious financial disaster – be it more infrastructure failures, or a recession similar to what was seen during the Housing Crisis of 2008 – come to pass.

The problem cannot be solved on the backs of taxpayers, but must be negotiated through strong, fair and forward-thinking collective bargaining agreements that create more sustainable benefits packages for city workers, or at least starting out by identifying efficiencies that can realize savings right away, like promoting ways for employees to utilize preventative care rather than frequenting the emergency room.

The fundamental concept behind compromise is that nobody gets everything they want. Union leaders must be able to come to the table knowing that painful concessions, be they in foregoing raises or budging on benefits, are necessary, and municipalities must be willing to stand firm on terms that will enable better financial health in the long term. There is simply no other way out.


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