Stakeholders, members of the business community, and government officials from across Rhode Island testified in support of General Treasurer Seth Magaziner's Healthy Local Pensions (HELP) Act before the House Finance Committee yesterday. The legislation (H 6030) will make it easier for cities and towns with locally administered pension plans to join the state run Municipal Employees' Retirement System (MERS). (A full list of endorsements is below.)
"Too many locally-managed municipal pension plans in Rhode Island remain critically underfunded, threatening the retirement security of employees who have spent a career in public service," said Treasurer Magaziner. "This common-sense proposal provides a new tool for those municipalities to get their pension plans back on track if they choose to do so."
The process by which municipal plans can enter MERS is antiquated and unnecessarily rigid. The HELP Act will, in part, update the process to make it more manageable by extending the length of time cities and towns can take to fully-fund their pension plans.
"The Treasurer met with stakeholders from across the state to listen to our concerns in order to craft legislation that offers municipalities a pathway to sustainable pensions," said Representative Shelby Maldonado (District 56 - Central Falls), sponsor of the HELP Act.
Current MERS members are, on average, better funded and have historically stronger investment performance and lower costs than most smaller locally-managed plans. While the 116 municipal plans in the state system have an average funded status of 87 percent, the pension plans that remain locally administered carry a combined $2.4 billion unfunded liability. Of the 34 locally administered plans, 19 are below 60 percent funded and 12 are below 40 percent.
"For many cities and towns, pension obligations are among the biggest factors when determining our local budgets and ensuring financial stability into the future," said Central Falls Mayor James A. Diossa. "As our city continues the march away from the fiscal irresponsibility of the past, this legislation provides another tool that we can use to achieve fiscal stability."
Under the HELP proposal, the decision to join the state's plan remains optional and must be collectively bargained by the municipality and its labor organizations.
Each MERS plan's funded status is calculated separately, meaning new plans entering MERS do not create additional risk for plans already in the system and will not affect the funding status of the state employees', teachers', or current MERS members' plans.
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Individual letters of support, along with the prepared text of Treasurer Magaziner's testimony to the House Finance Committee, can be downloaded at the link below.
The Help Act has received public support from:
*Cities and Towns*
James A. Diossa, Mayor of Central Falls
Donald Grebien, Mayor of Pawtucket
Jorge Elorza, Mayor of Providence
West Warwick City Council (unanimously resolved)
Graham Waters, Town Manager, Coventry
T. Joseph Almond, Town Administrator, Lincoln
Robert Mushen, Council President, Little Compton
John Menke, Finance Director, Portsmouth
David Gosselin, Jr., Council President, West Warwick
Mark Carruoulo, Interim Town Manager, West Warwick
Governor Gina Raimondo
Dennis Hoyle, Auditor General, State of Rhode Island
Robert Hull, Director of Revenue, State of Rhode Island
*Labor and Retiree Groups*
Fraternal Order of Police Lodge 2, Central Falls
West Warwick Public Employees Retirement Coalition
West Warwick Retired Police & Firefighters Association
*Chambers of Commerce*
Central Rhode Island Chamber of Commerce
East Greenwich Chamber of Commerce
Greater Providence Chamber of Commerce
Newport County Chamber of Commerce
Northern Rhode Island Chamber of Commerce
Ocean Community Chamber of Commerce
*Small Business Groups*
Rhode Island Small Business Economic Summit
Smaller Business Association of Rhode Island
National Federation of Independent Businesses
Rhode Island Association of REALTORS
Rhode Island Builders Association
Rhode Island Hospitality Association
Rhode Island Manufacturers Association
Rhode Island Lumber and Building Materials Dealers
Rhode Island Society of Certified Public Accountants
Rhode Island Small Business Economic Summit
Oil Heat Institute of Rhode Island
American Council of Engineering Companies
Providence Journal Editorial Board
Arlene Violet, Columnist - The Valley Breeze
John Simmons, Executive Director, Rhode Island Public Expenditures Council