Retirees Warn of Lawsuits if Pension Benefits Cut
The City Council met behind closed doors last night to discuss the mayor's proposal to cut retiree benefits after hearing several warnings from union reps and retirees that the move would be illegal.
The city's effort to save its local pension plan could lead to a court battle.
The City Council met behind closed doors last night to talk with city lawyers about the mayor's plan to cut pension benefits for police and fire retirees.
The closed-door meeting was held after a number of representatives from the police and fire retirees, including a lawyer they hired to represent them as a whole, addressed the City Council during a public forum. Their message was clear: cut our benefits without negotiations and break the law.
The plan (see the attached PDF) was submitted to the state by Cranston Mayor Allan W. Fung earlier this month. It was required by the state-run Pension Study Commission with a Nov. 11 deadline because Cranston's locally-run pension plan is just 16.9 percent funded and the unfunded liability is $271 million, which means the plan is in "critical status."
The plan offers four possible options to save the failing pension plan, each recommending a freeze on cost of living adjustments (COLAs) for 10- to 15-years or a permanent freeze.
James E. Kelleher, a lawyer representing the retirees, told the council that the situation has echos of a legal dispute in 2003 that began when the city arbitrarily changed COLAs and other benefits for retired firefighters without going through the collective bargaining process. The city was taken to court and lost, Kelleher said. And the city did not appeal, which made the ruling a "final judgement," he said.
"One of the first things you learn in law school is you can only get one bite at the apple," Kelleher said. "[This] is an identical issue, the parties litigated to final judgement as indicated and it has been decided. It can't be decided a different way."
The mayor's plan to eliminate COLAs would be a violation of law, Kelleher said, and "the debate no longer exists here."
Kelleher said that the City Council's lawyers would likely tell them there is actually a legal route the city could take to change benefits without negotiations based on a set of Supreme Court rulings known as "public purpose," which gives municipalities the ability to break contracts or make unilateral decisions in emergency situations.
"Here, nothing could be further from the truth," Kelleher said. "If the city of New Orleans makes arrangements with its unions then a hurricane comes in and annihilates the city and removes 80 percent of its citizens, that's something that nobody could have foreseen. It was in no one's contemplation when they made the collective bargaining agreement."
But the city's local pension plan, even if it's in critical status, is "nothing new," Kelleher said. "This body has been discussing the financial burdens and financial problems regarding the city pension system at least since the 1990s."
If the council acts, Kelleher warned, retirees would seek a Superior Court injunction ruling the City Council was in violation of a court order based on the Judge Daniel Procaccini's ruling about 10 years ago that states any change to retiree benefits must be accompanied by collective bargaining.
Paul Valletta, president of the Cranston Firefighter's Union, told the council that the same lawyer they'd hear from last night who'd likely tell them they can cut benefits is the same one who represented the city during their losing battle with retirees in the early 2000s. That lawyer, Vincent Ragosta, "made all that money from the city of Cranston losing that case and what's different now?" Valletta asked.
In terms of the public purpose argument, Valletta said there was no tax increase this year and the city is sitting on a $12 million rainy day fund. That's a far cry from the legal definition of "unprecedented and unexpected exigency" required to activate public purpose, he suggested.
Valletta said that retirees wanted to sit down with the mayor more than a year-and-a-half ago to talk about fixing the plan. They never got a response, he said, so now retirees are looking at the futures they worked hard for possibly going up in smoke.
""Now the Sword of Damacles is hanging over [their] heads," Valletta said. "If these ordinances are passed, it's going to be hard to get the membership to sit down and negotiate."
Retirees said repeatedly that they contributed to their pension plans during the course of their careers yet the city used the pension fund for other purposes. One retiree, Joe Ciccione Jr., also the president of the Cranston Police Retirees Association, said the management of their pension contributions "was appalling" and it was "totally despicable for the city to come today and asked us to pay for the extravaganza saying for us to give up our COLA for 10 years. The city must atone for the sins of the past by making our pension contributions."
"Have all avenues been explored?" Ciccione asked. "And if you approve this, what measures are you going to implement along with its passage to ensure it is followed by current and future city administrators? How does this assure 100 percent of COLA savings goes into our pension fund? What type of monitoring system would be put in place?"
Kenneth Rouleau, vice president of the firefighters union, said a legal battle would end up costing everyone, not just retirees. The litigation costs alone could be better used for education and other city services.
"My daughter's at Western Hills and she doesn't have middle school sports. They don't have an elementary school music program. This [money] would go a long way for the libraries. Do we really want to waste that when we know we're gong to lose again?"
City Council Lawyer Patrick Quinlan said the City Council was not going to vote on the ordinances last night. Instead, council members would hear a presentation from the city's lawyers about the mayor's proposals.
Newly-elected members of the City Council were also invited to the closed door meeting. Even though they have yet to be sworn in, they would be allowed to listen in for educational purposes, Quinlan said, since they could be the ones making the final decisions.
Allowing the new members into the executive session meeting was cleared with the state ethics commission. They would not be able to vote or ask questions and would be bound by the same laws of secrecy surrounding executive session as sitting members of the council.
So what's next?
Fung, who will start a new, four-year term at the start of next year, has said that his COLA freeze plan was submitted to the state to meet a deadline. He had hoped the City Council would hold public meetings about the issue before the election, but that didn't happen. In his letter to the Pension Study Commission chair Rosemary Booth Gallogly attached to his plan, he said he was hoping the council would adopt the plan during its regular business meeting on Nov. 26.
After last night, the chances of that happening appear increasingly slim.
Even last night's meeting didn't start without some resistance. Councilman Paul Archetto questioned whether the special meeting was even properly scheduled, indicating he had doubts that the matter left the Finance Committee meeting last month properly.
With several bangs of his gavel, Council President Anthony Lupino insisted it was. He read a transcript of the meeting over the weekend and it was clear that last night's meeting was lawfully scheduled before asking for the list of public speakers to be brought to him so he could start calling names.
Council members did not specifically address the issue at last night's meeting. Their comments are expected at the full City Council meeting at the end of the month.