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Court Rules Local Pension Reform Deal can Move Forward

Pension reform can move ahead, despite a legal challenge from some retirees who decided to "opt out" of the agreement.

Cranston Mayor Allan W. Fung and City Council President John E. Lanni Jr. at the May announcement of the pension reform deal.
Cranston Mayor Allan W. Fung and City Council President John E. Lanni Jr. at the May announcement of the pension reform deal.

Superior Court Judge Sarah Taft-Carter has ruled that the historic pension reform deal negotiated between the city and a majority of retired police officers and firefighters can go ahead despite opposition from some retirees.

A number of retirees are opposed to the plan, which will use a combination of caps on cost of living increases (COLAs), COLA freezes and reduced COLAs over the next 30 years along with a reamortization of the $300-million unfunded liability to save the plan from collapse in the not-to-distant future.

In an early-morning release, Fung said the agreement, OK'd by Judge Sarah Taft-Carter Carternow with an apparent seal of approval from the courts, will go a long way to help the city's financial future.

"This agreement impacts our budget today and for years to come,” Fung said. “With the support of so many of our retirees and union members, we will finally be able to put our pension liability on a better path. The taxpayers of Cranston will benefit right away from the significant savings from this agreement. In addition, this agreement will likely be well received by the city’s bond rating agencies as it was continually cited as a long-term problem.”

And the plan, its membership just 48 active and more than 450 retired Cranston police officers and firefighters, should be fully funded — something that seemed like a pipe dream even as recently as last year — within the next 30 years.

In an interview, City Council President John E. Lanni Jr. said the complaints from retirees seems unreasonable since the average pension is $50,000 per year plus about $18,000 in benefits.

"The average family in Cranston doesn't make that kind of money," Lanni said. "I think we're being fair."

Lanni said the pension deal, which caps, freezes and reduces COLAs over the next decade and a few years after that, is "a fair compromise" and not so much of a burden when other families have no pensions and would "dream" of having $50,000 annual income in retirement.

"The bottom line is we're facing a $300 million hole and it can't just be plugged," Lanni said. "You can point all the blame you want at past administrations and ask why they gave away these kinds of benefits, but it has got to be corrected."

The city's Finance Department said the agreement will save the city $6.7 million in this fiscal year and spares the threat of bankruptcy, which Cranston would have been facing in about 10 years.

Chris12 January 09, 2014 at 08:48 AM
"You can point all the blame you want at past administrations and ask why they gave away these kinds of benefits, but it has got to be corrected." Blaming past administrations??? How about blaming Union leaders for not keeping a watchful eye on pension contributions???
Bob January 09, 2014 at 09:29 AM
Spot on Chris, Union Goon leadership leads these people down an unsustainable path.......Guess what ??? Party's over....time to pay the piper !!!!!!! 50 k a year plus bennies...what a freakin joke...Time to join the REAL WORLD people
Andie D'Amora January 10, 2014 at 12:09 AM
I'm unclear what the difference is between Fung's plan and the state pension overhaul that Raimondo did. Editor?
Mark Schieldrop (Editor) January 10, 2014 at 09:39 AM
Andie - This is in regards to the city's now-closed local pension plan. All new hires are part of the state system now, but this plan covers a handful of active police and firefighters and about 450 retirees. This link gives more details (from earlier this year) : http://cranston.patch.com/groups/politics-and-elections/p/pension-deal-will-save-city-millions-fully-fund-troub87b5af6cb6

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