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art.022/5/022/4/022/3/022/2/028/2/028/1

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ARTICLE 22 AS AMENDED

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RELATING TO CENTRAL FALLS

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     SECTION 1. Central Falls Settlement Agreement.

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     (a) Definitions. As used in this public law, the following words and terms shall have the

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following meaning, unless the context shall indicate otherwise:

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     (1) “Administrative and Financial Officer” is an administration and finance officer

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appointed by the Director of Revenue under Rhode Island general laws section 45-9-10.

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     (2) “Appropriation Payment” means for purposes of this article the State appropriation

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set forth in subsection (c)(1) of this section to fund transition payments to Participating Retirees

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(“Transition Payments”).

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     (3) “Bankruptcy Court” means the United States Bankruptcy Court for the District of

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Rhode Island.

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     (4) “Central Falls Pension Plan” means the so-called “1% Plan” and the so- called “John

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Hancock Pension Plan” as restructured after the filing of the Chapter 9 petition for the City.

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     (5) “City” means the City of Central Falls, Rhode Island.

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     (6) “Contract Date” means December 19, 2012.

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     (7) “Director” shall mean the Rhode Island Director of Revenue.

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     (8) “MERS” means the Rhode Island Municipal Employee Retirement System.

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     (9) “Participating Retirees” means the retirees that signed the Settlement Agreement.

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     (10) “Participating Retirees’ Restricted 5-year Account” means the federally-insured

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interest-bearing account into which the City shall deposit the Appropriation Payment pursuant to

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Section 4 of the Settlement Agreement.

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     (11) “Plan of Debt Adjustment” means the amended plan of debt adjustment to be filed

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with the Court by the City.

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     (12) “State” means the State of Rhode Island.

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     (13) “Settlement Agreement” means the Settlement and Release Agreement by and

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between Receiver, the Director, the Participating Retirees, the Central Falls Police Retirees

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Association, Inc. and the Central Falls Firefighters Retirees Association entered into on the

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Contract Date.

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     (14) “Receiver” means Robert J. Flanders, Jr. in his capacity as state-appointed receiver

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for the City, and any successor receiver appointed by the Director under Rhode Island general

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laws section 45-9-7.

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     (15) “Transition Payments” means the annual payments made to Participation Retirees

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from the Appropriation Payment pursuant to the terms of the Settlement Agreement.

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     (b) Legislative Findings and Purpose.

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     (1) On August 2, 2011, the Receiver filed a Chapter 9 petition on behalf of the City with

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the Bankruptcy Court. Prior to January 9, 2012, the Settlement Agreement was executed by the

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Receiver, the Director, the Participating Retirees, the Central Falls Police Retirees Association,

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Inc. and the Central Falls Firefighters Retirees Association. On January 9, 2012, the Bankruptcy

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Court entered an Order approving the Settlement Agreement.

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     (2) For purposes of this Article, the key terms of the Settlement Agreement include,

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without limitation:

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     (i) That the Participating Retirees’ pension benefits have been reduced by up to fifty-five

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(55%) of their pre-bankruptcy pension payments; provided however if the General Assembly

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authorizes an appropriation in the amount of $2,636,932, then during Fiscal Years 2012-2016,

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participating Retirees shall also receive Transition Payments, so that their combined reduced

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pension payments and Transition Payments shall not aggregate to less than seventy-five percent

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(75%) of their pre-bankruptcy pension payments;

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     (ii) That the Participating Retirees, the Central Falls Police Retirees Association, Inc. and

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the Central Falls Firefighters Retirees Association have waived substantially all of their claims

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against the City and the State; and

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     (iii) That in the event that the General Assembly fails to appropriate a minimum of

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$2,000,000 for Transition Payments, the Participating Retirees may “opt out” of the Settlement

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Agreement and have it declared to be null and void.

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     (3) For the following and other reasons, this Article shall not be deemed a precedent that

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would require the General Assembly to make similar appropriations to any other Rhode Island

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distressed city or town:

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     (i) The City alone must pay 100% of the legal fees incurred in the litigation that

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established the constitutionality of the Fiscal Stability Act (Rhode Island general laws section 45-

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9-1 et seq.) and several important bankruptcy precedents, these precedents which have conferred

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a significant benefit on all Rhode Island cities and towns;

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     (ii) Participating Retirees have agreed to reductions in their annual pension benefits of up

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to 55%; and

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     (iii) The Settlement Agreement was approved by the Bankruptcy Court in order to make a

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Chapter 9 plan of debt adjustment feasible.

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     (4) The requested Appropriation Payment which will ease the Participating Retirees’

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transition to a pension benefit that has been reduced by up to fifty-five percent (55%) is fair and

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appropriate.

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     (5) The Settlement Agreement is hereby incorporated into this Article by reference.

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     (c) Appropriation Payment.

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     (1) Appropriation Payment and Restrictions on Use. There is hereby provided to the City

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of Central Falls a one-time lump-sum Appropriation Payment in the amount of $2,636,932 to be

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used solely for the purposes and subject to the restrictions set forth in the Settlement Agreement

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to fund Transition Payment to Participating Retirees.

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     (2) Deposit of Appropriation Payment and Payments to Participating Retirees. The

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Appropriation Payment shall be immediately deposited by the City into a restricted federally

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backed or federally insured interest-bearing account under the name of the City and denominated

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the “Participating Retirees’ Restricted 5-Year Account.” Within thirty (30) days after receipt of

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the Appropriation Payment from the State, for fiscal year ending 2012, the City (jointly with

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either the Receiver or an Administrative and Finance Officer for the City appointed by the

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Director) shall withdraw from the Participating Retirees’ Restricted 5-Year Account exactly the

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amount required to promptly pay and distribute to Participating Retirees the Transition Payments.

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Thereafter, during the months of July in fiscal years ending 2013, 2014, 2015, and 2016, the City

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(jointly with either the Receiver or an Administrative and Finance Officer for the City appointed

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by the Director) shall withdraw from the Participating Retirees’ Restricted 5-Year Account

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exactly the amount required to promptly pay and distribute to Participating Retirees the

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Appropriation Transition Payments.

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     Any and all withdrawals, transfers and payments from the Participating Retirees’

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Restricted 5-Year Account shall require the signature of two (2) persons, one of whom shall be

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either the Receiver or an Administrative and Finance Officer of the City after the Receiver’s

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duties are completed. Participating Retirees’ Restricted 5-Year Account shall remain under the

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control of the City jointly with either the Receiver or an Administrative and Finance Officer and

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that it shall be segregated from and shall not be controlled or managed by any third party

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managing the single Central Falls Pension Plan, whether administered by the City or if

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transitioned into MERS. Further, the Transition Payments shall be paid to Participating Retirees

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jointly by the City and the Receiver or an Administrative and Finance Officer and not by any

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third-party pension fund manager. Such Transition Payments shall cease after the distribution at

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the end of fiscal year ending 2016.

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     (3) Relationship to Base Pension Payments. The Transition Payments shall not be

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included in the calculation of the base pension benefits of Participating Retirees for purposes of

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determining a Participating Retiree’s COLA. However, a spouse or statutory beneficiary under

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Rhode Island general laws section 45-21.3-1 shall be entitled to sixty-seven and one-half percent

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(67.5%) of a deceased Participating Retiree’s Transition Payment.

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     (4) Distribution of Balance. Within thirty (30) days of the end of fiscal year ending 2016,

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the City shall withdraw the balance of the funds in the Participating Retirees’ Restricted 5-Year

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Account (i.e. the accumulated interest and any remaining sums) and shall pay and distribute those

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funds to each Participating Retiree based on the percentage assigned to each Participating Retiree

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in accordance with the requirements set forth in APPENDIX B of the Settlement Agreement.

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After all of the funds in the Participating Retirees’ Restricted 5-Year Account have been

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appropriately distributed, the City shall promptly close the Participating Retirees’ Restricted 5-

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Year Account.

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     (5) Access to Account Information and Records. The City, as overseen by the Receiver or

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an Administrative and Finance Officer, as the case may be, shall maintain appropriate account

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information and records relating to all receipts into, maintenance of, and distributions from the

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Participating Retirees’ Restricted 5-Year Account, and shall allow at all reasonable times for the

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full inspection of and copying and sharing of information about such account and any and all

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Transition Payments by and with any Participating Retiree.

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     (6) Unclaimed Payments. Any money distributed to a Participating Retiree from the

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Participating Retirees’ Restricted 5-Year Account and not claimed by a Participating Retiree after

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the City has exercised good faith attempts over a six (6) month period to deliver it to the best last

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known address of such Participating Retiree shall not escheat under state law, but shall be

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deposited in the “Participating Retirees Wyatt Payments Account” which shall thereafter be

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distributed in accordance with Section 5.3 of the Settlement Agreement.

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     (7) Liability and Penalties for Improper Use of Appropriation Payment. Any person,

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whether in his/her individual or official capacity, who uses, appropriates or takes or instructs or

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causes another to use, appropriate or take, the Appropriation Payment, or any portion thereof, that

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is not specifically used for making Transition Payments to Participating Retirees as required

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hereunder and under the terms, provisions and/or restrictions of the Settlement Agreement, shall

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be personally liable for repayment of said funds and further shall be subject to any and all other

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applicable civil and criminal sanctions and/or penalties for such act(s).

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     (8) Return of Appropriations. Notwithstanding anything set forth herein to the contrary,

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in the event that the Settlement Agreement becomes legally void and/or of no further legal force

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and effect, whether because the retirees have "opted out" of the Settlement Agreement, or because

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a party duly declares the Settlement Agreement to be null and void pursuant to the terms of the

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Settlement Agreement, or because a court determines the Settlement Agreement to be void, then

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all remaining amounts of the Appropriation Payment held by the City shall be returned to the

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State of Rhode Island.

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     SECTION 2. Section 28-9.1-6 of the General Laws in Chapter 28-9.1 entitled

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“Firefighters’ Arbitration” is hereby amended to read as follows:

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     28-9.1-6. Obligation to bargain. -- It shall be the obligation of the city or town, acting

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through its corporate authorities, to meet and confer in good faith with the representative or

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representatives of the bargaining agent within ten (10) days after receipt of written notice from

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the bargaining agent of the request for a meeting for collective bargaining purposes. This

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obligation shall include the duty to cause any agreement resulting from the negotiations to be

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reduced to a written contract, provided that no contract shall exceed the term of one year, unless a

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longer period is agreed upon in writing by the corporate authorities and the bargaining agents, but

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in no event shall the contract exceed the term of three (3) years unless a budget commission or a

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receiver has been appointed for a municipality pursuant to Chapter 45-9, in which case the

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contract shall not exceed the term of five (5) years. An unfair labor practice charge may be

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complained of by either the employer's representative or the bargaining agent to the state labor

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relations board which shall deal with the complaint in the manner provided in chapter 7 of this

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title.

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     SECTION 3. Section 28-9.2-6 of the General Laws in Chapter 28-9.2 entitled “Municipal

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Police Arbitration” is hereby amended to read as follows:

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     28-9.2-6. Obligation to bargain. -- It shall be the obligation of the city or town, acting

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through its corporate authorities, to meet and confer in good faith with the designated

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representative or representatives of the bargaining agent, including any legal counsel selected by

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the bargaining agent, within ten (10) days after receipt of written notice from the bargaining agent

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of the request for a meeting for collective bargaining purposes. This obligation includes the duty

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to cause any agreement resulting from the negotiations to be reduced to a written contract,

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provided that no contract shall exceed the term of one year, unless a longer period is agreed upon

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in writing by the corporate authorities and the bargaining agent, but in no event shall the contract

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exceed the term of three (3) years unless a budget commission or a receiver has been appointed

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for a municipality pursuant to chapter 45-9, in which case the contract shall not exceed the term

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of five (5) years. An unfair labor charge may be complained of by either the employer's

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representative or the bargaining agent to the state labor relations board which shall deal with the

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complaint in the manner provided in chapter 7 of this title.

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     SECTION 4. Section 28-9.3-4 of the General Laws in Chapter 28-9.3 entitled “Certified

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School Teachers’ Arbitration” is hereby amended to read as follows:

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     28-9.3-4. Obligation to bargain. -- It shall be the obligation of the school committee to

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meet and confer in good faith with the representative or representatives of the negotiating or

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bargaining agent within ten (10) days after receipt of written notice from the agent of the request

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for a meeting for negotiating or collective bargaining purposes. This obligation includes the duty

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to cause any agreement resulting from negotiations or bargaining to be reduced to a written

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contract; provided, that no contract shall exceed the term of three (3) years unless a budget

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commission or a receiver has been appointed for a municipality pursuant to chapter 45-9, in

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which case the contract shall not exceed the term of five (5) years. An unfair labor practice

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charge may be complained of by either the bargaining agent or the school committee to the state

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labor relations board which shall deal with the complaint in the manner provided in chapter 7 of

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this title.

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     SECTION 5. Section 28-9.4-5 of the General Laws in Chapter 28-9.4 entitled “Municipal

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Employees’ Arbitration” is hereby amended to read as follows:

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     28-9.4-5. Obligation to bargain. -- It shall be the obligation of the municipal employer

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to meet and confer in good faith with the representative or representatives of the negotiating or

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bargaining agent within ten (10) days after receipt of written notice from the agent of the request

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for a meeting for negotiating or collective bargaining purposes. This obligation includes the duty

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to cause any agreement resulting from negotiation or bargaining to be reduced to a written

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contract; provided, that no contract shall exceed the term of three (3) years unless a budget

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commission or a receiver has been appointed for a municipality pursuant to chapter 45-9, in

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which case the contract shall not exceed the term of five (5) years. Failure to negotiate or bargain

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in good faith may be complained of by either the negotiating or bargaining agent or the municipal

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employer to the state labor relations board, which shall deal with the complaint in the manner

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provided in chapter 7 of this title. An unfair labor practice charge may be complained of by either

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the bargaining agent or employer's representative to the state labor relations board, which shall

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deal with the complaint in the manner provided in chapter 7 of this title.

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     SECTION 6. Under Rhode Island general laws section 45-9-1 et seq. a municipality

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subject to the jurisdiction of a fiscal overseer, budget commission or receiver is responsible for

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payment of expenses and costs incurred carrying out the responsibilities of the fiscal overseer,

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budget commission and/or receiver. During fiscal 2011, the State incurred and paid on behalf of

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the City of Central Falls expenses totaling $ 1,073,131. On or about September 15, 2011, the

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State billed the City of Central Falls for said $1,073,131 expenses, for which the City of Central

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Falls is responsible under section 45-9-1 et seq., and which continue to be incurred and paid for

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by the State on behalf of the city. The State intends to bill the City of Central Falls for those

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expenses. Recognizing that the City of Central Falls does not currently have the financial ability

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to reimburse the State in full for said expenses and may need additional time to reimburse the

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State for expenses reflected in future bills submitted by the State for such expenses, the City of

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Central Falls shall have up to June 30, 2021 to reimburse the State for all such expenses paid by

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the State and billed to the city.

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     SECTION 7. Pathway to Retirement System Transition. – The Office of the General

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Treasurer, in consultation with the Department of Revenue, shall develop a framework for the

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City of Central Falls to transition its employees and retirees into the Municipal Employees'

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Retirement System and to provide retirement security for retirees. The Office of the General

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Treasurer shall report its findings and identified transition mechanisms to the General Assembly

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by January 1, 2013.

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     SECTION 8. This article shall take effect upon passage.