2014 -- S 2332 SUBSTITUTE A AS AMENDED

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2014

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A N   A C T

RELATING TO TOWNS AND CITIES - RETIREMENT OF MUNICIPAL EMPLOYEES IN

CENTRAL FALLS

     

     Introduced By: Senators Crowley, Metts, and Pichardo

     Date Introduced: February 12, 2014

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

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     SECTION 1. Chapter 45-21 of the General Laws entitled "Retirement of Municipal

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Employees" is hereby amended by adding thereto the following section:

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     45-21-67. Central Falls retirees - settlement agreement. -- (a) Definitions.- As used in

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this section:

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     (1) "Base pension benefit" is the amount listed on Appendix A, Appendix D-A and

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Appendix E-A attached to the settlement agreement, under the column labeled "annualized final

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base pension" which is the amount each Central Falls retiree was receiving as of July 31, 2011.

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     (2) "Central Falls retirees" are the retirees or the beneficiaries of retirees of the city of

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Central Falls listed on Appendix A to the settlement agreement, as amended from time to time

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when a retiree or beneficiary dies.

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     (3) "Settlement agreement" shall mean that settlement and release agreement, as set forth

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in Article 22 of the public laws of 2012, Chapter 241, signed by and between the receiver of the

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city of Central Falls, the director of revenue and the participating retirees, approved by the

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bankruptcy court by order dated January 9, 2012.

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     (b) Legislative findings and purpose.

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     (1) Pursuant to Article 22 of the public laws of 2012, chapter 241, which defined the

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terms of the initial appropriation, the state made an appropriation of two million six hundred

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thirty-six thousand nine hundred thirty-two dollars ($2,636,932), which was deposited into a

 

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restricted account held by the city of Central Falls, for the purpose of supplementing the reduced

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pensions of the Central Falls retirees, to enable the city to pay the Central Falls retirees seventy-

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five percent (75%) of their base pension benefit as of July 31, 2011 for a five (5) year period,

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with the last supplemental appropriation to be paid on July 1, 2016.

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     (2) The drastic pension reductions experienced by the Central Falls retirees provided a

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harsh example of the risks of unfunded pension liabilities, which in turn provided the primary

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incentive toward successful pension negotiations with other municipal, police and fire retirees,

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saving the state more than sixty million dollars ($60,000,000);

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     (3) If said appropriation is not made, as of July 2, 2016, the Central Falls retirees, many

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of whom sustained serious and permanent injuries in service to the city, will have their pensions

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reduced yet again, in some instances to less than sixty percent (60%) of the pension they were

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receiving on July 11, 2011;

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     (4) It is fair and just that the state appropriate sufficient funds to the city to supplement

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the city's funding of the pension benefits to the Central Falls retirees to ensure that the Central

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Falls retirees continue to receive seventy-five percent (75%) of the base pension benefit, after

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taking into account all applicable cost-of-living adjustments, for their lifetime and to the extent

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applicable, for the life of their beneficiaries,

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     (c) Appropriation payment.

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     (1) Appropriation payment and restrictions on use. In accordance with the terms set forth

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in Article 22 and the settlement agreement, the state shall annually appropriate sufficient funds to

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the restricted account for the city of Central Falls to supplement the city's funding for payments to

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Central Falls retirees in order that they continue to receive seventy-five percent (75%) of their

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base pension benefit as of July 31, 2011, after taking into account all applicable cost-of-living

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adjustments, for their lifetime and to the extent applicable, for the life of their beneficiaries. Such

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appropriation shall be determined annually by an actuarial valuation ("appropriation amount"),

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and it is expected over the life of the existing retirees to total four million eight hundred

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seventeen thousand seven hundred eight dollars ($4,817,708).

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     (2) Deposit of appropriation payment and payments to Central Falls retirees. The

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appropriation payment shall be immediately deposited by the city into the previously established

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"participating retirees restricted five (5) year account" which shall be redesignated as the

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"participating retirees restricted account." The participating retirees account shall be administered

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by the city and not by any third-party pension fund manager.

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     (d) Any and all withdrawals, transfers and payments from the participating retirees

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account shall be made as set forth in the settlement agreement and accompanying appendices and

 

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said Article 22 (c) until the payments are made on July 1, 2016.

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     (e) Beginning on July 1, 2017 and bi-annually thereafter, with payments to be paid each

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retiree or beneficiary as applicable on July 1 and January 1 of each year they are eligible for

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benefits under the Central Falls pension plan, the city shall distribute to each participating retiree

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or beneficiary one half (½) the annual amount listed on the actuarial spreadsheets prepared by

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Sherman Actuarial Services, which shall supplement the pension payments paid by the city in

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order that each retiree will receive seventy-five percent (75%) of their base pension benefit, after

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taking into account all applicable cost-of-living adjustments, for their lifetime, and to the extent

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applicable, sixty-seven and one-half percent (67.5%) of the base pension benefit, after taking into

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account all applicable cost-of-living adjustments, to their beneficiaries for their lifetime.

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     (f) Relationship to base pension payments. The supplemental payments to the Central

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Falls retirees from the participating retirees' restricted account shall not be included in the

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calculation of base pension benefits for the purposes of determining a retiree's or beneficiaries'

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cost-of-living adjustment.

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     (g) The cost of living adjustments as set forth in the settlement agreement are to be paid

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by the city of Central Falls to the Central Falls retirees, and to the extent applicable, their

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beneficiaries.

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     (h) The following provision shall amend and supersede Article 22 (c)(4) regarding the

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balance in the participating retirees restricted account as of July 2, 2016:

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     (1) Distribution of balance. As of July 2, 2016, no further supplemental payments shall be

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distributed to the Central Falls retirees under the terms of the settlement agreement. The balance

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of monies in the participating retirees restricted account shall be distributed in accordance with

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this Article, in the amounts and to those retirees and beneficiaries listed on the actuarial

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spreadsheets prepared by Sherman Actuarial Services, LLC and maintained and administered by

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the city. The amounts set forth on the actuarial spreadsheets will supplement the pension

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payments being made by the city in order that each retiree will receive seventy-five percent

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(75%) of their base pension benefit, after taking into account all applicable cost-of-living

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adjustments, for their lifetime, and to the extent applicable, sixty-seven and one-half percent

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(67.5%) of the base pension benefit, after taking into account all applicable cost-of-living

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adjustments, to their beneficiaries for their lifetime.

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     (2) Any monies remaining in the participating retirees restricted account after the last

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living retiree attains seventy-five percent (75%) of the base pension benefit, after taking into

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account all applicable cost-of-living adjustments, or last living beneficiary attains sixty-seven and

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one-half percent (67.5%) of the base pension benefit, after taking into account all applicable cost-

 

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of-living adjustments, shall be returned to the state under state law.

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     (i) Access to account information and records. The city shall maintain appropriate

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

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from, the participating retirees' restricted account, and shall allow at all reasonable times for the

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

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payments therefrom with any participating retiree and the state.

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     (j) Unclaimed payments. Any monies distributed to a participating retiree or beneficiary

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from the participating retirees' restricted account and not claimed by a participating retiree or

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beneficiary after the city has exercised good faith attempts over a six (6) month period to deliver

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it to the best last known address of such participating retiree or beneficiary, shall not escheat

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under state law, but shall remain in the participating retirees' restricted account until the

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conditions of subsection (h) herein have been satisfied.

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     (k) Liabilities and penalties for inappropriate use of appropriation payment. Any person,

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whether in his/her individual capacity, who uses, appropriates or takes or instructs another to use,

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appropriate or take, the appropriation payment, or any portion thereof, that is not specifically used

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for making payments to participating retirees or their beneficiaries as required hereunder and

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under the terms of the settlement agreement, shall be personally liable for repayment of said

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funds and further shall be subject to any and all applicable civil and criminal sanctions and/or

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penalties for such act(s).

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     SECTION2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TOWNS AND CITIES - RETIREMENT OF MUNICIPAL EMPLOYEES IN

CENTRAL FALLS

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     This act would provide for the state to appropriate sufficient funds to the city of Central

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Falls for payment to Central Falls' city retirees so that those retirees would continue to receive

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seventy-five percent (75%) of their base pension benefit as of July 31, 2011, for their lifetime,

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and to the extent applicable, for the lives of their beneficiaries. Certain adjustments are made to

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the percentage given to the retirees' beneficiaries as of July 2, 2016.

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     This act would take effect upon passage.

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