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:

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

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

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

this section:

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

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

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

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

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

when a retiree or beneficiary dies.

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

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

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

bankruptcy court by order dated January 9, 2012.

     (b) Legislative findings and purpose.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

receiving on July 11, 2011;

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

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

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

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

applicable, for the life of their beneficiaries,

     (c) Appropriation payment.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

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

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

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

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

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

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

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

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

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

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

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

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

cost-of-living adjustment.

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

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

beneficiaries.

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

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

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

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

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

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

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

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

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

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

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

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

adjustments, to their beneficiaries for their lifetime.

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

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

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

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.

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

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

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

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

payments therefrom with any participating retiree and the state.

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

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

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

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

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

conditions of subsection (h) herein have been satisfied.

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

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

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

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

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

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

penalties for such act(s).

     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

***

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

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

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

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

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

     This act would take effect upon passage.

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