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Pension board hears Providence lesson

April 6, 2012

PAWTUCKET — While the city of Providence has a significantly larger pension fund problem to deal with than Pawtucket, the city's ad hoc Committee on City Pensions and OPEB Obligations heard details about how the state capital has been handling such matters at its meeting on Thursday.
Ernest Almonte, the Pension Committee chairman, invited Caitlin Nangle, manager of employee benefits/human resources for the City of Providence, to speak to the panel about some of the methods that have been used to address the deficit. He disclosed that Nangle is his niece, but said she was not being paid for her visit, and that he thought it might be helpful for the panel to hear “the pros and cons of what is going on in Providence.”
Nangle gave the committee an overview of the many changes regarding health insurance benefits that have been put into effect for post-65 retirees, and the ones that are in the works for pre-age 65 retirees. She said that the administration's overall goal was to move all current and future retirees to Medicare.
Per the administration of Mayor Angel Taveras, all retirees were required to enroll in Medicare, A, B or C. If they were ineligible for A or B, they were told they needed a denial letter from Social Security and other arrangements could be made through a spouse who was eligible or with a medical supplement plan. They were also moved to Medicare D for their prescription drug plan.
Nangle said that all city employees (except for police and fire, who have gone to court to contest the matter) have been moved over to the Medicare plan and the city hopes to have everyone on board by July 1.
Nangle also said that Providence officials are proposing many changes to the health plan for pre-65 retirees, including moving them all into one simplified plan and imposing a payment of 20 percent of the “working rate” of health care costs, as opposed to a flat rate, to account for inflation.
Additionally, the administration wants to impose many changes to the prescription drug program, such as increased co-pays, mandatory mail order prescriptions for all “maintenance” drugs, and a “step-therapy”
program that would require people to try using generic brands of certain drugs or else pay a penalty if their doctor requires them to use a brand name.
She also outlined to the committee the basics of setting up a health savings account or health reimbursement account.
“This has been a very large process for the city,” said Nangle, who said she had come into work some days to have 150 e-mails from concerned retirees and 100 people waiting outside her door. She told city officials that if they are considering making similar changes to retirees' health benefits, to make sure they have enough personnel ready to answer questions. Speaking on behalf of the Taveras Administration, she added, “Our retirees are not happy with these proposals, but we must make decisions to balance the budget.”
While Almonte had stressed that the purpose of hearing about Providence was just to learn about “best practices,” several Pawtucket municipal retirees who were sitting in the audience said that they were concerned about many of the changes that Providence officials had made regarding health benefits and urged the panel to not recommend the same options for Pawtucket.
Numerous retired members of the city's Police and Fire Department's spoke out against various parts of the Providence plan, particularly the increased co-pays and other costs, which would reduce the money they have to live on. Several cited the fact that they had incurred health problems and medical conditions due to injuries and stresses involved in the public safety jobs, and said they should not be lumped into the same benefits pool as a person who simply sat behind a desk.
One retiree said he had served the city 33 years on a Fire Department ladder truck and during his tenure had delivered six babies, but now “my shoulder is gone, my knee is gone.” He said he now feels like “a second class citizen” with the way the city is threating to change his pension, and said “a contract is a contract.”
Another public safety retiree noted that if a retiree's pension drops by 25 percent of its worth due to all of the increased costs, “when would they be better off to go on general public assistance?” “When you put 20 years in and get banged up a little, you deserve more.”
Almonte said he knows firsthand that Providence city officials felt compassion for the retirees and the way the health care changes affected them, and did not just do it for the money. That money, he noted, was substantially higher for Providence than Pawtucket in terms of structural deficit and unfunded pension liability.
Yet, Almonte noted that Pawtucket's unfunded pension liability must be addressed as well. (According to the last audit, Pawtucket has an unfunded pension liability of $140 million, with a funding ration of 30 percent, and an Other Post Employment benefits (OPEB) liability of $378 million for retired public safety employees. He told those present, “We thank you for your service, but we have to come up with ideas. Decisions will have to be made on various facts.”
Pawtucket Police Capt. Mark Boisclair, president of the police union, read a lengthy statement urging city officials to respect the sacrifices that public safety officials make for the city. He noted that much of the city's current unfunded liability was cited in a recent financial analysis as stemming from the period of 1992 to 1997 when city officials did not contribute anything into the pension system.
Boisclair said that while the root of the problem may lie in the wrongs of past administration, he hoped that the Grebien administration would make any pension changes through negotiations with city employees, and not just through legislative decisions.
Fire Capt. Robert Neill, president of the firefighters' union, agreed, saying that since public safety employees are a labor organization “no pension changes should be forced. They should be made through collective bargaining.”
Police Major Bruce Moreau, who noted that his father spent 40 years as a Pawtucket Police officer before retiring, said he was always told that “the contract is the law,” and should be honored as such when it comes to pensions and health care benefits. Referring to the current pension legislation being proposed, he asked “what promise does anyone have that the administration will not make other changes?'
Almonte said that the pension advisory committee is still gathering input and “digesting information” on a variety of issues and that there is a lot more work to be done before it puts its findings into a report. He suggested that the panel meet again in three weeks. The committee's report will be submitted to the City Council and Mayor Donald Grebien.

 

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