By JIM BARON

PROVIDENCE — Cities and towns already demanding wage and benefit concessions from their employees to defray crippling deficits are also spending large and ever increasing amounts of taxpayer dollars on pensions for their existing and retired workers, a study by the business-backed Rhode Island Public Expenditure Council (RIPEC) found.

And the worst is yet to come, because that report doesn’t take into account the hits existing pension funds have most likely taken  in the national economic downturn and the plunge in the value of stocks and bonds that funds typically invest in. New actuarial studies expected by June 30 are expected to reflect the depth of that problem.
Of local cities and towns, Central Falls pays the biggest chunk of its annual budget in pension costs (excluding contributions to school teacher pensions), 12.5 percent, followed by Cumberland at 6.6 percent, Pawtucket at 6.5 percent, Woonsocket at 3.8 percent, Lincoln at 2.4 percent and North Smithfield at 1.7.
Although North Smithfield pays only a minuscule percentage of its total budget toward pensions, in actual dollars the cost has ballooned by 159 percent in the last five years, from $87,785 in 2004 to $222,432 in the current year. Pawtucket and Woonsocket are paying close to double what they did five years ago, with increases of 94.6 percent and 92.1 percent, respectively. Central Falls, on the other hand, is paying only 35 percent more than it did in 2004. Cumberland’s costs jumped 103 percent during that period.
While most employees are enrolled in the Municipal Employees Retirement System (MERS), some communities maintain separate pension systems for some classes of employees.
Woonsocket, for instance, has a plan for police officers hired before July 1, 1980 and firefighters hired before July 1, 1985. This fund is doing so well it is actually overfunded, with assets accounting for 103 percent of obligations.
On the other hand, Peder Schaefer of the Rhode Island Office of Municipal Affairs said Monday that “Pawtucket’s police and fire plan (post 1974) is giving us concern.
“They aren’t paying their ARC (Annual Required Contribution),” Schaefer explained.
“Every year, the actuary provides to a municipality what they should pay to amortize their unfunded liability over a certain number of years. If you go to Pawtucket’s financial statements, they have not payed their annual required contribution in recent years.”
Schafer said Pawtucket Finance Director Ronald Wunschel has presented the municipal affairs office and auditor general with a plan -- “and it’s a good one,” Schaefer added -- to start putting money into the pension fund once its synchronization bonds are finally retired in a year or two. The money currently going to pay off those bond will be directed into the pension system after that.
Attempts to reach local officials about their pension plans and the RIPEC report were unsuccessful Monday. City Halls in Pawtucket and Central Falls were closed for RI Independence Day and in Woonsocket both Mayor Susan Menard and Michael Annarummo were out of the office Monday afternoon.
Overall, Schaefer said of the municipal plans, “Obviously, it is something that has been concerning us for a long time, both the auditor general and the department of revenue. But its a tough time right now to come up with the extra money to fund these liabilities.”
Many of the numbers in the RIPEC report were obtained from the Office of Municipal Affairs, which is part of the state Department of Administration.
The RIPEC report contains recommendations from Auditor General Ernest Almonte to improve the condition of the locally-administered pension plans in Rhode Island communities,especially those considered “at-risk”. Those include:
• Contribute no less than 100 percent of the annual required contribution;
• Pursue moving active members into the State-administered MERS system; and
• Consider increasing employee contributions.
Getting new employees into the MERS plan “forces you to make the payments” to keep current with contributions, Schaefer said.
Gov. Donald Carcieri has proposed changes to the state pension system that he says will help cities and towns at the same time with their pension woes. The General Assembly did not adopt those measures as part of the revised budget for the current year, but House Finance Committee Chairman Steven Costantino said they could be folded into the 2010 budget or adopted as separate pieces of legislation.
Carcieri’s proposals would:
??Change the maximum benefit and establishes reporting criteria for municipal employees,
police and firefighters who retire on accidental disability after July 1, 2009;
??After July 1, 2009, municipal employees who are not yet vested as of July 1, 2009, in the
retirement system will be eligible to retire at age 59 with 29 years of service, or at age 65
with 10 years of service, or at age 55 with 20 years of service at an actuarially reduced
pension. In addition, municipal police and firefighters who are not vested and retire after
July 1, 2009 must be 55 years of age to be eligible to receive a pension;
??Increase the employee contribution rate for MERS plans from 6 percent to 7 percent, and
increasing the police and firefighter employee contribution rate from 7 percent to 8 percent
as of July 1, 2009;
??Apply the MERS age, years of service, and contribution rates established under MERS to
all municipally administered pension plans; and
??Reduce the funding requirement for the Teacher Retirement System to 25.0 percent of the
actuarial rate from April 1 to June 30.