Coventry Town Council members voted 4-1, for a strategy that would substantially reduce over many years the estimated $70 million of underfunded liability on pensions for municipal employees and police union at the Town Hall Annex on Tuesday
Only Ted Jendzejec (District 5), voted against the measure, saying “I am not comfortable with this plan. This is one of the most important decisions regarding our town. I can’t see this falling into place. It’s not carved in stone. We need more discussion among the taxpayers, collective bargaining units and town council.”
"It's not pension reform that I am against," continued Jenzejec following the meeting. "It's the hike in taxes that this plan could have that I'm against. I believe more open meetings involving all parties, including taxpayers, should have taken to place to formulate a plan."
Town Manager Tom Hoover said that town government officials have spent several months reviewing four plans for municipal employees and seven plans for the police unions before agreeing on recommendations for one plan for each pension system.
The town’s municipal employees are currently funded for just 23% of their pension plan while the police pension system is at just 11.3%.
To get out of the “critical status”- defined as the ability to fund at least 60 percent of a respective pension plan- will require measures that will have an impact on the members of the affected unions and on taxpayers, town officials said.
Hoover and the town government prefer a plan to get the municipal employees out of critical status within the next 19 years and to achieve 80% funding within 26 years.
Among the measures that Hoover said could achieve those goals and meet state requirements are: an increase in ARC payments by 20% annually for the next four years; an increase in employee contributions, a 3-year wage freeze and a defined contribution plan in which the town matches the total contributions by up to 10%.
For the police union proposal, town officials recommend following a plan that would remove the critical status within 20 years and be 80% funded in 24 years. Measures for this proposal would include: a freeze in longevity pay based on a five-year average of annual earnings, an increase employee contribution to 20%, allowance of retirement eligibility at age 55, elimination of future COLAs, closure of defined benefit plans to existing employees and an increase in the ARC to as much as 7%.
Nevertheless, Hoover and town council members repeated several cautionary notes to citizens and to union members.
“The plans can be adjusted and they are subject to collective bargaining and other factors,” said Hoover. “But if we don’t meet the plan requirements, then we will have to undertake alternative measures.”
Kerry L. McGee, Vice-President (District 3), said it was a "painful" process to vote for the plan, especially for those who have worked hard for their retirement, but a necessary move.
“This vote allows us to meet the deadline imposed by the state of Rhode Island so that we will not be penalized for state and local aid,” repeated Gary Cote, Town Council President. “We have to put our foot forward for the taxpayers and for the employees who work for the Town of Coventry. But this is not finished by any means.”
Hoover says the consequences of following either plan would not be felt short-term by Coventry taxpayers “Long-term, we will have to either cut expenses or increase revenues. Worst-case, there could be a 4% increase in taxes.”
According to Hoover, the 11 respective plans will be made available to the public on the Town's website this week. They can also be viewed in the PDF files attached to this article.