RIPEC Endorses Chafee Plan for Local Pensions
Wednesday, June 08, 2011
The Rhode Island Public Expenditure Council issued a report yesterday praising Governor Lincoln Chafee’s incentive program for cities and towns to fully fund their retirement systems.
In its report, RIPEC noted that local pension and other retiree benefits account for 66.9 percent of the total $11.4 billion unfunded state and local retirement benefits liability. Local plans, not counting the teacher system, were just 50.3 percent funded while funding for other retiree benefits is .08 percent according to RIPEC.
Chafee’s program, known as the Municipal Accountability, Sustainability and Transparency (MAST) program, would provide additional state aid to communities that fully fund their retirement systems.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST“The proposed MAST program represents a step toward long-term municipal fiscal sustainability. A number of the mandates, such as timely submission of financial statements, uniform reporting and a focus on out-year budgets allow for a more comprehensive understanding of the fiscal status of each municipality,” RIPEC said in its report. “In addition, as RIPEC has noted, outstanding retirement benefit obligations are a risk to the long-term sustainability of local budgets and must be addressed. To this end, the funding requirements under MAST represent sound fiscal policy.”
But … Chafee plan not a complete solution
However, the group also said that some cities and towns simply do not have the resources to meet the mandates of the MAST program. “Those communities that are most impacted by the MAST mandates are, for the most part, municipalities that have been designated as fiscally stressed and are thus the least able to respond,” the report states.
To help those communities, RIPEC recommends that the state make changes so they have more flexibility to “address their primary cost drivers.” Such changes could include premium sharing for retiree health care, changes to COLAs, or new restrictions on disability benefits, according to RIPEC.
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