BREAKING: City Reaches Tentative Deal with Retirees
Wednesday, May 30, 2012
The Taveras administration has reached a tentative agreement with its retirees on a deal that will save the city of Providence $18.5 million in FY 2013, according to an e-mail that went out to employees this afternoon.
The deal was first reported by WPRI.com.
“At 5:00, the Mayor will officially announce a tentative agreement on pensions and Medicare with our retirees,” the e-mail, which came from Communications Director Michael Raia, said. “The tentative settlement will save the city approximately $18.5 million in FY13. The pension reforms, which permanently eliminate all 5 and 6 percent compounded COLAs and cap pensions at 150 percent of the state’s median household income, will reduce the City’s unfunded pension liability by approximately $170 million. The Medicare settlement will save approximately $40 million over 10 years.”
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTAccording to a briefing attached to the e-mail, the deal will suspend COLAs for ten years except for families of city employees killed in the line of duty. All 5 and 6 percent COLAs will be eliminated.
By 2023, COLAs will be reinstated only for retirees with pensions less than 150 percent of the state median income or less than the salary of the incumbent employees o the same rank of the retiree (if they are police or fire). All future COLAs will be capped at 3 percent.
The briefing also noted that retirees making less than $100,000 will be eligible for one-time $1,500 stipend in FY 2017.
The deal will also move retirees over the age of 65 to Medicare. Retirees under 65 will not have changes made to their health coverage.
The tentative settlement will bring the city to within $3 million of the promised savings offered by the Providence Pension Protection Plan and likely puts to rest any chance of a lawsuit being filed by retirees.
The Medicare settlement is expected to save taxpayers $40 million over 10 years.
UPDATE: In a press release, Mayor Taveras offered the following comment:
“This settlement saves the pension system for current workers, protects retirees from losing their pensions and puts Providence on firm financial ground so that we can move forward to create jobs, improve public education and make Providence a more livable and vibrant city. I hope that history will show this to be one of Providence’s finest hours: the moment when those with the greatest stake in Providence’s future came together to accomplish the painful and difficult work needed to pull Providence back from the brink. Today is not a day for celebration, but I am proud of what we have accomplished on behalf of the citizens of Providence and all of Rhode Island.”
