Warwick Retirement Board Votes to Give City Municipal Retirees a 2.81% COLA Increase Starting July 1, 2018 (next fiscal year)
The City of Warwick currently has approx. $600 million worth of accrued unfunded pension and retiree healthcare debt. "Accrued" means, what the city is expected or promising to pay the current active city employees when they retire, along with the benefits paid to current retirees.
The City hopes to get back about a 6.9% rate of return per year on their pension plan investments. However, for the past 10 years, the rate of return has averaged 5.24%. Every time the rate of return was low, and not even coming close to what they expected (in years past they expected back 8% then they dropped it to 7.5%, now it's 6.9%) the taxpayers always had to make up for that difference -- costing Warwick taxpayers MILLIONS in tax increases.
Again, when the rate of returns are low, the taxpayers make up the difference in tax increases.
At the recent Warwick city retirement board meeting, the decision was made to give a 2.81% COLA increase to Municipal retirees based off of what their pension plans made in investment returns over the past year. Yes, it was a good market year.. However, as it has been said over and over again at the City budget hearings for years: you have to look at the historical performance trends at least over a 10 year period, and not just 1 year of performance.
The City Employees/Municipal pension plan is currently funded at 72.2%. Police II funded at 82.3% (retirees get a 3% COLA increase every year)-- Fire II funded at 86.4% (retirees get a 3% COLA increase every year) and the police 1/Fire 1 pension plan is funded at 24% (retirees get a COLA increase based upon what the active city employees get in salary increases).
No pension plan should be getting a COLA increase until it's at least 90% funded. Any plan can look better when you keep increasing taxes and send almost all of it to funding pension plans.
The City retirement board members who just voted for the COLA increase for Warwick Municipal retirees is comprised of members from the public as well as current city employees and past and present Municipal Union Presidents.
Scott Small- current Warwick municipal employees union president.
Jean Bouchard-- past Warwick municipal union president.
William Depasquale- current city Planning Dept. Director
Timothy Kelly-- municipal employee
Half of the city retirement board who voted for the 2.81 COLA, are city employees!!!!
Unfortunately, the City Council Finance chair person, Councilman Ed Ladouceur, was NOT present to vote. This is a problem, as it has been in the past. Former City Council Finance chair woman, Rep. Camille Vella-Wilkinson missed the majority of city retirement board meetings.
Keep in mind, the City retirees are also receiving lifetime healthcare benefits which also covers the spouse, along with prescription copay coverage which cost the Warwick taxpayers at least $8 million just last year alone!
Did anyone calculate at the Warwick retirement board meeting how much a 2.81% COLA increase for municipal retirees would cost the Warwick taxpayers?
I doubt it.