Providence Mayor Angel Taveras has struck a tentative agremeent with unions representing city workers and retirees that could move the B-word — bankruptcy — out of the lexicon in the capital city.
Taveras told reporters he’s cautiously optimistic the deal will get union support. If that happens, he says, it could serve as a model for other troubled cities and towns. A successful pact would also burnish Taveras’ high standing as he considers a possible gubernatorial bid in 2014.
Here’s how the city breaks down some of the details:
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,” said Mayor Taveras. “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.”
The Agreement – Pensions:
- COLA SUSPENSION: All COLAs suspended for 10 years. (Families of city employees killed in the line of duty will continue to receive annual COLA.)
- ELIMINATION OF HIGH END COLAs: All 5 and 6 percent compounded COLAs are permanently eliminated.
- PENSIONS CAPPED: In FY2023, COLAs will be reinstated only for retirees with pensions less than 150 percent the state median income (currently $82,353) OR less than the salary of an incumbent employee of the same rank as the retiree at the time of retirement (police and fire retirees only), whichever is lower.
- FUTURE COLAs LIMITED: Retirees whose COLAs are reinstated in FY2023 will receive annual raises of 3 percent compounded or what is called for in their contract, whichever is less.
- ONE-TIME STIPEND IN FY2017: In FY2017 (Year 5 of the agreement), retirees collecting pensions of less than $100,000 will receive a stipend of $1,500. This one-time payment will not change their future pension calculations.
- CONTINGENT STIPEND IN FY2020: In FY2020 (Year 8 of the agreement), retirees collecting pensions of less than $100,000 may receive a separate one-time stipend of up to $1,500 if the city achieves savings through the creation of a self-insured dental plan. The potential payment would not change future pension calculations.
- SUSTAINABLE REFORMS TO PENSION CALCULATIONS: Future pensions will be calculated based on the four highest years of service. The current system calculates pensions based on the highest three years.
- CONTINUED PENSION CONTRIBUTIONS: Employees will be required to contribute to the pension system for as long as they earn credit toward a pension.
- ACCIDENTAL DISABILITY: Accidental disability pension calculations will be based on 66 2/3 of the employee’s final salary.
The Agreement – Healthcare (only pertains to police, fire and retiree association):
- MEDICARE SETTLEMENT: Retirees 65 and older will move onto Medicare.
- PART B SUPPLEMENT AND MEDICARE PENALTY: The city will provide funding to cover Medicare’s Part B supplement and penalties, as had previously been committed.
- PART D PRESCRIPTION DRUG COVERAGE: The city will also provide funding to cover Medicare Part D prescription drug coverage.
- UNDER 65 HEALTH COVERAGE UNCHANGED: Health care for retirees under the age of 65 will not be changed.
Taveras was careful to underline the tentative nature of the agreement while talking with reporters.