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State warns West Warwick about pensions

May 9, 2012

WEST WARWICK — A joint meeting was held last night between West Warwick's elected officials, the State Revenue Director and R.I.'s Auditor General to drive the fact that West Warwick could be the next Central Falls unless they fix their unfunded pension crisis.

Rosemary Booth Gallogy, State Revenue Director, explained to the council that the Annual Required Contribution (ARC) payment for the town of West Warwick has not been kept up and that is why the unfunded liability has grown.

She told the Town Council, School Committee and town’s Pension Board that currently the town is only setting aside 20 percent of their ARC payment.

She explained that the accrued liability that the town has acquired is $120 million. She said the assets that it would take to pay off the pension promises have declined.

Gallogy told all in attendance that in 2001 the West Warwick pension plan was almost 100 percent funded.

But in 2012 however, the pension plan is now in critical status, which means it is less than 60 percent funded.

She said that in 2012, if $1 million is contributed towards the town’s pension system that is only 12 percent of what should be set aside to meet the 100 percent ARC payment.

She said the rating systems, such as MOODYs, have said that they view unfunded pension liability as a debt.

“When you don’t fund your annual required contribution, you’re really borrowing from the next 10 to 15 years,” she said.

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