WEST WARWICK — After approving a resolution authorizing a supplemental appropriation to the town’s pension plan, the West Warwick Town Council heard Tuesday from Carly Iafrate, a labor lawyer representing a group of retired town employees, who suggested the town look into ditching its pension program.

“It’s about security,” Iafrate told councilors as she recommended they begin to seriously consider moving to the state-run Municipal Employees' Retirement System (MERS). “Until it’s the day that you are told that your benefits may not be there, it’s hard to grasp… and I look at this, and this is a town where it really might not be there.”

Iafrate was speaking Tuesday on behalf of the West Warwick Public Employees Retirement Coalition, a group of around 500 retired teachers, firefighters, police officers and other municipal employees that formed in 2014 in response to the town’s dire fiscal situation.

“At the time, the town was looking to change everybody’s health insurance benefits and cut, potentially, everybody who had a local pension,” said Iafrate, who’s been representing the coalition since its founding. 

The plan at the time the group was founded, Iafrate said, was to “pay attention.” 

“I mean getting involved in the pension board meetings, getting involved in giving input into who was on the pension board, and criticizing, when the opportunity arose,” she said, adding that the underfunding of the pension funds before the group was founded was likely due partly to residents not paying attention. 

When the coalition was founded five years ago, the town’s pension fund was funded at just 19 percent, which Iafrate called “really terrible.”

“With a pension plan of this size, and the amount of work it takes to administer it, and the fact that it’s grown only from 19 percent to 23 percent… it seems to me that it’s time for us to have a discussion about not being in the pension plan business anymore,” Iafrate said. 

Iafrate said that under MERS, it would no longer be up to the town to manage the plan. All that would be required, she said, is an annual submission of the town’s contribution (ARC).

“It’s essentially just a bill that you pay,” Iafrate said, requesting that the town council appoint a committee tasked with exploring the possibility of a MERS migration. 

Councilor Maribeth Williamson agreed that there should be a formal conversation about the possibility. 

“Pensions are very complicated,” Williamson said, “and it is expensive to maintain them and run them, and we don’t have, necessarily, the wherewithal to do that.”

In addressing the council, Iafrate also said councilors should reevaluate the amount they appropriated Tuesday to make up for a series of minor shortfalls in pension contributions. 

Town Manager Ernest Zmyslinski said that when the town adopted its five-year plan in 2014, it had committed to funding 100 percent of each year’s required pension contribution. But, he added, in reviewing audit results, it was discovered that there were slight shortfalls in fiscal years 2015, 2016 and 2018. 

In the year ending in June of 2015, Zmyslinski said that while the town was supposed to contribute $8.1 million to the pension fund, it ended up contributing $41,605 less than it should have. The following year, $129,776 less was contributed to the pension fund than should have been. 

And last year, the plan was funded at 99.89 percent, leaving a shortfall of $9,751. That, however, was made up in the current fiscal year’s budget.

The council unanimously approved a supplemental appropriation of $171,331 to be taken from the undesignated fund account, which is currently at $962,354.

“So this year, the ARC will be over 100 percent, but it’s to make up for those two fiscal years,” Zmyslinski said. 

Still, Iafrate said that wouldn’t be quite enough, suggesting the town tack on additional money.    

“It’s not enough to put in the [$171,331], because you’re not addressing what that money would have earned if it was put in in FY15 and FY16,” she said. “That’s one point I would just like to raise to put on your radar, in terms of perfect funding of this plan.”

Iafrate added that she’d like to have a further discussion about whether or not 2017 and 2018 were properly funded, in the first place. She said the town’s contribution recommended in a study by the actuary firm Nyhart of the town’s pension plans differed from that recommended in the audit.

“The two numbers are not the same, and the ARC in the Nyhart report is higher than what is in the budget,” she said. “There may be some mistake—I don’t know—but it’s one of those things that I think is important. It’s important to my group to make sure that we’re staying on top of it.”

kgravelle@ricentral.com

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