Chariho School Parents’ Forum

August 13, 2009

Pension pro-con or not

Filed under: contract negotiations,Hopkinton,Hopkinton Town Council,Police — Editor @ 11:40 pm

After speaking with Sylvia and re-reading some emails I can understand where the different views come from.

On the meeting of the 20th they voted on the contract. Apparently, she was relying on me to finish the evaluation for their meeting.  But I didn’t get it right until the 21.  I wasn’t so concerned. We had a few meetings and the votes were always 4 to 1. Technically they weren’t votes, they were consensus. We would have had to announce them to the pubic if they were votes.

 Actually, I’m surprised nobody has ever done an evaluation before.  This pension has been used since 1998 (voted on in 2000). There were three contract votes since then.

So Sylvia wrote from the perspective that the council was voting on the 19th and since my numbers weren’t good at that time they voted for the status quo.  She defended that vote by identifying my errors.

But even then, assuming Sylvia had the right number or not, why did they still vote for it. The early data had the liability at $55 million. Now we know its only $27 million.  That’s still 27 million dollars more than if we used a defined contribution plan. If it was only $10 m, would we accept that?  Why do we have to give them a pension that is anything more than the private sector?

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August 10, 2009

Westerly Sun commentaries

Filed under: Hopkinton,Hopkinton Town Council,Police — Editor @ 11:17 pm

Sylvia sent me the text of her piece and I will post mine below. Most disturbing to me was that the Westerly Sun called and asked that we send in essays debating the pension system. I even spoke with Sylvia around July 30 and she asked me about the data I was using. I explained that I found the other regs that increased the contribution rate and reduced the starting salary  and had updated the website. But she ignored that and wrote the following:

________________

July 20, 2009 the Hopkinton Town Council ratified a new 3-year contract with the International Brotherhood of Police, Local 498. Prior to this, Town Manager, Bill DiLibero and Council President Tom Buck spent many meetings and hours with union representatives. Each time they reported their progress, the council found we needed more information.

What was the total increase in salary for each officer after the yearly step increases, longevity and raises were factored in? Why in 1999 did a council incorporate the compounded COLA provision? Would this item lead to excessive pension payouts that the town could not afford? How could we get rid of it?

For years, residents have relayed serious concerns about the compounded COLA. Even a day before our July 20thmeeting, it was reported in a local internet blog, this provision would provide $178,924 in an annual pension to a just retired 27-year town police officer when his retirement reaches its 28th year.

Earlier in July the blog reported officers that began employment at age 24, retired at 44, would get an annual pension of $75,000 and after 34 years of retirement, escalate to $198,925. Also it was claimed the police are only required to contribute 1% of their salary each year toward their pensions requiring the town to “…come up with the balance needed to meet the defined benefit”.

July 20 was the first time we had the police contract on the agenda for public discussion. I expected a crowd of concerned residents. Not a single comment or question.

Fortunately for all our sakes, the information in the blog was wrong. The data that follows was taken from town payrolls, RIGL, and a review of provisions of forty RI police department contracts.

An actual 2009 retired 20-year officer’s pension will be just under $31,100 not $75,000. The annual pension amount 34 years into retirement will be $82,487 not $198,925.

The just retired 27-year officer’s beginning annual pension will be just under $32,929 and 28 years into retirement will be $73,143 not $178,924. Also, pursuant to numerous RI pension laws, Hopkinton Police Officers are required to contribute 9% annually to their pension not 1%. The town’s contribution changes year to year and is currently at 18.43%. Also, the town stops paying into the pension when the officer retires.

The financial data reported on the blog was incorrect because pursuant to the RI Laws, the base annual pension is 50% of the highest salary, (derived from weekly salary, longevity, and holidays), not 100% and should not have included over time.

Bottom line, Hopkinton is one of only 4 communities that will pay dramatically less in pension payments than the other 36 cities and towns because they opted to foot the bill for retiree’s health insurance. The 1999 council did not and instead opted for the compounded COLA.

Currently, the cost for a family health care plan is around $15,000 per year. Do the math. Hopkinton could never afford to pay $15,000 per year, per retiree for years.

The agreement reached by the members of the council, in attendance at the July 20 meeting has a long list of subtle changes that will allow the town flexibility in managing the staff scheduling and will insure more control over spending. Due to language added, the police will not receive a raise this year. They will receive 1% next year and 2% the final year.

Steps were reduced, but not eliminated. Longevity was folded into the first year’s hourly wage, but is eliminated in year 2. They will increase their share of health care from 10% to 14% by the third year.

There are many other changes that were detailed page by page by Council President Tom Buck. Nothing was hidden and all was explained. The video of this meeting is not yet posted on the Town’s website (www.hopkintonri.org). However, consider picking up a copy of the contract at the town hall and watch the video when it’s posted to hear about all the changes.

Is it everything we wanted? No. Did the Town’s labor attorney, Dan Kinder assist during negotiations? Yes. Is statewide pension reform desperately needed? Yes. We also know our town’s contract developed over time and can’t be totally reversed overnight, but a little patience and hard work did equal progress.

______________

Here is the one I submitted:

Unemployment is at a 25 year high. Rhode Island was among the first in the recession and economists predict we will be among the last ones out. During these tough economic times public sector contracts continue to pay double-digit raises and provide benefits that will bankrupt our towns in the coming decades. The recently signed Hopkinton police contract is a perfect example.

The HPD contract, like most other public sector contracts, rewards seniority rather than performance. While the yearly “raises” have been kept low, the underlying “Step” increases combine to make a real “raise” as high as 16% per year – this at a time when we have asked every other employee in Hopkinton to accept a 2% raise.

But the most egregious item in the new contract, which was also passed in the previous three contracts, is the pension.

People that do not work for the state, or town, normally receive pensions that define how much money will be deposited into an account for the employee to draw from during retirement. These are called defined contribution plans.

Public sector pensions are defined benefitplans and they pay out more money for longer periods of time than defined contributions plans. The difference between the average private sector plan and the Hopkinton Police Department’s plan is shocking.

A Hopkinton police officer may retire after only 20 years (as young as 44) and will receive a percentage of their salary increasing at a rate of 3% compounded annually. As Einstein said compound interest is “the most powerful force in the universe.”

As an example, an officer leaving the force after 20 years, with a $70,000 salary, would receive $1,665,139 over the next thirty years. The amount paid by the town could be even more as people continue to live longer.

In a defined contribution plan, using the same employee terms, the maximum amount the town would be responsible for is $80,830, half of the accumulated $161,660 retirement pool. I know we all appreciate our police department, but giving them a pension that pays 10 times that of the private sector is too much.

There was a day when these employees received low salaries so the pensions balanced the deal. Today, the average Hopkinton police officer makes nearly $70,000 while the average Hopkinton income is closer to $47,000.

The Westerly Sun reported the Hopkinton council’s defense of the contract on two points: (1) they claimed “not to alter police pensions because of future pension reforms the state may make,” and, (2) that the town couldn’t change the pension because they “didn’t know what (they) wanted to trade off for something that huge.”

First of all, the council has more faith in Smith Hill than I do. The lawsuits filed by the unions in opposition to the current moderate reforms do not bode well for future more significant reforms.

Secondly, regarding the question of what we have that is “huge” enough to exchange for true pension reform – I can save the council time and say that we don’t have anything. Just because councils of the past made outrageous mistakes doesn’t mean we have to be bound by them.

There are currently 18 people eligible for, or already receiving, the HPD pension. Using the figure above as an average, the town of Hopkinton could reduce its liabilitycosts by over $27 million by simply ending the current program and providing a pension equivalent to those provided in the private market. Why are we mortgaging our children’s future for a select group of employees?

Town councils and school committees can continue to nibble at the edges of contract reform, but drastic measures are needed. It is time to treat public sector employees the same as private sector employees – no better, no worse.

_____________________

As an aside, if I used the $32,929 figure (Sylvia says  this is the accurate starting salary), that would make the 30 liability for the taxpayers $28,198,995. The difference between that and the 30 liability of a defined contribution plan would be $25,289,087.  

In my commentary I said it would be $27m.   Again, Sylvia knew I had updated the information because I told her about a week before she submitted her essay. But she ignored the question and decided to attack me instead.

Even though the Sun asked us to debate the pensions, Sylvia said she wrote the oped on the old data because it came out before a town council meeting.  But for those reading the paper it makes it look like I lied in my essay.

July 25, 2009

more figurin’

Filed under: contract negotiations,Police — Editor @ 2:10 pm

I keep thinking about the question Lois posed about calculating the exact cost of the pension using actual employees, versus the rough estimate I used.

We can make an assumption that future increases would be the same as the current contract but how do we calculate salary changes in the past  (thus giving us the number to calculate previous employee contributions).

Then there is the challenge of past year’s contributions for the employees who worked at the HPD prior to the implementation of the 3% compound COLA. The contract made the benefit retroactive (which came as a surprise to the Dept of Municipal Affairs), were payment retroactive? 

Then there is the challenge of calculating the return on investments made with those floating pension dollars (see post below for the difficulties there).

So, I’m not sure how to proceed (without a lot of dedicated hours researching old contract details and historic market performance).  Suggestions?

July 23, 2009

Sometimes timing is everything

Filed under: contract negotiations,Hopkinton,pension,Police,Unions — Editor @ 10:22 pm

Having just gotten back from a trip I got caught up here, then started reading the papers and blogs. First on the list is Anchorrising and Justin’s post on pensions is as timely as ever and brings in another persepective on our pension issue.

We  have been talking about the difference between defined contribution and defined benefit plans as a matter of liability — How much is owned. This article helps to understand the difficulty in paying for it.

As Gene and Lois have said, our private sector 401 k’s are now 201 k’s as a result of the failing market. But public sector pensions also rely on investment income. 

The  AR post is pasted in full below because it’s so darn good (and did I mention timely).

 

Pensions and Politics

Katherine Gregg’s Providence Journal article on Rhode Island’s pension fund losses has an interesting frame. Toward the beginning (emphasis added):

Despite this recent run of losses, state officials say there is no immediate danger for state and local employees and teachers whose retirement checks are drawn from the pension fund, which is made up of a mix of investment earnings, taxpayer contributions and employee contributions. These retired public employees are guaranteed pension payments for life, regardless of the stock market’s performance.

And the final word is given to Stephen Laffey, who (Gregg notes) is “weigh[ing] a return to politics”:

“I have said many times that the only way to save the pension system is to end it and give everyone their money and go to a 401(k) plan … like the people in the private sector,” Laffey said in an e-mail.

The question — over which the unions will shed blood, if necessary (although probably figuratively) — is who bears the risk. When the market shrinks beyond reserves, or simply does not live up to the excessive requirement of more than 8% growth, either retirees manage on less income or the state attempts to tighten the tax vice on a population that already feels overtaxed (with ample justification). Moral considerations aside, the latter option is simply not functional; folks working in the private sector are not going to idly watch their money flow to retirees, many of whom are taking home more than they are, and employers are not going to accept the escalating costs associated with operations in Rhode Island.

Probably the most important point to emerge from the article is that inadequate half-measures aren’t going to cut it:

But the market losses have already eliminated any possibility of taxpayer savings this year from state lawmakers’ decision to curb annual cost-of-living increases and institute a minimum retirement age for all state pensioners. As state budget officer Rosemary Gallogly explained Wednesday: “The rate of payroll determined for FY2010 will not change as a result of pension fund performance.”

Mr. Laffey, in other words, is absolutely correct: The two possibilities are (1) drastic changes or (2) the collapse of the pension system, bringing the state with it.

 

You can comment directly on the  AR blog HERE.

Then there is the ProJo piece on Providence giving us a glimpse of the future (h/t Gene).

This is a concern for Providence since the city is already drawing nearly 62 percent of its obligation to pensioners from its yearly contribution to the system, meaning it is putting money into the system almost as fast as it is being paid out.

And our  baby boomers are just starting to retire – things are going to get worse quickly.

All the writing is on the wall. The only reason the state isn’t in more pain right now is because we put $226m of stimulus money to plug the budget – we still increased spending 12%. Next year we can expect things to be worse. Drastic change is needed and Hopkinton is as good as place as any to start.

figuring it out

Filed under: contract negotiations,Police,Unions — Editor @ 8:27 pm

Lois Buck is a very brave person. Tom, her husband, HTC prez, and a friend, crafted the police contract with DeLibero and she has been defending him here courageously, especially considering the overall tenor of people who post comments here. (Tom is not a internet user)

Everything I talk about here I’ve spoken with Tom personally, as well as most of the council, so there are no secrets. And to a person (sans Bev who I haven’t spoken much about these things) I believe they know that the perfect world would be where public sector workers are paid the same as private sector – no better, no worse. And we can all agree it used to be much worse for the public labor, but now it is much better – the pendulum has swung to apex.

Lois, Tom et. al., disagree with me that drastic change can occur quickly and support incremental changes. I say we can’t afford those anymore because the decisions we make today,  such as the pensions, lock us into unreasonable costs that we wont be able to afford in the future – when they come due.

But Lois’ inquisition brings out the best in my neuroses. She was not comfortable with my admittedly gross estimates. So, I am compelled to provide such proof as asked.

But we have to make some estimates. So how about this:

The payroll I got from the town hall had a typo (linked int he first pension post below). What was listed as “other longevity” is the clothing allowance.  Longevity is built into the salary so I don’t know what last years base was. But I do have a list of the employees and what year of service they are in. I can apply the pay according to the rank and year.

That gives us this grid for the first two years of the contract (which is what I happened to have on a spreadsheet now but can add the rest when I get to the office but I doubt it will change it much).

Calculated Hourly   Jul-09   Jul-10   Jul-11   2yr raise total
Name/Badge yrs hourly 37.5X52            
Ch. Scuncio 1 11 $43.29 $84,419.75 $44.16 $86,108.15 $45.48 $88,691.39 *1 5.1%
Patton 9 9 $29.83 $58,168.50 31.16 $60,762.00 32.09 $62,575.50 *4 7.6%
Ahearn 6 5 $27.71 $54,034.50 28.26 $55,107.00 29.11 $56,764.50 *5 5.1%
Cole 17 7 $27.71 $54,034.50 28.26 $55,107.00 29.11 $56,764.50 *7 5.1%
Dufault 18 7 $21.14 $41,223.00 21.56 $42,042.00 22.21 $43,309.50 *8 5.1%
Kenyon 10 7 $27.71 $54,034.50 28.26 $55,107.00 29.11 $56,764.50 *10 5.1%
Nutting 16 1 $21.14 $41,223.00 24.21 $47,209.50 26.49 $51,655.50 *11 25.3%
Percivil 11 5 $27.71 $54,034.50 28.26 $55,107.00 29.11 $56,764.50 *12 5.1%
Quartella 15 11 $30.54 $59,553.00 31.15 $60,742.50 32.09 $62,575.50 *13 5.1%
Whewell 8 8 $27.71 $54,034.50 28.26 $55,107.00 31.34 $61,113.00 *14 13.1%
Forbes 14 1 $21.14 $41,223.00 24.21 $47,209.50 26.49 $51,655.50 *11 25.3%
Sgt. Lyman  5 19 $33.09 $64,525.50 33.09 $64,525.50 36.19 $70,570.50 *3 9.4%
Det. Macdonald 7 20 $31.25 $60,937.50 32.6 $63,570.00 33.58 $65,481.00 *15 7.5%
Altimari 12  20 $31.25 $60,937.50 32.6 $63,570.00 33.58 $65,481.00 *6 7.5%
Lt. Baruti 2 20 $34.80 $67,862.30 $35.50 $69,219.55 $36.56 $71,296.13 *2 5.1%
new recruit 0 $19.14 $37,323.00 21.56 $42,042.00 24.94 $48,633.00 *16 30.3%
*1 no step changes, just 2  & 3%       two yr avg plus 1yr  
*2 moves to 21+ chart ??? But already above so just added 3%   10.40% 5.20%  
*3  goes from <20 to 21+ = 34.45 yr 1, 35.14 yr 2, 36.19 yr 3        
*4 30.54 + 2% yr 2 (31.16), 31.16 + 3% yr 3(32.09)         
*5 27.71 + 2% = 28.26 yr 2, 28.26 + 3% = 29.11 YR 3        
*6 goes to 21+ in yr 2- 31.96+2%=32.60, + 3% yr 3=33.58         
*7 27.71 + 2% = 28.26 yr 2, 28.26 + 3% = 29.11 YR 3        
*8 21.14+2%=21.56 yr 2. 21.56+3%=22.21 yr 3          
*9 33.84+2%=34.52 yr 2, 34.52+3%=35.55 yr 3          
*10 27.71 + 2% = 28.26 yr 2, 28.26 + 3% = 29.11 YR 3        
*11 23.74+2%=24.21 yr 2 – yr3 step 3 25.21+2%=25.71- +3%=26.49      
*12 27.71 + 2% = 28.26 yr 2, 28.26 + 3% = 29.11 YR 3        
*13 30.54+2%=31.15 yr2, 31.15+3%=32.09 yr 3          
*14 27.71 + 2% = 28.26 yr 2, yr3step 10 29.83+2%=30.43 + 3%=31.34      
*15 goes to 21+ in yr 2- 31.96+2%=32.60, + 3% yr 3=33.58         
*16 21.14+2%=21.56 yr2, yr3 step2-23.74+2%=24.21 +3%=24.94      
  new recruit same as above            
                   

That gives us an average raise of 5.2% per year (which is good compared to the last contract and most others that are around 7%).  So if I extend the salaries out the appropriate years to when they would retire, based on increases of 5.2% per year, that would give us a final salary at retirement. We still won’t have the holiday pay but that’s going to be small potatoes compared to the rest.

I would be happy to do that spreadsheet if you think those assumptions are good. Sound ok?

July 19, 2009

Total pension liability for Hopkinton right now is estimated at $55,329,372.

 The HPD infamous 3% compound COLA pension –

There has been a lot of talk, most notably from frmr town councilman John Matson, that the pension was not implemented according to the letter of the law. I asked the town’s solicitor about it and she said it looked as though Matson was right, but she wasn’t sure, and that if it was true there probably wasn’t anything we could do about it now.

I have spoken with one other council person and told them what I’m going to say here – for the protection of the town I think we should have a written opinion from our counsel ending this question once and for all. If there was anything improper can we do anything about it, and if not, why.

How much is our pension system going to cost us?

The contract states that longevity and holiday pay are included in the calculation for pensions. I don’t have average holiday pay, nor do I know if that includes comp and sick time, so I won’t include it just to play it safe.

I also used a conservative average yearly wage increase of 5% (the actual current average is 7%).

I used the actual pay numbers from our latest retiree and worked backwards to determine how much the employee contributed over the years. The employee works 20 years (contract minimum) and lives for another 28 years (from 55 to 78).

The defined contribution method (private sector) says the employee contributes 8% of salary and the employer matches it (which is rare in this economic times).

The accumulated pension in the private sector method gains 3% interest and is paid out over the same 28 years. 

The defined benefit method (HPD) has the same 8%  employee contribution, but the town contribution is based on what benefits are defined to be paid – in our case it is the gross salary with a 3% increase, compound yearly.\

I want to compare what it is going to cost the town if we used a defined contribution pension program like private sector businesses and the defined benefit pensions found in the public sector – using the HPD as an example.

So, let’s get started.
The most recent employee to retire (Patrolman Georgetti) had a total income of $80,550 last year. Using the 3% compound COLA and assuming he lives the average of 28 years after retirement, he will be receiving $178,924 per year by then. We will have paid him a total of $3,458,085 over those 28 years. For that the employee paid $82,678 into the system while the town has to cover the rest (approximately $3m).

Now let’s compare that to the private sector.  If the same employee, making the same income, paid into a defined contribution plan, the employee  would contribute the same $82,678 but the employee would contribute another $82,678 – NOT the estimated $3m to meet the defined benefit obligation.

Assuming we had all 16 employees retire tomorrow (after working the required 20 years) – and didn’t add a single additional employee ever again (like Exeter) our total liability would be $55,329,372. That’s what we owe right now – assuming nothing is done retroactively to remove this crazy pension gift.

This is very serious stuff for a small town. I hope when the HTC votes on this contract they have taken these numbers into consideration. Anything other than a defined contribution plan is going to bankrupt the town. I’m happy to recalculate is someone points out an error in the method.

  Total 8%  
Year Pay Emp cont  
1         30,395.83      2,431.67  
2         31,995.61      2,559.65  
3         33,679.59      2,694.37  
4         35,452.20      2,836.18  
5         37,318.11      2,985.45  
6         39,282.22      3,142.58  
7         41,349.70      3,307.98  
8         43,526.01      3,482.08  
9         45,816.85      3,665.35  
10         48,228.26      3,858.26  
11         50,766.59      4,061.33  
12         53,438.52      4,275.08  
13         56,251.07      4,500.09  
14         59,211.65      4,736.93  
15         62,328.05      4,986.24  
16         65,608.48      5,248.68  
17         69,061.56      5,524.92  
18         72,696.38      5,815.71  
19         76,522.50      6,121.80 Total paid in
20         80,550.00      6,444.00           82,678.33
Pension begins1        80,550.00    
2         82,966.50    
3         85,455.50    
4         88,019.16    
5         90,659.73    
6         93,379.53    
7         96,180.91    
8         99,066.34    
9       102,038.33    
10       105,099.48    
11       108,252.46    
12       111,500.04    
13       114,845.04    
14       118,290.39    
15       121,839.10    
16       125,494.28    
17       129,259.10    
18       133,136.88    
19       137,130.98    
20       141,244.91    
21       145,482.26    
22       149,846.73    
23       154,342.13    
24       158,972.39    
25       163,741.57    
26       168,653.81    
27       173,713.43    
28       178,924.83    
      Total 3,458,085.81    
all 16   55,329,372.95    

HPD Salary and pension info

Filed under: contract negotiations,Hopkinton,Police,Unions — Editor @ 4:32 pm

The police salary spreadsheet is posted HERE (pdf) and HERE (excel). I’m a bit confused on a couple of points which I asked for clarification of and will post the response when in.

First item I don’t get is the “other longevity.”  The HPD contract states that longevity will be paid as follows:

Five years of service through the tenth year of service, 5 percent of annual salary; after completion of ten years of service through the fifteenth year of service, 7 1/2 percent of annual salary; after completion of fifteen years of service through the twentieth year of service, 10 percent of annual salary; after completion of twenty years of service, 12 1/2 percent of annual salary.

But as you see on the spreadsheet, all longevity is listed at $650. Officer Baruti, as an example, has 20+ yrs of service and a base salary of  $69,166.19, so his longevity would be $8,645.75.  Of course the contract says “annual salary” so I just hope that means base.

I’m also very surprised about the amount of overtime paid. Officer Lyman, who does the negotiations for the union has $19,136 in overtime. The most is $21,746 for one officer who went from $59,709 to $82,286 – an increase over the base pay of  38%. And this is different from “detail” payments which can be reimbursed.

I’m also unsure why Chief Scunzio is listed as paid by “salary” – we see he not only got paid for some overtime but he also has 550 hours of accumulated “comp” time that he will be paid for in one lump sum (@ his $43 hr that equals $23,650 – let’s hope this doesn’t get included in his pension, which already includes longevity and holiday pay!!!).  Ironically, our chief, who receives a pension from the taxpayers for previous employment, will retire with his 2 pensions to Exeter, a town without a police department.

As I get the pension comparison ready to post I thought you might like to see the most current Muni Employee’s Retirement System Actuarial Valuation Report.  I’ll have the comparison posted soon.

More Police Contract info

Filed under: contract negotiations,Hopkinton,Police,transparency — Editor @ 2:11 pm

The new police contract is on the HTC agenda to be voted on for ratification on Monday. Unfortunately, I will be at the NCSL next week  but I wanted to continue posting information on the current police contract.  I’ve already gone on record as voting against the new contract for a variety of reasons (no, you haven’t heard about the votes like you did at Chariho. At HTC they chose to take “consents” which don’t require public notification).

But I’m just going to review the current contract until the new one is released

To establish our place in the hierarchy of wealth in RI I posted census data –  we are 19th in per capita income, 18th in median household income, and 21st in median family income. In a population of 39 cities and towns I think it is reasonable to say that Hopkinton is slightly below average in regards to income.

Here are the police salaries ranked among the same population.

Recruit and top-level patrol

Town recruit 09 Town Top Patrol
 West Warwick  $50,967.54  Westerly  $63,121.00
 Pawtucket  $46,069.00  Warwick  $59,281.56
East Greenwich $45,779.00 Hopkinton  $55,288.00
 North Prov  $43,945.00 charlestown $54,081.00
charlestown $43,004.00  Johnstown  $53,964.45
 Smithfield  $42,954.00  South Kingstown  $53,878.00
Coventry $42,810.04  Pawtucket  $53,539.85
 Johnstown  $42,559.53  Lincoln  $53,536.00
Bristol $42,447.44  Narragansett  $53,054.88
 North Smithfield  $42,016.00  Scituate  $52,691.60
 Little Comp  $41,320.00 Coventry $52,442.52
 Gloster  $41,134.00 East Greenwich $51,946.17
 Newport  $40,793.00  Gloster  $51,527.30
 Cumberland  $40,384.67  Portsmouth  $51,436.67
Cranston $39,529.18  Jamestown  $51,252.56
 Portsmouth  $39,474.00  North Prov  $50,984.20
 New Shoreham  $39,198.00 Barrington $50,857.00
Burrilville $38,688.30  Newport  $50,675.00
 Middletown  $38,669.00  Woonsocket  $49,202.61
 South Kingstown  $38,508.00  Middletown  $49,202.00
 Scituate  $38,064.00  West Greenwich  $49,190.26
 West Greenwich  $37,404.81  North Smithfield  $48,973.08
Hopkinton  $37,252.00  Smithfield  $48,524.00
 Warren  $37,111.00  Richmond  $48,364.00
 Richmond  $37,064.00  Warren  $47,271.00
 Westerly  $36,964.00  Little Comp  $46,537.00
 Warwick  $36,764.00 Central Falls $43,309.00
 Narragansett  $36,236.92 Cranston  
Barrington $36,098.00  Cumberland   
 Lincoln  $36,041.00 Bristol  
 Jamestown  $36,016.00 Burrilville  
 Woonsocket  $35,399.14  New Shoreham   
Central Falls $32,935.24  West Warwick   

 

Sergeants and Lieutenants

Town Sgt 2009 Town Lt 09
 Warwick  $67,860.00  Warwick  $74,048.00
 Westerly  $67,795.00 Cranston $66,082.35
Cranston $60,090.03  Pawtucket  $65,983.32
 Pawtucket  $60,009.00 Barrington $65,426.00
Hopkinton  $58,543.00  Newport  $65,005.00
 Newport  $58,435.00 charlestown $63,953.00
charlestown $58,135.00  Narragansett  $62,937.00
Barrington $57,319.00  Smithfield  $62,450.00
 Narragansett  $57,215.00 East Greenwich $62,295.00
East Greenwich $57,120.00 Hopkinton  $61,693.00
 Smithfield  $56,880.00 Coventry $61,176.44
 Lincoln  $56,735.00  North Prov  $61,101.00
 Scituate  $56,680.00  Portsmouth  $60,649.00
Coventry $56,642.56  Johnstown  $60,628.86
 Johnstown  $56,622.93  South Kingstown  $60,098.00
 South Kingstown  $56,378.00  West Warwick  $59,255.82
 West Warwick  $56,134.26  Jamestown  $58,907.99
 North Prov  $55,943.00  Middletown  $58,665.00
 Portsmouth  $55,248.00  Lincoln  $58,644.00
 Richmond  $55,160.00 Bristol $58,194.72
 Cumberland  $54,756.68 Burrilville $57,785.09
 Middletown  $54,562.00  West Greenwich  $56,868.36
Bristol $54,387.58  Woonsocket  $56,500.26
 West Greenwich  $54,101.00  Cumberland  $56,464.43
 Jamestown  $53,844.00  Gloster  $55,905.00
 Gloster  $52,905.00  Warren  $54,860.00
Burrilville $52,708.41  Little Comp  $54,467.00
 Woonsocket  $52,291.57  New Shoreham  $53,747.00
 North Smithfield  $52,260.00  North Smithfield  $53,612.00
 Warren  $51,806.00 Central Falls $49,583.00
 Little Comp  $51,060.00  Richmond   
 New Shoreham  $46,538.00  Scituate   
Central Falls $46,340.84  Westerly   

“Raises” are a combination of the reported “raise” plus steps and longevity. The current Hopkinton police contract has raises ranging from a low of 3.5% and a high of 16% – the average raise for the HPD in the newly expired contract was 7.2%.

In review, Hopkinton is below average on income but we have much higher than average police salaries.  I find this especially troubling considering all the problems (and legal fees) associated with this highly paid department. I don’t feel like I’m getting my money’s worth.

Later tonight I will post the numbers comparing our current pension system with one used in the private market (defined benefit versus defined contribution).

July 8, 2009

Police contracts and ‘stuff’

Ultimate pensions – politicians and police calling each other corrupt – and the AG’s office in the mix.  Grab some popcorn…

Since leaving the school committee and joining the town council I don’t post here as often as I should. I get a lot of contact asking what I’m going to do with this site. Luckily, I’ve been so busy with my day job that I haven’t had time to make any decisions. But lately, the emails have turned more into – “why don’t you write about what’s going on?” and “are you going to ignore this stuff?” referring to the police contract and the lawsuits involving the police department and the related AG memos that are flying around town.  And, quite frankly, you are right. I haven’t been forthcoming with a lot of this information and I should have been. I could use the excuse that I was trying to get my feet under me and I thought I could get more done with honey than vinegar, but that didn’t seem to work and there is too much riding on this to keep quiet and hope for the best.

While there isn’t any penalty to divulging executive session material, I haven’t and don’t see a need right now but I can still talk about what is public knowledge.

I also feel fortunate to have an outsiders view of this stuff. I’m not a local and don’t have any preconceived ideas about the players.  I want to have a few more conversations before I get into details but basically I see a lot of bad actors in a falling house of cards – we have a police department being sued by a former building and zoning town employee and a police officer. The employee also had a case with Westerly PD (and won).  I see a lady who many say is nutty, but apparently she was smart enough to beat the HPD on this deal. And  I see a former town councilor, while not in litigation, seems even more aggressively in the mix than the first three.

I also see a police contract with some of the most generous benefits I have seen in the entire state. But most specifically, a pension program that IMHO could have only been passed by someone in an old boy network (I’ll describe that in a bit) or completely incompetent.

Plus the internal AG memos recently released that adds concern going back a few years.

As I said, I’ll give more thoughts after a few more conversation but this strikes me as a lot of bad actors all around.  They are all pointing fingers at each other saying the other guy is corrupt – and they might all be right.

I know our solicitor is not going to be happy with this post, but I’m not going to be a council person that walks away sayingI couldn’t do anything about it. If it means Hopkinton gets dragged naked through the streets but at the end of the day all is exposed and in the open and over with, then so be it. I’ve dealt with this ‘percieved’ air of corruption and old boy network in this town for too long. Former town councilors have left the state because of it and I’m not going to be one of those.  This will end one way or the other.

By ‘old boy network’ i don’t mean to suggest a body politic gone bad. The reality is that a relatively few number of bad actors can do a lot of damage – after all, who really has the ability to know what’s going on in all corners. Slick laws can be passed and councilors don’t read the fine print.

And I include the contract in the discussion because when you get the picture  of the contract that I am beginning to see you are going to ask yourself, ‘how in the heck did that happen” and the only logical solution that fits all the outlined issues is a ‘scratch my back and i’ll scratch yours’ culture that is imploding (or again, completely incompetent people taken advantage of by the union).

But let me get to the contract and I can deal with that other ‘stuff’ soon.

As was reported in the Sun, the council isn’t going to release the contract until after we ratify it – contrary to an expressed desire that towns do otherwise.  What was misleading in the paper was that it was a council  decision. Not true. I asked for and got the council’s endorsement of the 30 day rule back in January but the law didn’t pass and when the time came to actually show the public the contract, Tom Buck made the decision not to. I asked specifically if this would be a council decision and he said it was his alone. I don’t know if Barbara and Sylvia would have supported me or not although Sylvia’s comments suggest she would not have since she said she doesn’t want to be the first (technically, East Providence was teh first). I assume Tom can do that since the attorney was in the conversation when I asked if he had the authority.

I’m doing a very in depth analysis comparing our contract to every other one in the state. Today I just want to get the conversation started and establish some background. Then I will break the current contract down into pieces and make comparisons.

But before you get to that, I do want to review what I consider the most egregious part of the current contract

The pension in place now is a 3% compound COLA (cost of living adjustment) (RI Gen Law 45-21.2-5(9)). What that means is that each year after retirment the amount goes up by 3% and the interest compounds  upon itself- as Einstein said, “compound interest is the most powerful force in the universe.”

Now, a 3% cost of living adjustment is insane for a number of reasons. First of all, we are in a recession and the Consumer Price Index is actually negative. If the intent was to keep pace with the ‘cost of living’ then we would be reducing the amount, not increasing it.

But the compound nature is the insidious part. If a person starts the force at 24 and retires in 20 years (which they are able to do in Hopkinton) they will be 44 years old. If they retired with a $75,000 per year pension at age 44 (which isn’t that hard considering we include longevity and holiday pay with the ‘income’ for pension determination) by the time they reach the normal life span of 78 years old we will be paying them $198,925 per year. I am not kidding.

But that’s not the worst part of Hopkintons pension program. The worst part is how it is paid.

You may have heardthat as much as 1 in 5 private companies have stopped making matching payments to 401 K’s. THey just don’t have the money – the economy is tanking (because government- read public sector employees like police – are taking too much in taxes) and private companies can’t just raise the price of goods because competition maintains the market. So they have to cut where they can.

Normally a company will offer a 1 to 1 match up to a certain percentage. normally a small % of your salary that you can put in to a retirement saving account and your employer will match it. Whatever is in there is yours at retirement.

But in Hopkinton, the police are only required to contribute 1% of their salary. Yup, you read correctly – 1 percent (RI Gen Law 45-21-52). [note the law does not say it is ‘compound’ – thats why they had to pass a new law linked above – I’m still doing the research but it looks like that couldn’t be done without legislative support so I will see who is responsible and let you know).

But I digress – so, the police employee contributes 1 percent of their salary to get the most lucritive pension available – Does that mean Hopkinton contributes 1% too?

  NO!   The town has to put in much more than 1%. We must come up with the  balance needed to meet the defined benefit.

We are currently contributing 18%.  Read that again – it is a 1 to 18 match for the most generous pension package I have ever seen (and I study these things for a living). But thats nothing – that 18 percent just pays the employee who is collecting now – who recently retired. Wait until the compound interst adds up and their pension doubles and then triples Our contribution will have to double and triple.

UPDATE – I’m told there may be underlying law that requires an initial 6-7% employee contribution and the 1% mentioned above would be in addtion to. Let’s certainly hope so (not that the compound 3% isn’t bad enough) and I’ll let you know as soon as I learn more.

Does anyone else see a train coming?

But as I said, that’s just a taste. And there may be some irregularities with the way the pension was created that I’m looking into – I will provide more details on all levels of the contract with statewide comparissons soon. And more comments on what is the hot topic in town – the Matson/Mauti/Scunzio/??? peyton play.

PS. In the last meeting I also asked about the 550 hours of comp time Chief Scunzio has compiled. I was surprised that much could be accumulated but I was told that it will be paid by the confiscated drug money – like this matters. If we didn’t use the money to pay for comp time for the CEO of the organization (you know, like other CEO’s get comp time) we could have used the money for sand and salt so we didn’t have to raise your taxes. She missed my point but it did show what the mindset of was- defend and divert! 

PSS. I was pulled over on HWY 95 yesterday by a Providence Police Officer and State Cop (I haven’t been pulled over in 20 years) – luckily I had a witness in the car with me.  But I certainly don’t fear not having one with me – it is just nice to have witness to what was said.  You can find me on 95 north every weekday at 8ish.

For now, please see pasted below a list of towns compared on incomes – i sorted it on per capita. It will establish a good baseline to see where our expenses should line up compared to our income.  After all, if you are middle class, you don’t buy a Ferrari do you?

 Now lets look at the financial demographics of our lovely little village…

Rank Place Per Capita Median House- Median Family Population Number of
    Income hold Income Income   Households
1 Jamestown $38,664 $63,073 $77,990 5,622 2,359
2 East Greenwich $38,593 $70,063 $90,221 12,948 4,960
3 Barrington $35,881 $74,591 $84,657 16,819 6,011
4 Little Compton $32,513 $55,368 $62,750 3,593 1,475
5 New Shoreham $29,188 $44,779 $59,844 1,010 472
6 Narragansett $28,194 $50,363 $67,571 16,361 6,846
7 Portsmouth $28,161 $58,835 $68,577 17,149 6,758
8 North Kingstown $28,139 $60,027 $69,559 26,326 10,154
9 Scituate $28,092 $60,788 $67,593 10,324 3,780
10 Lincoln $26,779 $47,815 $61,257 20,898 8,243
11 Middletown $25,857 $51,075 $57,322 17,334 6,993
12 West Greenwich $25,750 $65,725 $71,332 5,085 1,749
13 Charlestown $25,642 $51,491 $56,866 7,859 3,178
14 Cumberland $25,592 $54,656 $63,194 31,840 12,198
15 Exeter $25,530 $64,452 $74,157 6,045 2,085
16 Newport $25,441 $40,669 $54,116 26,475 11,566
17 North Smithfield $25,031 $58,602 $67,331 10,618 3,954
18 Westerly $24,092 $44,613 $53,165 22,966 9,402
19 Hopkinton $23,835 $52,181 $59,143 7,836 2,965
20 South Kingstown $23,827 $56,325 $67,912 27,921 9,268
21 Warwick $23,410 $46,483 $56,225 85,808 35,517
22 Smithfield $23,224 $55,621 $66,320 20,613 7,194
23 Glocester $22,914 $57,537 $62,679 9,948 3,559
24 Tiverton $22,866 $49,977 $58,917 15,260 6,077
25 Warren $22,448 $41,285 $52,824 11,360 4,708
26 Richmond $22,351 $59,840 $64,688 7,222 2,537
27 Foster $22,148 $59,673 $63,657 4,274 1,535
28 Coventry $22,091 $51,987 $60,315 33,668 12,596
29 Cranston $21,978 $44,108 $55,241 79,269 30,954
30 Bristol $21,532 $43,689 $54,656 22,469 8,314
31 Johnston $21,440 $43,514 $54,837 28,195 11,197
32 Burrillville $21,096 $52,587 $58,979 15,796 5,559
33 West Warwick $20,250 $39,505 $47,674 29,581 12,498
34 East Providence $19,527 $39,108 $48,463 48,688 20,530
35 Pawtucket $17,008 $31,775 $39,038 72,958 30,047
36 Woonsocket $16,223 $30,819 $38,353 43,224 17,750
37 Providence $15,525 $26,867 $32,058 173,618 62,389
38 North Providence $13,489 $19,721 $31,655 32,411 14,351
39 Central Falls $10,825 $22,628 $26,844 18,928 6,696

June 29, 2009

Working to increase contract understanding

Sylvia makes the best point towards the end of the article (emphasis added) –

From the Westerly Sun:

Union contracts up for vote next week
Hopkinton councilors weigh pacts with police, department heads and clerical workers.
     
By VICTORIA GOFF / Sun Staff Writer
HOPKINTON — The Town Council is expected to consider approving contracts for three unions next week after the existing pacts expire tomorrow.

The council will likely vote on the pacts for the unions — police, clerical and “professional and technical” (department heads) — on July 6, said former Town Manager William A. DiLibero and Council President Thomas E. Buck, who have been in private talks with the unions.

The police union has approved its contract. The council has not yet seen final versions of the other two contracts, and it is awaiting approval by the unions, said DiLibero, whose last day as town manager was Friday.

The council has not publicly offered details on what is contained in the new pacts, despite earlier this year supporting a bill that would have required municipalities and school districts to release a proposed contract and an accompanying fiscal impact statement 30 days before ratifying it.

The proposal to release the contracts prior to ratification was part of the governor’s budget-repair plan to close a multi-million dollar state deficit by June 30. It was later eliminated from the plan passed by state lawmakers.

In January, the council passed 4-1 a resolution that said the bill, along with three other measures proposed by the governor, would “improve the management and operations of the Chariho regional school system.” The council also supported other proposals included in the governor’s plan, saying they would lower municipal costs.

Councilor Beverly P. Kenney was the sole dissenter.

But since that vote, two councilors have changed their minds.

“I’m going to recant my vote on that,” Buck said Thursday. “That was one that was added to [the resolution] at the last minute. I didn’t have chance to review it.”

Asked why he doesn’t support releasing a contract to the public for review before it is ratified, Buck said, “It’s not the right way to do it. I was elected by the townspeople to negotiate their contracts.”

“Too many things come up, too many issues come up,” he said. “Too many things change in contract negotiations. As you get down the road, you trade off something for something else.”

Buck cut short the phone interview with The Sun Thursday because he said he was on another phone line with someone else. He did not respond to messages left at his home Friday and Saturday.

Councilor Sylvia K. Thompson had first suggested that the council endorse releasing contracts early, but recently said she no longer supports the measure.

As a member of the public, she said she would think: “You’re all done [with negotiations], you’re not going to do anything, so what good is that?”

“I could see where it could just irritate the taxpayer because what are you doing this for and shouldn’t you have done it before?” she added.

Instead, Thompson said she would support meeting with the public before negotiations start, like Chariho Regional School District officials did in December before they started talks with the teacher’s union. The council would give an overview of the current contract and its fiscal impact, she said, and then it would ask the public for its opinion on a new contract.

After a contract is ratified, she said the council should explain its “ins and outs” and financial effects.

Councilor William J. Felkner, an advocate for open contract negotiations, said he hopes that is an action the council will take.

“It’s the people’s money,” he said. “We’re spending their money. I think they should know what deal we just signed them up for the next three years.”

Councilor Barbara A. Capalbo said, “I don’t think that the majority of the people care about the intricacies [of a contract], but I do think that in general terms it must be discussed.” General terms, she said, would be “salaries, benefits.”

Capalbo said contract talks should occur privately “so people can be as clear and forthright as they want to be,” but noted she would support releasing a contract to the public once it is “clear” with the negotiating parties before ratification.

“We obviously can’t change everything at one time but I think it is good for the public to be aware of the changes in the contract,” she said.

Kenney said contract talks should always take place privately.

“I believe contract negotiations are a give and take, and working to get the best deal for the town is easier to do when it is in closed session,” she said.

But Thompson said she hopes state lawmakers would eventually pass a law to require contract talks to be held publicly to benefit municipalities, as she says unions currently have an advantage.

“They’re the ones that fundraise and many of them have a huge war chest in the bank for arbitration,” she said.

Another potential benefit, Thompson noted: “More people in town would be interested and take an active role in what these contracts really mean.”

While Thompson supports open negotiations, she doesn’t want to be the first community to lead the charge, if state law does not mandate public talks.

“It comes to picking your battles,” she said.

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