Administration counters claim it failed to address unfunded retiree health costs

Chief of staff David Picozzi is outraged; Mayor Scott Avedisian demands a correction and Ward 5 Councilman Ed Ladsouceur, who caused the uproar when he charged the administration of ignoring the long-term impact of retiree health costs, maintains little is being done to address this $290.7 million unfunded liability.

Picozzi reminds Ladouceur he and other members of the City Council ratified the Warwick Firefighters contract in 2015 that limited a retiree to an individual plan, whereas retirees who were members of the department prior to the new contract receive family coverage.

Picozzi charges Ladouceur of “lying” at the worst. “At least he should know what he’s talking about.”

In the larger picture, Picozzi says the council complains about the unfunded legacy cost of OPEB, other than pension costs of post employment benefits, but refuses to take action to address it. He points out that although they were comparatively small amounts, the council refused on two occasions to budget funds to start an OPEB trust.

“No one wants to start anything,” said Picozzi.

“We’ve done good things. We need to stop the bleeding at some point…we’re making this better for the future. We’re changing things for the future,” Picozzi said Wednesday. He noted that about 300 city employees are in the tier II contract that limits retiree health care benefits to an individual plan.

“We’re not keeping it going the way it was. This is going to be better off for the taxpayers, for our children and our grandchildren if they are still living here.”

Picozzi sees the long range solution – one giving the city the resources to pay the future costs of retiree benefits – as the end of the 40-year plan implemented to meet the unfunded liability of the Fire and Police I pension plan.

“We’re more than halfway through it,” Picozzi said of the plan. When paid in full, he notes, the city contributions to the plan will drop by about $30 million, freeing funds to pay for OPEB. Further, he notes, expenses will be “a lot more in line” because of contract changes.

Pressed about his vote on the 2015 firefighters’ contract, Ladoueur confirmed his affirmative vote, but finds the change from a family to an individual plan for retirees one of only 11 possible actions the city could take.

“OK, they did something…it’s a beginning,” he said Tuesday.

But Ladouceur sees it as not much more than a baby step.

“Given the magnitude of the unfunded health care report that we received from our healthcare actuary, I am focused on the real time issues and the future of the health care plan for our current retirees, future retirees and our current employees. The fact that our own actuary said, ‘if this were my business model I would run away from it’ speaks volumes about this problem,” he said.

What about a trust, and would he now support a trust appropriation if the mayor were to include it in his budget?

Ladouceur called a trust “a waste” and said Jefferson Solutions, the city’s healthcare actuary, questioned if that was the proper course of action.

“I’m not going against the advice of the actuaries,” he said.

Currently, the city is on a pay-as-you-go system, which is costing taxpayers in excess of $8 million annually. Of that amount, 70 percent of the cost is for uniformed retirees – police and fire – while the balance is for all other employees. Teachers come under a different plan. The unfunded liability for teacher retiree benefits other than pensions is an additional $52.3 million according to Jefferson Solutions in its report April 3 to the City Council.

“This is the single largest unfunded liability the city has. While the 2015 contract does change the "family health coverage" to "single coverage health care" for future retirees," it does not address the lion’s share of the other 90 percent of our actuaries’ recommendations. I was surprised to see that the mayor was not present at the presentation given by our actuaries so he could speak to the concerns and dark future forecast that our actuaries presented to us. My job right now is to focus on the upcoming budget that will be presented to us by the administration and concentrate on bringing some relief to the taxpayers,” Ladouceur said.

Raymond Cerrone of Jefferson Solutions said Tuesday that the most current report is based on contracts and retiree and personnel counts as of July 1, 2015. He said those totals would not reflect contract revisions implemented since then.