March 23, 2012

Governor Chafee's Municipal Relief Package

Carroll Andrew Morse

Governor Lincoln Chafee's municipal relief bills are now available at the Rhode Island General Assembly website. The Senate sponsors are Finance Chairman Daniel DaPonte and Senator David Bates of Barrington/Bristol.

Here are some excerpts from the submitted text:


16-2-9.4. School district accounting compliance. -- (e) The department of elementary and secondary education shall conduct periodic reviews and analysis of school revenues and expenses. The department shall also review and monitor compliance with the approved budget model and best practices. The department shall identify those local education agencies considered to be at risk of a year-end deficit or a structural deficit that could impact future years. Such potential deficits shall be identified based on the periodic reviews, which may also include on-site visits and reporting in accordance with the provisions of section 45-12-22.2. Potential deficits shall be reported to the office of municipal finance, office of auditor general, superintendent, chairman of the school committee, mayor or town manager, and the president of the town council, of the applicable school district, regional school district, or state school, and/or for a charter school, to the board of trustees or directors, as applicable.
45-21.4-3. Limits on retirement benefits. -- Notwithstanding any general law or special law of the state of Rhode Island to the contrary no current municipal ordinance, collective bargaining agreement, or interest arbitration award shall require employee retirement benefits that exceed the actuarial value of benefits afforded under state law for those municipal employees who participate in the municipal employees retirement system as authorized by chapters 45-21, 45-21.1, and 45-21.2 of the Rhode Island general laws. For employees who have not already reached their vesting date in a pension plan that provides benefits with greater actuarial value under the municipal employees retirement system as authorized by chapters 45-21, 45-21.1, and 45-21.2 of the Rhode Island general laws, and except as further limited by this chapter, town and city councils following normal procedures for approval of an ordinance are authorized to amend the retirement benefits for new and non-vested employees and such action shall take precedence over existing collective bargaining agreements for new and non-1 vested employees.
45-65.1-3. Definitions. -- (3) “Critical status” means that, as determined by its actuary, as of the beginning of the 19 plan year, a plan’s funded percentage for such plan year is less than sixty percent (60%)...

45-65.1-5. Benefit adjustment suspension. -- Notwithstanding the provisions of any other statute, ordinance, interest arbitration award, or collective bargaining agreement to the contrary, a municipality in critical status shall not be required to provide benefit adjustments, pursuant to the provisions of this chapter. Once the municipality is no longer in critical status, it shall resume providing cost of living adjustments, but such adjustments shall not exceed the consumer price index for all urban consumers (CPI-U) as published by the United States department of labor statistics determined as of September 30 of the prior calendar year until the actuarial value of the locally administered plan’s assets is one hundred percent (100%) of the actuarial value of such plan’s liabilities, using actuarial assumptions made by the actuary in good faith and in accordance with accepted actuarial standards.

45-65.1-6. Mandatory reinvestment. -- At least fifty percent (50%) of funds resulting from benefit adjustments suspended pursuant to this chapter shall be reinvested exclusively to increase a plan’s funded percentage, at least until the plan is no longer in critical status.


This is the longest of the individual bills. A major chunk of the bill is built around this section...

45-13.2-6. Relief provisions. -- During any fiscal year in which a municipality is designated as a highly distressed community pursuant to section 45-13.2-4 and for two (2) years after it is no longer so designated, its municipal council shall be authorized and empowered to adopt an ordinance or charter amendment specifying any of the following relief provisions (which relief provisions shall be automatically repealed, and shall have no legal force or effect, as of two (2) years after the date that the municipality is no longer designated as a highly distressed community)...
The bill then lists 12 areas for relief provisions: (1) Purchasing; (2) Continuance of contractual provisions; (3) Retirement of sick or injured police officers and fire fighters; (4) Educational incentive pay; (5) Consolidation of administrative functions; (6) Municipal budget and contract approvals; (7) Teacher step increases; (8) Certified nurses; (9) School bus monitors; (10) Transportation to nonpublic schools; (11) Health insurance cost sharing and plan design; (12) Public safety collective bargaining.


The official explanation provided by the legislative council is the best summary of this bill...

This act would change the dates for payment of the state’s share of the 1 basic program for foundational level school support and approved expenditures. It would also change the percentage of the aid due for both the July payment and the August through September payment which is payable based upon the data for the reference year. This act would also provide for payments to be made to each eligible community each August from the distressed community relief fund.
45-21-22. Accidental disability allowance. -- (b) Upon any application for accidental disability submitted on or after July 1, 2012, if the member has been found to be permanently and totally disabled from service but has not been found by the board to be permanently and totally disabled from any employment as a result of his/her accidental disability, a member shall receive a retirement allowance equal to fifty percent (50%) of the rate of the member's compensation at the date of the member's retirement...

(c) Upon retirement for accidental disability that has been found by the board to be permanently and totally disabling from any employment, a member shall receive a retirement allowance equal to sixty-six and two-thirds percent (66 2/3%) of the rate 1 of the member's compensation at the date of the member's retirement...

16-7-23.2. School deficit reduction -- Maintenance of effort provision. -- A city, town, or regional school district appropriating authority may appropriate supplemental funds to eliminate or reduce a school budget deficit. To the extent that such a supplemental appropriation represents payment of past annual expenditure, the payment shall not be used in the computation of the maintenance of effort requirements established by section 16-7-23.