§ 45-65-3. Legislative findings.
It is the intention of the general assembly to begin the process of ensuring the sustainability
of locally administered pension plans and to advance and maintain the long-term stability
of such plans. The general assembly finds and declares that:
(1) Rhode Island law authorizes and empowers municipalities to administer their own municipal
pension plans; currently, there are thirty-six (36) such plans administered by twenty-four
(24) municipalities.
(2) According to a report by the Office of the Auditor General entitled Pension and OPEB
Plans Administered by Rhode Island Municipalities (September 2011): "Many municipal
pension plans are severely underfunded which presents the risk that sufficient funds
will not be available to meet promised benefits to retirees. It also undermines the
overall fiscal health of the plan's sponsor.�
(3) It is in the best interests of individual employees, taxpayers, municipalities and
the state itself to maintain viable and sustainable municipal public pension plans.
These interests include:
Preserving a level of pension benefits that is, over the long term, reasonable for
current and retired municipal employees and affordable for taxpayers;
Avoiding significant and unanticipated retirement benefit reductions, which could
cause an increase in poverty among retired municipal employees and a resulting strain
on state social services;
Maintaining investments in infrastructure and education on the state and local levels
in lieu of diverting critical resources to satisfy pension obligations;
Preventing the financial downgrade of municipalities by rating agencies as a result
of unfunded pension obligations, which would make it more difficult to access the
capital markets and increase the costs of borrowing;
Encouraging rating agencies, in recognition of the state's proactive approach toward
financial discipline, to take positive credit actions on Rhode Island municipal bonds;
and
Creating a more stable and well-managed environment in Rhode Island to attract new
businesses and maintain and expand existing businesses, which will diminish the uncertainty
and fiscal instability that accompany uncontrolled pension obligations.
(4) The first step in ensuring the viability and sustainability of local pension plans
is to get an accurate analysis of the current condition and fiscal health of the individual
plans.