Effective January 1, 2026, employees will contribute an additional .67%, then another .67% of salary in 2027. After that it increases to 2% of base salary.
Council members Jeremy Rix and Ed Ladouceur each voted to oppose ratifying the contracts, protesting the diminished effort to address the long-standing unfunded liability for medical benefits for retirees, Other Post-Employment Benefits – OPEB. That figure was assessed at $397.4 million in 2023, but changes in the value of the pension funds, combined with a new plan put into action in June 2023 [explained in detail in this article], the city is now using the assumed investment return as the discount rate for determining the balance sheet liability for the OPEB plan, 6.9% as opposed to 3.69%, reducing the figure by several millions of dollars, to about $280 million.
Former Councilman Timothy Howe offered support for the contracts, particularly the OPEB contributions. “Councilman Rix, I want to commend you. I want to congratulate you,” said former Councilman Timothy Howe, “You pushed for OPEB. Again and again, you stated, OPEB, OPEB, there needs to be something about OPEB. In all three contracts, that is being heard tonight. There is OPEB contributions.”
But Rix was worried that the police and municipal unions had only agreed to .66 percent salary contributions to OPEB, not the 2 percent Mayor Picozzi and the Council had hoped to secure for the remaining two unions when the firefighters contract pioneered OPEB contributions on the condition that the other unions followed suit.
Long discussed, routinely recommended yet never committed to before 2023, an Other Post-Employment Benefits (OPEB) trust would begin paying down the OPEB liability, $352 million in 2019. With such a trust established, regardless of the funding, the city would immediately qualify for a discounted rate to be used to calculate its liability, Dennis Hoyle, Rhode Island’s auditor general, said in 2019.
But Rix was not heartened by the incremental progress.
“We have something like, what, four and a half million towards it? It’s better than zero, but that’s not great. That’s incredibly under-funded.”
In 2023, Rix said, the city made a significant increase in OPEB planning, since it would have been a 2% increase as of 2025. “Now, we’re looking at this increase being phased in over the course of three years and from a certain perspective, of course this is making a step in the right direction, but, unfortunately, I would say that its a step back from where we were, what we thought we were doing as of a couple of years ago. I simply can’t take that step back,” Rix said.
Brian Nappa pointed out the total OPEB liability would only be due as a lump sum all at once if the entirety of the pension fund payouts, delivered upon retirement, were suddenly due all at once.
“Which I think we can all agree, the chance of that happening is essentially zero,” Nappa said, “So, net positioning, as far as fiscal health for the city, while it’s a good barometer for some instances, it’s not a good overall barometer of the fiscal health of the city. So, I think we can push that aside. That large number tends to scare people often, and I think we need to keep that in perspective as to what that actually means.”
Nappa also argued against holding the police union responsible for something another union negotiated two years ago, noting they were not in a position to bargain then. Instead, he said, the Mayor took the position that they could amortize police OPEB contributions over time to reach the 2 percent goal. He said that decision is similar to the decision they made last week by asking for a budget commission to aid in dealing with Warwick School Department’s budget deficit, which includes a five-year fiscal plan.
“We’re amortizing a problem at hand, over time,” Nappa said.
Councilman Vinny Gebhart said he shared Rix’s frustration that the police and municipal contracts were not contributing 2 percent to OPEB as planned when the Council made their first OPEB contribution steps with the fire union in 2023.
“But I think Councilman Nappa well articulated that we cannot put future unions and their members into a situation where the outcome has been pre-negotiated for them. That’s not how the process works,” Gebart said.
Council President Anthony Sinapi noted that the Council’s role was either yes or no, with a rejection sending the contract to arbitration, which in Rhode Island favors unions.
“So, this isn’t really much of a decision for us, for better or worse,” Sinapi said.
After the police union vote, Rix objected to the characterization that the OPEB liability was being amortized. He said the figure continues to rise, with little being paid against it, and with the additional burden of rising numbers of retirees drawing out, relying on a smaller group of active employees paying in.
“If we don’t make some serious sacrifices to make sure this works, it’s just not going to be there,” Rix said. He said pensions, including healthcare, will eventually fail retirees.
“I want all of the benefits promised to be there when each and every one of you retires,” Rix said.
Gebhart asked Bill Facente, Picozzi’s Chief of Staff, if there were other parts of the plan to remedy the OPEB liability. Facente said there were, noting that the 2 percent, while short of the 8 percent Joe Newton, with the city’s actuarial firm, Gabriel, Roeder Smith & Co. (GRS) of Southfield, Mich., said would be necessary to fix the issue long-term, was the start of a fix. Further steps increasing the contributions will be made in future contracts, he said. Also, he said, lifetime healthcare is expiring for many retiree plans, and there are a group of newer employees who will only be covered on individual health care plans, as well as other cost-saving measures.
When the vote for ratifying the memorandum reducing the firefighters OPEB contribution was taken, Gebhart repeated his frustration with the situation, as the Council had agreed to concessions while negotiating with the firefighters in return for the 2 percent OPEB contributions that were now watered down. He said he wanted to vote against the memorandum, but would count votes to ensure doing so didn’t upend what little they’d managed.
The memorandum passed with only Gebhart voting against.
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Author: Rob Borkowski
Rob has worked as reporter and editor for several publications, including The Kent County Daily Times and Coventry Courier, before working for Gatehouse in MA then moving home with Patch Media. Now he's publisher and editor of WarwickPost.com. Contact him at editor@warwickpost.com with tips, press releases, advertising inquiries, and concerns.
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