July 10, 2007 Contact: Sue Baker ... 738-2000
For Immediate Release
Avedisian responds to Auditor General’s report on municipal pension plans
WARWICK – Mayor Scott Avedisian today commended Auditor General Ernest Almonte for his report, issued yesterday, regarding Rhode Island’s Municipal Plans, saying it provides valuable information for Rhode Island cities and towns, and supports actions the city has taken to administer its pension plans.
The City of Warwick administers four plans: city employees’ pension plan; police pension II; fire pension II and police pension I & fire pension plan.
The report examined three areas: whether the municipality was consistently making 100 percent of the required annual contributions to the plans; overall status of the plans; and investment performance of plan assets.
“When you look at the annual required contribution to the plans, Warwick is one of only five communities that have funded at 100 percent from 2002 to 2006,” Avedisian said. “That is very positive news for our community. We have consistently followed the advice of our actuary every year, and that is clearly serving us well.”
Avedisian noted that the report stated at the outset that underfunded pension plans are not unique to the state.
“Yet, the Auditor General found that three of the city’s four plans exceed the average unfunded accrued liability for all municipal administered plans: municipal at 78 percent, police II at 102.3 percent, and fire II at 86 percent,” Avedisian said. “A current report from the city actuary shows that as of June 30, 2006, the municipal plan’s funding ratio was 83.2 percent. We have known, and publicly stated, that the police plan I and fire are underfunded, which is why we have put a plan into place that will have it fully funded.”
Avedisian said that, had the report included 2004 and 2005 investment numbers, the city’s percentages would have met or exceeded state averages.
Avedisian said the city’s actual five-year rates of return for the four funds, as calculated by the city’s investment advisor, Fiduciary Investment Advisors, LLC, for the period ending December 31, 2006 are 9.1 percent for municipal; 9 percent for police II; 8.2 percent for police I and fire I; and 10.4 percent for fire II (this calculation is for three years).
“Currently, all of the city’s funds have exceeded the state’s five-year average rate of return of 8 percent,” Avedisian said. “This, and the state of our pension plans in general, are a credit to the hard work of a number of people through the years.”
Avedisian noted that some of the Auditor General’s recommendations have already been standard practice in Warwick, and that he and Finance Director Ernest Zmyslinski will be reviewing other recommendations in the report in the coming weeks.
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