April 08–NORTH PROVIDENCE, R.I. — The town is working to resolve two accounting errors affecting retirees and hopes to “make the taxpayers whole again,” Mayor Charles Lombardi said.
Four police officers who retired on disability were wrongfully issued cost-of-living adjustment payments (or COLAs) totalling up to $130,000.
From 2001 to 2011 the finance department gave incorrect salary information to the state’s municipal employee retirement system. This mistake may still be affecting pension payments for up to 20 retired firefighters.
But both of these mistakes, first reported by WJAR last week, were made “B.C.” or “Before Charlie,” said the mayor, who took office in 2007.
“We inherited this problem,” Lombardi said. “We are going to do the right thing. No sense in playing the blame game.”
The town sent letters explaining the situation to affected police and firefighters in February and March. Police were asked to pay back the money within five years.
The firefighters may be compensated by the state, but it is not clear how much — if any — money they are owed, Evan England, a spokesman for state’s treasurer, said.
How did these accounting mistakes happen? Lombardi has two answers.
For the firefighters, it was a miscalculation. The town’s payroll department provided a higher salary number — that included the firefighter’s longevity payments over time — to the state.
In 2011, the state noticed this error and alerted the town, England said. Since then, the retirement board has been “awaiting [the town] to provide new data,” he said.
The retirement system received the new numbers last month, England said, about four years later. Lombardi said this is because the issue was complicated and required “a good amount of work.”
The mistake with the four police officers came from “numbers provided to the town by John Hancock,” Lombardi said. In 2014, the town’s finance department began sending payments to retired police instead of the bank because it “cost like 20 or 30 grand a year and I’m not paying that,” Lombardi said.
In January 2017 — when the town hired a new actuary — the mistake was discovered.
Lombardi, who said he was not in the office on Friday afternoon, said he could not recall the name of the current or former actuary.
Officers that retire because of a disability receive COLA payments, but only after the 20-year anniversary of their hire, said Controller Maria Vallee.
The retirees in question have not yet reached that benchmark, and now owe the town up to $130,000 collectively, the mayor said. The mayor’s office declined to provide the names of the officers.
Asked if the retirees knew they were receiving additional money Lombardi said: “We’re told that a few of them knew.”
“My questions as the keeper of the green, so to say, is what if the situation were reversed?” Lombardi said. “Where would we be … if they weren’t being paid?”
To calculate pensions for municipal employees the state relies on information from cities and towns, England said. When an employee submits his or her retirement paperwork, the town provides a number — the employee’s average salary over the last five years including longevity payments — to the state retirement board.
Longevity payments are issued once a year, on the date the employee was hired, Vallee said.
This figure is not to include overtime. But, when North Providence’s payroll department sent salary information during that 10-year period, it included overtime. This mistake “affected all active and retired firefighters,” Vallee said.
When the town first was alerted of the error, they met with representatives from the state and were told they could focus on the active firefighters first, Vallee said. Last week, Vallee sent letters to the remaining 20 retired firefighters.
England said the impact of the mistake is still unclear.
Retirees contribute about 8 percent of their pension check to the state, said England, so if the miscalculation led them to overcontribute, they will be compensated.
By Jacqueline Tempera, The Providence Journal, R.I.
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