Fire Survey Shows $330 Million in Costs for RI
GoLocalProv News Team
Fire Survey Shows $330 Million in Costs for RI
The data released by Block shows that Rhode Island operates more individual fire stations and has more apparatus than almost all major metropolitan areas in the United States. In an example cited by Block, RI has 158 fire stations; Chicago has 92; and Los Angeles has 106. Fire protection services in the state, according to the release, collectively cost more than $330 Million dollars per year.
"Too many of Rhode Island's fire stations are located where a fire station has been located for centuries. When fire engines were pulled by horses, it made sense to have more stations situated relatively closely together. But a 19th century fire station system facing 21st century costs for equipment, maintenance, personnel, benefits and retirements is stressing local budgets, and far exceeds what many other locations provide for fire protection," remarks Ken Block. "It is my hope that this data will foster a statewide debate and dialogue regarding locally provided public services. Local and statewide officials need to come together to help reduce the high cost of local government in Rhode Island."
According to Block’s report:
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTArea of coverage: 500 square miles
Population: 900,000
Annual cost of more than $300 million
103 Fire Stations
$900 million in unfunded firefighter pension liabilities
Annual family of 4 cost of nearly $1,400
Contrasts with fire protection services in other metro areas:
Dallas has 57 fire stations, Phoenix has 59, Chicago has 92 and LA has 106.
Dallas has 56 fire engines, Phoenix has 66, Chicago has 98 and LA has 132.
Disability Costs
The data released by Block shows that the number of firefighters out on disability varies greatly among communities. “We believe that contract language directly drives the disability numbers. This should be a crucial area of concern for taxpayers and elected leaders alike, because we have a large number of fire fighters retired on disability with a concentration in certain communities,” read the statement. “Should Rhode Island consider a statewide definition of disability in an attempt to stabilize and drive down the numbers of fire fighters collecting disability pensions?”
Providence Pension Liability
Unfunded Liability in 2013
Total Liability: $1.2 billion
Actuarial Assets: $380.4 million
Unfunded Liability: $831.5 million
Unfunded Liability in 2011
Total Liability: $1.2 billion
Actuarial Assets: $380.4 million
Unfunded Liability: $831.5 million
Percent Funded in 2013
Funding Ratio: The ratio of the amount of actuarial assets to the amount owed.
Funding ratio in 2013: 31.39%
Percent unfunded in 2013: 68.61%
Percent Funded in 2011
Funding Ratio: The ratio of the amount of actuarial assets to the amount owed.
Funding ratio in 2011: 31.94%
Percent unfunded in 2011: 68.06%
Rate of Return
Former Assumed Rate of Return: 8.5%
New Assumed Rate of Return: 8.25%
What the state’s assumed rate of return is: 7.5%
What Moody’s Investors Service says the assumed rate of return should be: 5.5%
What investor Warren Buffet says the assumed rate of return should be: 6%
Actual Return on Investment
Actual Market Return in FY 2012: 1.49%
Actual Market Return in FY 2013: 11.35%
Current Assumed Rate of Return: 6.42%
Average Market Rate of Return for FY 12 and FY 13: 8.25%
Impact of Lower Rates of Return
$72 million:The city unfunded liability increased by this amount when the city lowered its assumed rate of return by a quarter of a percentage point, from 8.5% to 8.25%
$506.2 million: The estimated increase in the unfunded liability were the city to use the 6% assumed rate of return recommended by Moody’s Investors Service.
Retiree Pay – Fire and Police
Number on Active Duty: 834
Average Annual Pay: $61,325
Number of Retirees: 587
Average Retiree Age: 65.3
Average Retiree Annual Pay: $40,512
Disability Pensions – Fire and Police
Number on Disability: 418
Average Age: 64.8
Average Annual Pay: $59,028
Retiree Pay – Other City Workers
Number of City Workers: 2,164
Average Annual Pay: $38,687
Number of Retirees: 1,453
Average Retiree Age: 72
Average Retiree Annual Pay: $18,252
Disability Pensions – Other City Workers
Number on Disability: 88
Average Age: 66.8
Average Annual Pay: $18,684
Current Cost of Pension Fund
For 2013
City Contribution: $58.1 million
Employees Contribution: $10.9 million
Net Investment Return: $18.1 million
Cost of Retiree Benefits: $95.4 million
Note: Net investment return is the return on investments after investment and administrative fees have been paid.
Cost of Pension Fund in 10 Years
Normal Cost: $9.8 million
Additional Cost Because
of Unfunded Liability: $84 million
Total Annual Cost: $94.3 million
Note: Total figure for the year includes a small second payment for the deferred liability.
Cost of Pension Fund in 20 Years
Normal Cost: $13.9 million
Additional Cost Because
of Unfunded Liability: $118.5 million
Total Cost: $132.4 million
Paying Off Unfunded Liability
Average annual increase: 3.5%
Number of additional years to pay off: 27
Fiscal year unfunded liability to be paid off by: 2040
