Block Battles with Fung Over His Claims About Pension/401k Savings in Cranston
Monday, September 01, 2014
Critics are questioning claims by Cranston Mayor and gubernatorial candidate Allan Fung that the city's changes to 401K pension are contributing to substantial savings.
Fung has touted major financial overhauls in Cranston, citing that he "cut spending, balanced budgets, rolled up his sleeves and reformed pensions, saving millions...all of that means smaller government and bigger economy," in a TV ad.
"The Mayor decided to get people out of the old city plans and into 401Ks. My understanding is that it's only new hires -- if which the city's only had about 4 or 5 since then," said City Councilman Paul Archetto. "I've heard now that a number of unions have negotiated that as part of a collective bargaining unit. So even if we have 25 folks now in the new system, I think the Mayor is over-exaggerating the savings associated with this currently."
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Fung has said the millions in savings associated with negotiated pension reform that he ushered through Cranston in 2013 are a result of freezing -- and capping -- cost-of-living-adjustments to the city's fire and police retirees.
"Mayor Fung has brought more than 1,000 new private sector jobs to Cranston during his administration, achieved pension reform saving over six million dollars in this budget year alone, has consolidated services, reduced personnel, and has moved new employees in two major unions into 401(k) style retirement plans. These reforms have helped to balance budgets without a tax increase for three straight years," said the Fung campaign in a release in July.
Dan Yorke, who hosts "Dan Yorke State of Mind" on WPRI-12 and "The Dan Yorke Show on WPRO-630," said that guests and callers have broached the issue of the impact of the switch to 401Ks on his programs.
"Allan has recently talked about 401Ks -- and I've wondered out loud why it hasn't been a more instrumental piece of his campaign," said Yorke.
The Fung administration and campaign team has said that while there have been cost savings to date, the major savings are expected in the future.
"There’s approximately 21 people from both the Teamsters Union and Laborers Union, and possibly a few more in the process of joining," said Carlos Lopez in the Mayor's Office.
As for how much has been saved to date, Lopez said the following.
"Approximately $37,000 so far in FY ’13-‘14 where the city only contributes 3% towards the 401a plan & the employee contributes their share vs. traditional pension plans where city pays approximately 11% and is more costly to taxpayers," said Lopez.
"All new employees who are hired under these contracts will participate in the 401(k) style retirement plans rather than the more expensive traditional pension plan. As a result, the savings will continue to grow in coming years," added Fung campaign spokesperson Robert Coupe. "Also, Cranston was a leader in this movement to defined contribution retirement plans under Mayor Fung."
Block Questions Impact
Gubernatorial opponent Ken Block, however, said he took issue with the way that the 401k savings were portrayed in Fung's messaging.
"This is Fung, insider politician, using smoke and mirrors to look like a reformer. If these numbers are true, whether it's the four city employees the Councilman thought was now having 401Ks, or it's the 25 or so the City is now saying, they couldn't have possibly saved the city millions," said Block spokesperson Jeff Britt. "This is one of many times that the Fung campaign has stated something that isn't actually true. That's what inside politicians do."
Britt pointed to a recent mailer by Fung addressing the 401ks. "He didn't require employees as he said in his mailer to move into 401Ks. Only 21 people have moved for less than $50K," said Britt. "He's caught telling half truths, if not full-out lies. It's like how he talks about not raising taxes Cranston -- but ignores his first three years in office."
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