The broadly worded bill would allow any state worker to contribute to a supplemental union pension plan outside of the state retirement system.
PROVIDENCE - The Laborers' International Union scored a long- sought victory at the State House yesterday when the Senate approved legislation to allow the state to divert a portion of the salaries it pays the union's members to a Laborers' pension fund.
The bill whizzed through a unanimous Senate vote yesterday without question or debate, and went over to the House, where it has already won an influential endorsement.
"I like the bill," said House Speaker John B. Harwood, D-Pawtucket, of the legislation sponsored by Sen. Dominick Ruggerio, a high-ranked officer in one of the 14 Laborers' locals that represent more than 1,000 state employees in various state agencies, including the courts.
The broadly worded bill would allow any state worker to contribute to a union pension plan. This would be in addition to the 8.75 percent state workers are already required to contribute, out of their pay, to the state retirement system.
But the seeds for yesterday's vote were, in fact, sown by a provision in a contract the Rhode Island Laborers District Council negotiated with the Almond administration in 1996.
Permitting contributions to the Laborers' pension fund had been a top priority in contract talks with the state, said Ronald M. Coia, the business manager for the council, after the unannounced pact came to light.
The provision was attached to the contract for the period from July 1, 1995, through June 30, 2000. It says:
"It is specifically acknowledged and agreed to that the Union may, on behalf of its members, accept any across-the-board wage increase ... or a portion thereof and assign the remainder of said increase, on behalf of its members, to the Laborers' International Union of North America National (Industrial) Pension Fund."
"If the union members want it, we should not be the ones to stand in the way," state administration director Robert L. Carl Jr. said yesterday.
But legislative action has been required, from the start, to clear away legal obstacles and minimize the state's chances of ending up with liability for the benefits pledged by the Laborers' fund.
Key lawmakers were cool to the idea when it first surfaced in 1998. Then-Gen. Treas. Nancy Mayer warned about unintended financial risks to the state.
Then-Atty. Gen. Jeffrey B. Pine also had numerous concerns. Among them: that state law prohibits collective bargaining on pensions, and even more specifically bars state workers from receiving benefits from any other pension system to which they or the state are required to contribute.
The way it would work, according to Laborers' officials: each of the 14 Laborers' bargaining units would vote separately on joining the union pension plan, but all unit members would have to contribute if a majority voted to do so.
But this year, Ruggerio who is the secretary/treasurer of Local 808, the Laborers' bargaining unit that represents state court employees produced letters of endorsement from the current state treasurer, Paul Tavares, and attorney general, Sheldon Whitehouse.
Whitehouse said he had no objection as long as "employees are not required to participate in a union retirement system."
Tavares, too, had "no objection" based on the assurances he received from the legal counsel to the state Retirement Board, David Barricelli, a one-time president of the Rhode Island Building & Construction Trades Council.
Barricelli saw no obstacle. "It is important to note that if passed in its present form, the [bill] does not in itself require participation in a union pension plan," he wrote Tavares in June 1999.
He also advised Tavares there was no reason to believe a second employer-sponsored union plan would put any state worker above the pension benefit cap in federal tax law that stood, at that time, at $160,000 a year.
He could not categorically rule out liability for the state in the distant future because "no one can predict what, if any, withdrawal liability an employer will have until the time of the withdrawal."
In testimony to the Senate Finance Committee in April, James S. Ray, the Washington-based legal counsel to the $500 million Laborers' pension fund, listed among its members 70 public and private employee groups in Rhode island alone, including state and local workers in Providence, Warwick, Cranston, Westerly, Lincoln, Bristol, North Providence, East Greenwich and at the Rhode Island Public Transit Authority.
When lawmakers in California were faced with a similar decision recently, Ray said, they "recognized that a supplemental program, like the [Laborers'] Pension Fund, provides an outlet for pressure on them from employees and retirees to improve benefits under the public retirement system."