In 2001 and '02 . . . we had the pension system funded at (the) 100% level in that year, and we did for two years at that point.
Former Providence Mayor Vincent "Buddy" Cianci Jr. says he's running to regain his old job because he believes the city has gone downhill since he was forced to leave office in September 2002. One of the biggest problems facing the city is the lack of money and part of the problem is a severely-underfunded pension system. According to the most recent data, from July 31, 2013, the city has only 31.4 percent of the money it needs to pay for its pension obligations. During the Sept. 21 edition of WPRI-TV's "Newsmakers" program, which featured Cianci rattling off a blizzard of financial numbers about the city, host Tim White asked Cianci about his role in the pension shortfall. After playing an old video in which Cianci stressed the importance of fully paying the city's pension costs, White noted that from 1998 to 2002, the city was putting in only 60 percent or less of what it was supposed to be paying. Cianci said that he did pay in full, and he had a document to prove it. "In 2001 and '02, a letter that I have from the finance director says that we had the pension system funded at [the] 100 percent level in that year, and we did for two years at that point," he said. Cianci made it clear later in the interview that he was referring to the two years prior to his leaving office. So was the Cianci administration putting all of the money it was supposed to into the pension fund in those two years? The short answer is no. City pension records show that in the 2001 fiscal year, the city paid only 60.6 percent of the amount it needed to properly fund its pension program. That amount is an estimate known as the annual required contribution, or ARC. And in 2002, another year when Cianci said the pension was being funded at 100 percent, the funding level was actually 64.2 percent. Only in the 2003 fiscal year, when Cianci was mayor for just over two months (to be succeeded by John Lombardi and, later, David Cicilline, now a U.S. representative) did the ratio rise significantly, to 80.3 percent. By then, the pension fund was hobbled with a massive debt, with only $335 million of the $899 million it needed. And what about the letter Cianci was talking about? First, a little background. From 1991 through the 1994 fiscal year, and again in the 1996 fiscal year, Providence was paying 100 percent of the ARC. (Cianci, who had been mayor from 1975 until 1984 when he was removed from office after being convicted of felony assault, began his second stint as mayor in 1991.) But after the first few years of Cianci's second administration, the funding for Providence's pension program began a precipitous decline. The city paid 54 percent in 1995, then 93.6 percent in 1997, 57.5 percent in 1998, 56.2 in 1999, 60.0 percent in 2000. Cianci and Alex Prignano, who was Cianci's finance director at the time and is now business manager in the Cumberland school department, told PolitiFact Rhode Island in a joint interview that pension benefits were the subject of lawsuits. To make a long story short, Cianci had agreed in 1991 to annual 5-percent cost-of-living increases; in 1994, amid concerns over the mounting expense of funding them, the city filed suit seeking relief from the increases. As the suit progressed, the city based its pension fund payments on the assumption that it would win the suit. It was also working under the belief that if it fully funded the pension system, it would be harder to argue in court that the cost of living payments were unsustainable, Prignano and Cianci said. (The Providence Journal's Tom Mooney outlined the saga in a June 7, 2011 story.) When the state Supreme Court ruled on the case in 2000, the decision produced an annual pension shortfall of about $16 million, Prignano said. He developed a timetable to bring the payment level back up to 100 percent. The letter Cianci was referring to is dated Aug. 23, 2002, exactly two weeks before Cianci would be removed for office once again, this time after being convicted of racketeering conspiracy. In the letter, Prignano writes about Cianci's support for "a four-year plan that my office proposed in fiscal 2000 to fully fund the annual pension contribution according to the amount recommended by the actuary." In other words, Prignano explained in his interview with PolitiFact, Cianci had agreed to the timetable for bringing the funding back to 100 percent of the city's ARC. The percentage the city was paying started to rise -- albeit very slowly -- in 2000. The biggest increases didn't come until Cianci left office. And as Prignano acknowledged, it wouldn't hit 100 percent until 2007, five years after Cianci left, when David Cicilline was mayor. Cianci said that when he talked about funding the pension system at 100 percent, he was referring to 100 percent of the amount recommended by Prignano, not the full 100 percent of the annual required contribution. Our ruling Cianci said, "In 2001 and '02 . . . we had the pension system funded at [the] 100 percent level in that year, and we did for two years at that point." But the last full contribution to the system under Cianci was in 1996. During the last years of his term, he short-changed the system each year by more than a third of the money it would ultimately need. That would have a long-term deleterious impact on the health of the pension plan. Cianci contends his "100 percent" remark referred to a plan to eventually restore the funding level. But although he had ample time to explain that during the "Newsmaker" interview, he never made that clear. And viewers likely came away with the false impression that Cianci had given the pension fund the full amount it needed in those years. We rate Cianci's claim False. (If you have a claim you’d like PolitiFact Rhode Island to check, email us at politifact@providencejournal.com. And follow us on Twitter: @politifactri.)
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