Plan to protect water plant workers' pensions stalls

Nov. 18, 2000
Water treatment plant workers are concerned about being forced to accept a company's retirement plan if the Pawtucket Water Supply Board goes ahead with privatization plans.

By JOHN CASTELLUCCI Journal Staff Writer

PAWTUCKET, RI, Nov. 15, 2000 (The Providence Journal)—Water treatment plant workers have hit a roadblock in their effort to protect their pensions by remaining in the state's municipal employees retirement system if the plant is privatized.

Objections raised during impact bargaining talks and at a recent meeting of the City Council's Ordinance Committee have put the innovative pension move on hold.

Allen Champagne, water supply manager, said he finds the situation frustrating.

"It seems to me, if you really want to do something, you can get it done," Champagne said in an interview yesterday.

"Why can't individuals, not unions, approach the city? I mean, they're all taxpayers," he said.

Champagne, a member of Teamsters Local 64, and other water treatment plant workers are worried that their pensions will be eroded if a private company is hired to design, build and operate a water treatment plant, as the Pawtucket Water Supply Board has promised.

In Woonsocket, where operation of the city's wastewater treatment plant was taken over last year by a private company, participation in the municipal pension system was replaced with a 401K plan.

The Pawtucket Water Supply Board has assured unionized employees that no one will be laid off, nor will anyone's benefits will be forfeited if the plan to privatize the plant goes forward.

But employees are skeptical. Champagne said plant workers who are not yet vested in the state retirement system could lose their right to become vested, and the workers who are vested could be frozen at their current pension levels if the management of the plant changes hands.

To prevent that, Champagne asked the City Council to consider passing an ordinance that would keep water treatment plant employees in the municipal employee retirement system even if the plant is operated privately.

The ordinance would assure the Internal Revenue Service that the Water Supply Board retains control of the privatized water treatment plant, enabling plant employees to remain in the state pension system without jeopardizing the system's tax-exempt status.

The approach has been used successfully in other communities, among them, Milwaukee, Wisc., where city employees were able to remain in the pension system despite privatization of the municipal wastewater treatment plant.

Impact bargaining talks are under way in Pawtucket. Their aim is to set contract terms for the workers who will become employees of a private company if the new water treatment plant is privately operated, as the Water Supply Board plans.

Pensions are being discussed in the impact bargaining talks. Without passage of the ordinance sought by Champagne, however, privatization would make it necessary for plant employees to be removed from the municipal employee retirement system, because only employees of tax-exempt entities, such as the Water Supply Board, are allowed to take part in the state retirement system under IRS rules.

When Champagne presented the pension preservation proposal, he characterized it as a nonunion effort, although he also said he was speaking for plant employees.

Objections were raised. During impact bargaining talks, Champagne said, he was asked to drop the pension proposal.

During last Wednesday night's Ordinance Committee meeting, Thomas E. Hodge, the committee chairman, said that lawyers for the city and Water Supply Board are worried that entertaining the proposal would, in effect, introduce a third party into the talks.

And, he told Champagne, It is also not clear who you represent.

Champagne said yesterday he requested that the pension move be tabled so that it wouldn't interfere with impact bargaining.

He also said that he is planning to confer with legal counsel to determine how to respond to the objections. A union legal counsel is being consulted, not because the pension move is a union matter, Champagne said, but because as a union member he can obtain legal advice for free.

The Water Supply Board sells water to 26,000 customers in Pawtucket, Central Falls and part of Cumberland. A new treatment plant is needed, the board says, to meet new federal safe drinking water standards scheduled to take effect in two years.

A meeting at which the Water Supply Board will develop specifications for the new plant is scheduled to be held tomorrow evening, starting at 5, at the Water Supply Board headquarters, 85 Branch St. The meeting, like others at which the specifications have been discussed, will be closed to the public, meaning that ratepayers and employees will not be allowed to attend.

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