Skip to main content
H 7369Cities & Towns

Towns and Cities - Audit of Accounts and Installation of Systems

Municipalities failing to fully fund retiree benefits must submit plans to the state detailing how they will fix the shortfall.

Introduced62 Yea1 Nay12 Not voting
Population
Affected
45
Email Legislator
Introduced Jan 28, 2026Committee House Municipal Government & Housing

Plain-English Summary

This legislation updates Rhode Island law regarding how municipalities manage financial obligations for employee pensions and "Other Post-Employment Benefits" (OPEB), such as retiree healthcare. Specifically, it mandates that if a city or town contributes significantly less than the amount recommended by actuaries to fund these benefits, they must submit a corrective plan to the state auditor general and director of revenue. The bill outlines the reporting requirements to achieve full funding and clarifies the legal framework for establishing and managing trust funds dedicated to these post-employment benefits.

For younger readers

When people work for a city or town, they are often promised money and health care for when they get older and retire. This bill makes sure that towns are saving enough money today to pay for those promises later. If a town isn't putting enough money into its savings account to cover these costs, the town leaders must write a report to the state explaining exactly how they plan to fix the problem. This helps ensure that workers will actually get the benefits they were promised in the future.

Who & Where It Applies

Impacted groups
Municipal EmployeesRetired Municipal EmployeesLocal TaxpayersCity and Town CouncilsMunicipal Finance Directors
Impacted communities
All

Constitutional & Fiscal Check

None Likely

Estimated cost
Amount unknown
Estimated revenue
None

Bill Analysis

Both viewpoints
For Progressives
  • Strengthens the financial security of public sector employees by ensuring municipalities develop concrete plans to fully fund promised pension and healthcare benefits.
  • Promotes transparency and accountability in local government finance, requiring officials to publicly address funding shortfalls rather than ignoring future obligations.
  • Helps protect the long-term viability of essential public services by preventing future municipal fiscal crises caused by unmanaged debt and benefit liabilities.
  • Could force municipalities to divert immediate funding from current social programs and community services to satisfy long-term actuarial targets.
  • Increases state-level oversight and bureaucratic hurdles for local governments, potentially limiting their flexibility to manage budgets based on immediate community needs.
  • The requirement to reach 100% funding might lead to pressure to reduce benefit levels for future employees if towns cannot afford the required contributions without cutting other services.
For Conservatives
  • Enforces fiscal discipline on local governments by requiring them to acknowledge and plan for their long-term financial liabilities regarding employee benefits.
  • Increases transparency for taxpayers by explicitly subjecting OPEB trusts to the Access to Public Records Act, allowing citizens to monitor how their money is managed.
  • Prevents municipalities from hiding the true cost of government employment, ensuring that current budgets reflect the actual expense of promised benefits.
  • Represents an expansion of state government power over local municipalities, dictating how town councils must manage their internal financial planning.
  • Will likely result in increased local property taxes as towns scramble to find revenue to meet the 100% funding targets demanded by the state.
  • Entrenches the system of generous public sector benefits rather than encouraging a transition to private-sector style retirement plans like 401(k)s.

Votes

Loading votes...

Full Bill Text

Changes to existing Rhode Island law · 27 additions · 11 deletions

It is enacted by the General Assembly as follows:

SECTION 1. Section 45-10-15 of the General Laws in Chapter 45-10 entitled "Audit of Accounts and Installation of Systems" is hereby amended to read as follows: 45-10-15. Compliance with requirements of “governmental accounting standards board (GASB)” pension funding. Municipal compliance with funding pension and other post- employment benefit plans.

(a) For any audit year in which a municipality contributes materially less than 100% of the annual required actuarially determined contribution to its pension plan(s) as ("ADC") reported in accordance with GASB statement 27 or any successor statement Governmental Accounting Standards Board ("GASB") requirements to its pension plan(s), the municipality shall submit to the auditor general and the director of revenue, within three (3) months of completion of the annually audited financial statement, the municipality’s most recent actuarial study of the valuations determining the ADC for the pension plan(s) and management’s recommendations for assuring future payments equal to the annual pension cost (APC) planned future contributions to achieve one hundred percent (100%) ADC funding. (b)(1) For any audit year in which a municipality contributes materially less than one hundred percent (100%) of the ADC reported in accordance with GASB requirements to its other post-employment benefit (“OPEB”) plan(s), the municipality shall submit to the auditor general and the director of revenue, within three (3) months of completion of the annual audited financial statement, the most recent actuarial valuations determining the ADC for the OPEB plan(s) and management’s recommendations for planned future contributions to achieve one hundred percent (100%) ADC funding.

(2) Municipalities may create an OPEB trust agreement pursuant to § 45-21-65, if not currently in place.

(c) Municipalities shall consult with the auditor general until approved pension and OPEB funding plans are adopted.

SECTION 2. Section 45-21-65 of the General Laws in Chapter 45-21 entitled "Retirement of Municipal Employees" is hereby amended to read as follows: 45-21-65. Other post-employment benefits — OPEB trusts.

(a) Notwithstanding the provisions of any general or special law, or the provisions of any municipality’s home rule charter, to the contrary, for purposes of funding any unfunded liability for other post-employment benefits including, but not limited to, health care and dental care benefits hereinafter referred to as (“OPEB”) in accordance with government accounting standards board statements 43 and 45 Governmental Accounting Standards Board ("GASB") requirements, a municipality, acting by its treasurer or director of finance, upon an approving resolution of the city or town council or agency board as applicable, may enter into a trust agreement between the municipality and a corporate trustee which shall be a bank or trust company doing business in the state, or a corporation established pursuant to chapter 5 of this title. This trust agreement shall be in any form deemed proper by the treasurer or director of finance of the municipality, and shall be executed by its treasurer or director of finance and countersigned by its mayor or president of the town council. It shall be lawful for any bank, trust company, or entity organized pursuant to §  45- 5-20.1 doing business in the state to act as a depository or trustee under this trust agreement, and to furnish indemnification and pledge securities that may be required by any municipality.

(b) OPEB trust funds shall be credited with all amounts appropriated or otherwise made available by the municipality for the purposes of meeting the current and future OPEB costs payable by the municipality. OPEB trust funds shall also be credited with all amounts contributed or otherwise made available by employees of the municipality for the purpose of meeting future OPEB costs payable by the municipality. Amounts in an OPEB trust fund, including any earnings or interest accruing from the investment of these amounts, shall be expended only for the payment of the costs payable by the municipality for OPEB or as otherwise permitted by the terms of the trust and applicable law. The director of finance or treasurer, as applicable, shall invest and reinvest the amounts in the OPEB trust fund not needed for current disbursement in any investment permitted for the municipality’s pension funds consistent with the prudent person rule and investment policies of the municipality, if any.

(c) Municipalities are hereby authorized to enter into agreements, trusts, contracts, and other arrangements with the state and any of its departments, agencies, boards or commissions relating to the execution, management or operation of the OPEB trust funds, including, but not limited to, investments, and the state and its departments, agencies, boards and commissions are hereby authorized to enter into such agreements, contracts and other arrangements with municipalities. Notwithstanding any provisions of any general or special law or principle of equity to the contrary, the state shall have no liability to any municipality for entering into such agreements.

(d) A municipality may employ any qualified bank, trust company, corporation, firm or person to advise it on the investment of the OPEB trust fund and may pay from the OPEB trust fund for this advice and other services. Procurement for these services shall be subject to the procurement procedures and rules governing municipalities in the state.

(e) Municipalities are also hereby authorized to enter into agreements, trusts, contracts, and other arrangements with any corporation established pursuant to chapter 5 of this title relating to the execution management or operations of OPEB trust funds including, but not limited to, investments, and the corporations established pursuant to § 45-5-20.1 are hereby authorized to enter into such agreements, trusts, contracts or other arrangements with municipalities.

(f) Any OPEB trusts that have been created by municipalities and are in effect on the date hereof are hereby ratified and confirmed.

(g) Nothing herein shall be construed to exempt OPEB trusts from the Rhode Island Access to Public Records Act, § 38-2-1 et seq.

SECTION 3. This act shall take effect upon passage.