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S 3127Cities & Towns

Towns and Cities - Audit of Accounts and Installation of Systems

Requires municipalities to submit plans for fully funding retiree benefits and subjects benefit trusts to public records laws.

Introduced
Population
Affected
45
Email Legislator
Introduced Mar 20, 2026Committee Senate Finance

Plain-English Summary

This legislation updates the financial reporting and funding requirements for Rhode Island municipalities regarding their pension and "Other Post-Employment Benefits" (OPEB) plans, such as retiree healthcare. It adopts current terminology from the Governmental Accounting Standards Board (GASB). Crucially, if a municipality is not fully funding its actuarially determined contribution to these plans, it must submit a plan to the state Auditor General and Director of Revenue detailing how it intends to reach 100% funding. It also explicitly subjects OPEB trust funds to the Rhode Island Access to Public Records Act.

For younger readers

When people work for a town or city for a long time, they are often promised benefits like health insurance after they retire. This bill creates rules to make sure towns are saving enough money today to pay for those promises in the future. If a town isn't saving enough money, they have to write a plan to the state explaining how they will fix it. The bill also makes sure that the records about this money are open for the public to see, so everyone knows how the savings are being handled.

Who & Where It Applies

Impacted groups
Municipal EmployeesMunicipal RetireesProperty 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
  • Protects the long-term financial security of municipal workers and retirees by ensuring their promised post-employment benefits are adequately funded.
  • Increases government transparency by explicitly stating that OPEB (Other Post-Employment Benefits) trusts are subject to the Access to Public Records Act.
  • Prevents future austerity measures or sudden benefit cuts by mandating responsible financial planning and regular contributions to benefit funds.
  • Strict funding mandates may force municipalities to divert immediate funding from current social services, education, or infrastructure to pay down long-term liabilities.
  • Increases state-level oversight and intervention in local affairs, potentially reducing the autonomy of local communities to manage their own budgets.
  • The focus on "unfunded liabilities" could be utilized politically to argue that public sector benefits are too expensive and should be reduced or privatized.
For Conservatives
  • Enforces fiscal responsibility by requiring local governments to acknowledge and plan for the true cost of the benefits they have promised to employees.
  • Protects future taxpayers from massive tax hikes that would otherwise be needed to bail out underfunded retiree benefit systems.
  • Ensures transparency and accountability by subjecting the management of public benefit trusts to open records laws.
  • Violates the principle of home rule by imposing state-level financial mandates and reporting requirements on local municipalities.
  • Compliance with 100% funding targets could necessitate immediate and significant property tax increases for local residents.
  • Expands the administrative state by requiring additional bureaucratic reporting to the Auditor General and Director of Revenue.

Votes

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Full Bill Text

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

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.