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HB 5947

AN ACT RELATING TO TOWNS AND CITIES -- AUDIT OF ACCOUNTS AND INSTALLATION OF SYSTEMS

2025 Regular Session Introduced by Mia Ackerman and 3 co-sponsors

Requires RI municipalities to report actuarial valuations and 100% ADC funding plans for pensions/OPEB when underfunded; enables OPEB trusts with AG oversight.

06/20/2025 Referred to Senate Finance
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Bill Summary · HB 5947

Summary — HB 5947 (Rhode Island): Audit of Accounts and Installation of Systems

Status (as of 2025-06-20): House passed (06/03/2025); referred to Senate Finance (06/20/2025). Introduced to House Municipal Government & Housing (02/28/2025).

Purpose / Intent

The bill strengthens municipal reporting, planning, and legal authority around funding pension and other post‑employment benefit (OPEB) liabilities. It (1) requires municipalities to provide actuarial valuations and funding plans when they underfund pension/OPEB contributions, (2) mandates consultation with the Auditor General until approved funding plans are adopted, and (3) explicitly authorizes municipalities to establish and manage OPEB trust funds and related contracts and investments.

Key provisions

  • Amend §45-10-15 (Audit of Accounts and Installation of Systems)

    • If a municipality contributes "materially less than 100%" of the actuarially determined contribution (ADC) for pensions (per GASB requirements), it must submit to the Auditor General and the Director of Revenue, within 3 months of completing the annual audited financial statement:
    • The most recent actuarial study/valuation determining the ADC; and
    • Management’s recommendations/planned future contributions to achieve 100% ADC (i.e., full funding).
    • Parallel requirement for OPEB plans: same 3‑month submission of actuarial valuations and management’s planned contributions when contributions are materially less than 100% of the ADC.
    • Municipalities shall consult with the Auditor General until pension and OPEB funding plans are approved.
    • Municipalities may create an OPEB trust pursuant to §45-21-65 (if not already in place).

  • Amend §45-21-65 (Other Post‑Employment Benefits — OPEB trusts)

    • Municipalities (via treasurer or finance director and approved by city/town council or board) may enter trust agreements with corporate trustees (banks, trust companies, or authorized corporations) to fund OPEB liabilities.
    • OPEB trust funds may receive municipal appropriations and employee contributions; earnings and principal may be used only for OPEB costs or as allowed by the trust and law.
    • Treasurers/finance directors may invest trust assets under the prudent person rule, consistent with municipal pension investment policies.
    • Municipalities may contract with the state or private advisors for trust management/investment; the state assumes no liability for such agreements.
    • Procurement of advisors/services must follow municipal procurement rules.
    • Existing municipal OPEB trusts are ratified.
    • OPEB trusts are subject to the Rhode Island Access to Public Records Act (APRA).

  • Effective date: upon passage.

Who is affected

  • Municipal governments (cities/towns) and their finance officers/treasurers
  • Municipal pension and OPEB plan participants (current employees and retirees)
  • Auditor General and Director of Revenue (receive reports, oversee consultations)
  • Banks, trust companies, and investment advisers acting as trustees or advisors
  • State agencies if entering contractual arrangements with municipalities

Practical impact / considerations

  • Increases transparency and formalizes corrective planning when municipalities underfund pensions or OPEB.
  • Encourages and clarifies authority to establish OPEB trusts and invest assets to prefund liabilities, which can reduce long‑term unfunded liabilities but requires governance, investment expertise, and possibly upfront costs.
  • Requires municipalities to produce and submit actuarial studies and funding plans within a fixed timeframe (3 months post-audit), and to consult with the Auditor General until plans are approved—potentially increasing oversight and administrative workload.
  • Treats OPEB trust assets as public records (APRA), which affects confidentiality and disclosure.

Note: A separate, unrelated Michigan bill text referencing implicit bias training also appears in the provided materials; this summary pertains only to the Rhode Island HB 5947 (municipal pension/OPEB trust bill).

Compiled from official sources — confirm details with the bill’s official record.

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