January 11, 2013

U.S. Department of Justice Grants RI Cities Flexibility to Use Google Settlement Funds to Stabilize Pensions

Providence, RI – At the urging of U.S. Senators Jack Reed and Sheldon Whitehouse, the U.S. Department of Justice (DOJ) has agreed to allow the cities of East Providence and North Providence to use a portion of their share of a $500 million federal settlement with Google to help plug gaps in each city’s law enforcement pension fund.  The cities were each awarded $60 million last April after assisting the U.S. Department of Justice (DOJ) in a federal investigation into online ads distributed by Google for Canadian pharmacies that were illegally marketing prescription drugs to Americans.

After the funds were awarded, East Providence and North Providence requested flexibility to spend the money for purposes outside of DOJ’s guidelines for the program, which generally limit use of “equitable sharing” funds to expenses like police training, equipment, and the improvement of facilities.  The cities requested that they be allowed to use the funds to help address shortfalls in their police pension systems. 

Senators Reed and Whitehouse strongly supported the cities’ requests and called and wrote to U.S. Attorney General Eric Holder on their behalf, saying, “we believe allowing East Providence and North Providence to use the equitable sharing funds for these purposes would be fully consistent with the statutory basis for the program.  As such, we urge your full and fair consideration of these requests…”

Attorney General Holder today called the Senators to let them know that he had granted the request and issued a waiver from the policy, allowing East Providence and North Providence to use the money to shore up their police pension funds.  Holder indicated that, given the circumstances facing Rhode Island and these cities, Senators Reed and Whitehouse made a compelling case to justify the waiver.  Holder further indicated that his decision was limited to this Google forfeiture in the state of Rhode Island and would not change Department policy nationally.  East Providence will be allowed to use $49.2 million of its allotment for police pensions, and North Providence will be allowed to use $20.6 million.  The balance of each city’s allotment must still be used in accordance with existing rules.

“This is great news for taxpayers, the cities, and for the retirement security of our police officers.  Attorney General Holder made the right call based on the merits of the case.  I appreciate his careful and timely review of this matter, and I thank the Attorney General.  Using a portion of these funds to stabilize these police pension plans should ease budgetary difficulties, and I am pleased to have helped East Providence and North Providence make the best possible use of these funds for public safety,” said Reed.

“The Attorney General was very clear.  He said that this was an ‘extraordinary exception’, limited to the Google forfeiture in Rhode Island, and that it would not have happened without the compelling case that Senator Reed and I made regarding the economic stresses faced in Rhode Island and in these two municipalities,” said Senator Whitehouse.

The State of Rhode Island’s efforts – led by Governor Chafee and Director of Revenue Rosemary Booth Gallogly – included crafting a waiver request detailing the extent of these communities’ needs and laying out compelling facts for why these funds should be put toward strengthening local pension systems.

“I am pleased that the federal government has recognized the need of these municipalities to strengthen their locally managed pension funds,” said Governor Lincoln Chafee.  “State, federal, and local officials worked together to achieve this outcome, and because of this collaboration East Providence and North Providence are on firmer financial footing today.”

“On behalf of the residents of East Providence, I’d like to thank Senator Whitehouse, Senator Reed, and Governor Chafee for their respective roles in facilitating the reallocation of the Google forfeiture fund to the East Providence pension,” said East Providence Mayor James A. Briden.  “This is a great day for our city, and will be central in implementing long-term financial stability.”

“This is an historic occasion, and hopefully the taxpayers realize how monumental this is for the financial stability of the town of North Providence for years to come,” said North Providence Mayor Charles A. Lombardi.  “Again, my heartfelt thanks to both Senator Whitehouse and Senator Reed for their help, and I apologize for my persistence.”


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Meaghan McCabe, (202) 224-2921