Town of Johnston, RI Article VI Retirement Escrow Fund

[Adopted 4-11-2022 by Ord. No. 2022-4]

§ 31-12 Establishment and administration of the Compensated Absence Retirement Escrow Fund.

A. The Town Council hereby establishes a special revenue fund to be known as the Town of Johnston Compensated Absence Retirement Escrow Fund.

B. The fund shall be established with a transfer of $1,750,000 from the General Fund, unassigned fund balance, and shall therefore be funded as provided for below.

C. On an annual basis the Town will allocate any amounts of tax revenue collected during the fiscal year for all the preceding tax years which exceed the amounts budgeted for that year. These excess receipts will be allocated to the Compensated Absence Retirement Escrow Fund up to a maximum amount of $250,000 annually. If the positive budgetary variance of these tax collections exceeds $250,000, then the amounts collected in excess of the $250,000 variance shall remain in the General Fund.

D. Those funds shall continue to accumulate in the Compensated Absence Retirement Escrow Fund and shall only be utilized to help cover the payment of compensation which is paid out to employees upon their separation of service from the Town of Johnston and in accordance with the terms of the respective collective bargaining agreements.

E. Utilization of the fund balance accumulated in the Compensated Absence Retirement Escrow Fund in accordance with Subsection D above, shall only be completed if the General Fund incurred a deficit during the fiscal year, and that deficit was caused in part as a result of the expenditures for compensation exceeding the amount budgeted for the fiscal year due to the separation from service payments made to employees separating from employment with the Town in accordance with the collective bargaining agreements. The amount to be utilized may not exceed the lessor of the General Fund's operating deficit or the amount of separation from service compensation which was paid during the fiscal year that was in excess of the amount budgeted for said expenditure.

F. The funding of the Compensated Absence Retirement Escrow Fund shall be completed annually up until such time as the accumulated fund balance of this Fund is equal to 125% of the accumulated benefit obligation of the Town, including the applicable payroll taxes. At no time should the accumulated fund balance of this Compensated Absence Retirement Escrow Fund exceed 125% of the accumulated benefit obligation of the Town, not including the School Department. The Fund balance level will be determined annually in the annual audit.