March 22 The Rhode Island town of North
Providence had its near-junk credit rating boosted two notches
on Friday after it used a windfall legal settlement with Google
Inc to fix its troubled pension system.
Standard & Poor's Ratings Services on Friday raised the
town's general obligation bond rating to BBB-plus from
North Providence received $60 million out of the $500
million nationwide settlement with Google. The town then won
permission from the U.S. Justice Department to use $20.6 million
of that chunk to help plug a $22.5 million shortfall in its
police pension fund.
The settlement stems from Google's admission in 2011 that it
improperly assisted Canadian online pharmacy advertisers to run
ads that targeted the United States, according to Rhode Island
The windfall took North Providence's police pension fund
from critically underfunded at 45.3 percent in 2010 to 94.9
percent as of July 1, 2012, S&P said.
That is far healthier than most public pension funds in the
Another Rhode Island city, East Providence, also planned to
use $49.2 million of its $60 million in settlement money to
narrow its $105.8 million unfunded pension liability. S&P has
not taken any rating actions on that city in connection with the
settlement, a spokesman said.
S&P's upgrade of North Providence also reflects the town's
three straight years of general fund surpluses after its
finances had weakened through 2010, said S&P analyst Henry
Henderson in a statement.
That success has come largely because the town issued $10.26
million of deficit reduction bonds. But S&P believes the
structural balance is sustainable, even as the town deals with
potential pressure from unsettled labor contract negotiations
and school operations, Henderson said.
S&P's outlook on North Providence is stable. The town has
$30.2 million of general obligation bonds outstanding as of