NEW YORK Jan 17 A partial windfall from a $500
million payment Google made in 2011 to Rhode Island
will be used by the towns of North Providence and East
Providence to reduce significant unfunded liabilities in their
pension funds, Moody's Investors Service said on Thursday.
Each city received $60 million in the settlement in which
Google admitted to have improperly assisted Canadian online
pharmacy advertisers to run ads that targeted the United States,
according to Rhode Island officials.
The U.S. Department of Justice on January 11 granted
permission to use the funds for public pensions.
"This is credit positive for both municipalities because
the settlement funds will alleviate pension underfunding and
reduce annual pension contributions," Moody's said.
The cost of funding public pensions is a controversial issue
in many U.S. states and cities struggling with low revenue.
Rhode Island enacted far-reaching pension reform, but it
left untouched dozens of independent local pension plans that
often are heavily underfunded.
North Providence will deposit $20.6 million from the
settlement into its police pension fund, which will eliminate
most of the town's estimated $22.5 million unfunded liability,
Moody's said. The funded ratio stood at 45 percent as of the
East Providence will put $49.2 million of the settlement
money into its public safety pension fund, which will eliminate
close to half of its $105.8 million unfunded liability. The
funded ratio of the city's pension fund was 33.6 percent.