Michigan legislature passes pared-down retiree health care changes in late-night session
LANSING, MI — For the second year in a row, first responders in Michigan celebrated a victory as the state legislature moved to pare down legislation on retiree health care changes affecting police and firefighters.
It appears that we have prevailed. Legislation is going to be presented tonight that require the Task Force recommendations are followed
— MPFFU (@MPFFU) December 7, 2017
The legislature started considering changes after the Responsible Retirement Reform for Local Government Task Force found a collective $7.46 billion in unfunded pension liabilities and $10.13 billion in unfunded health care liabilities lurking in local governments’ finances in a July report.
The House and Senate, after failing to gather enough votes on a plan with more teeth, took away the most controversial portions of the bill and reverted to the recommendations from Snyder’s Responsible Retirement Reform for Local Government Task Force, which met for months and issued recommendations in July.
Those recommendations were a broad outline, and the legislation is, too. It would:
- Require local units of government to thoroughly report financial information including funding of pension and retiree health care plans.
- The Treasury department will then evaluate plans to determine which are underfunded. For retiree health care, a plan is considered underfunded if its obligations are less than 40 percent funded and if its annual contribution is more than 12 percent of the unit’s revenue. A pension plan is considered underfunded if it’s under 60 percent funded and if the unit’s annual contribution is more than 10 percent of its revenue.
- The treasurer will give waivers to communities with underfunded pensions if they have approved plans to rectify the situation.
- Creates a “Municipal Stability Board” comprised of three experts; one from local government, one from state underfunded and haven’t self-implemented a plan to fix it. It will be comprised of three experts appointed by the governor; one from local government, one from state government and one representing employees and retirees, all with relevant financial experience. It will assist communities in coming up with and ultimately approve or disprove corrective action plans.
The final package did away with a “Financial Management Team” included in the original legislation that proved controversial due to its emergency management powers, including going into a local government’s budget. That and other provisions in the original bill were opposed by police and firefighters.
Senate Majority Leader Arlan Meekhof, R-West Olive, said the revised bills weren’t a total solution but a step in the right direction.
“You didn’t get the touchdown but you got a couple first downs. Let’s keep going, move the ball,” Meekhof said.
The changes swayed lawmakers like Sen. Rick Jones, R-Grand Ledge, a former Sheriff who was a hard “no” on the legislation as introduced. As amended, sticking to the task force’s report, he supported it.
“It’s everybody working together, employees and employers, and I think it’s a good thing,” Jones said.
Rep. Andy Schor, D-Lansing, served on the task force and supported the bills as passed.
“We did put out the task force report. This is labor and business and CPAs and really everybody who was involved. I thought we came up with a great product, and today that product was put up for a vote,” Schor said.
The bills passed unopposed in the Senate, but drew a scattering of opposition in the House – including from the House sponsors of the bills, Reps. James Lower, R-Cedar Lake, and Tom Albert, R-Lowell. There the main bill passed 105-5.
Joe Adams, state president of Michigan Fraternal Order of Police, was among dozens of police and firefighters gathered in the Senate lobby as members entered the chamber at 10 a.m., the start of a session that would last more than 15 hours.
“We were here a year ago today, we were here on the capitol steps rallying against it last year when something tried to get slammed through. And it worked last year,” said Adams, a police officer in Grosse Pointe.
It was after a last-minute push and failure in December of 2016, the governor formed the task force. The Fraternal Order of Police were represented on that task force, and want the legislature to follow its recommendations.
The bills passed today were mirror images in both chambers. They passed just after 2:30 a.m. To become law, one of the versions would have to pass the opposite chamber and be signed by Gov. Rick Snyder, who is supportive of changes to address retiree health care liabilities.