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Retiree health care changes headed to Gov. Rick Snyder for signature

LANSING, MI – A pared-down version of the bills to address unfunded pension and retiree health care liabilities in Michigan communities made its way through the chambers Tuesday and is headed to Gov. Rick Snyder’s desk. 

The bills attempt to address more than $7 billion in unfunded pension liabilities and $10 billion in unfunded retiree health care liabilities within local communities by requiring financial reporting and helping local communities with underfunding issues create corrective action plans to regain their financial footing.  

“It is estimated that local governments in Michigan are $18.8 billion in the red on their pension and retirement health care obligations,” said Sen. Jim Stamas, R-Midland, who led the bill package in the Senate.  

“Our goal with this legislation is to increase transparency, preserve local control and encourage local solutions. Many local governments have already taken action to address their unfunded liabilities. These proactive reforms are designed to help locals that have not taken steps to resolve their growing debt issue.” 

The House and Senate passed each other’s bills on Tuesday, then switched them back to their original chambers for enrollment, printing and presentation to the governor. The governor is supportive of the legislation, according to a spokeswoman. 

The measure was originally opposed by police and firefighters, who took issue with a key portion of the bill that would have given power to a “financial management team” under the state’s emergency management act. That was stripped away in a late-night session last week.  

Michigan legislature passes pared-down retiree health care changes in late-night session  

The new version has gotten a tepid reception from municipal groups like the Michigan Association of Townships, which said last week it doesn’t go far enough to help local retirement plans achieve solvency. 

The bills passed with wide margins in both chambers, but one consistent “no” vote was from Rep. Thomas Albert, R-Lowell, who along with Rep. James Lower, R-Cedar Lake, authored the original package.   

“I don’t like them compared to what we had originally introduced. Really what I cared about was making sure retirees and active employees too that are promised a benefit actually get paid it. And I just don’t have a lot of confidence the current bills will achieve that goal,” Albert said. 

Senate Majority Leader Arlan Meekhof, R-West Olive, said the bills made progress by requiring financial reporting, measuring communities equally, determining which communities didn’t have financial problems in their retirement systems and requiring corrective action plans from those with underfunding problems.  

“I was hoping for more, that we would have more solutions. But that’s not to say that there isn’t more work to do, but it’s just not right now,” he said.  

The bills concurred in by their respective chambers on Tuesday were Senate Bills 686, 688, 691-699 and House Bills 5301, 5304, 5306, 5308, 5310 and 5313.  

The legislation will:  

  • 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.   
  • Create a “Municipal Stability Board” 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. 

Note: The story has been corrected to reflect that local communities have $10 billion in unfunded pension liabilities. 

Retiree health care changes headed to Gov. Rick Snyder for signature

LANSING, MI – A pared-down version of the bills to address unfunded pension and retiree health care liabilities in Michigan communities made its way through the chambers Tuesday and is headed to Gov. Rick Snyder’s desk. 

The bills attempt to address more than $7 billion in unfunded pension liabilities and $10 billion in unfunded retiree health care liabilities within local communities by requiring financial reporting and helping local communities with underfunding issues create corrective action plans to regain their financial footing.  

“It is estimated that local governments in Michigan are $18.8 billion in the red on their pension and retirement health care obligations,” said Sen. Jim Stamas, R-Midland, who led the bill package in the Senate.  

“Our goal with this legislation is to increase transparency, preserve local control and encourage local solutions. Many local governments have already taken action to address their unfunded liabilities. These proactive reforms are designed to help locals that have not taken steps to resolve their growing debt issue.” 

The House and Senate passed each other’s bills on Tuesday, then switched them back to their original chambers for enrollment, printing and presentation to the governor. The governor is supportive of the legislation, according to a spokeswoman. 

The measure was originally opposed by police and firefighters, who took issue with a key portion of the bill that would have given power to a “financial management team” under the state’s emergency management act. That was stripped away in a late-night session last week.  

Michigan legislature passes pared-down retiree health care changes in late-night session  

The new version has gotten a tepid reception from municipal groups like the Michigan Association of Townships, which said last week it doesn’t go far enough to help local retirement plans achieve solvency. 

The bills passed with wide margins in both chambers, but one consistent “no” vote was from Rep. Thomas Albert, R-Lowell, who along with Rep. James Lower, R-Cedar Lake, authored the original package.   

“I don’t like them compared to what we had originally introduced. Really what I cared about was making sure retirees and active employees too that are promised a benefit actually get paid it. And I just don’t have a lot of confidence the current bills will achieve that goal,” Albert said. 

Senate Majority Leader Arlan Meekhof, R-West Olive, said the bills made progress by requiring financial reporting, measuring communities equally, determining which communities didn’t have financial problems in their retirement systems and requiring corrective action plans from those with underfunding problems.  

“I was hoping for more, that we would have more solutions. But that’s not to say that there isn’t more work to do, but it’s just not right now,” he said.  

The bills concurred in by their respective chambers on Tuesday were Senate Bills 686, 688, 691-699 and House Bills 5301, 5304, 5306, 5308, 5310 and 5313.  

The legislation will:  

  • 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.   
  • Create a “Municipal Stability Board” 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. 

Note: The story has been corrected to reflect that local communities have $10 billion in unfunded pension liabilities. 

Retiree health care changes headed to Gov. Rick Snyder for signature

LANSING, MI – A pared-down version of the bills to address unfunded pension and retiree health care liabilities in Michigan communities made its way through the chambers Tuesday and is headed to Gov. Rick Snyder’s desk. 

The bills attempt to address more than $7 billion in unfunded pension liabilities and $10 billion in unfunded retiree health care liabilities within local communities by requiring financial reporting and helping local communities with underfunding issues create corrective action plans to regain their financial footing.  

“It is estimated that local governments in Michigan are $18.8 billion in the red on their pension and retirement health care obligations,” said Sen. Jim Stamas, R-Midland, who led the bill package in the Senate.  

“Our goal with this legislation is to increase transparency, preserve local control and encourage local solutions. Many local governments have already taken action to address their unfunded liabilities. These proactive reforms are designed to help locals that have not taken steps to resolve their growing debt issue.” 

The House and Senate passed each other’s bills on Tuesday, then switched them back to their original chambers for enrollment, printing and presentation to the governor. The governor is supportive of the legislation, according to a spokeswoman. 

The measure was originally opposed by police and firefighters, who took issue with a key portion of the bill that would have given power to a “financial management team” under the state’s emergency management act. That was stripped away in a late-night session last week.  

Michigan legislature passes pared-down retiree health care changes in late-night session  

The new version has gotten a tepid reception from municipal groups like the Michigan Association of Townships, which said last week it doesn’t go far enough to help local retirement plans achieve solvency. 

The bills passed with wide margins in both chambers, but one consistent “no” vote was from Rep. Thomas Albert, R-Lowell, who along with Rep. James Lower, R-Cedar Lake, authored the original package.   

“I don’t like them compared to what we had originally introduced. Really what I cared about was making sure retirees and active employees too that are promised a benefit actually get paid it. And I just don’t have a lot of confidence the current bills will achieve that goal,” Albert said. 

Senate Majority Leader Arlan Meekhof, R-West Olive, said the bills made progress by requiring financial reporting, measuring communities equally, determining which communities didn’t have financial problems in their retirement systems and requiring corrective action plans from those with underfunding problems.  

“I was hoping for more, that we would have more solutions. But that’s not to say that there isn’t more work to do, but it’s just not right now,” he said.  

The bills concurred in by their respective chambers on Tuesday were Senate Bills 686, 688, 691-699 and House Bills 5301, 5304, 5306, 5308, 5310 and 5313.  

The legislation will:  

  • 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.   
  • Create a “Municipal Stability Board” 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. 

Note: The story has been corrected to reflect that local communities have $10 billion in unfunded pension liabilities. 

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.  

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.  

Police, Firefighters rally for retiree health care at capitol  

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.  

Senate panel OKs retiree health care changes affecting police, firefighters

LANSING, MI — The House and Senate Competitiveness Committees voted on Tuesday to approve a package of bills that aim to assess and address underfunded pension and retirement health care systems in local Michigan communities.

The legislature is 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.

The task force couldn’t agree on the details of how to fix it, but an agreement between House and Senate leaders, along with Gov. Rick Snyder, was the topic of hearings at the state capitol on Tuesday, when both the House Competitiveness Committee and Senate Competitiveness Committee held testimony on identical, 16-bill packages.

The Senate committee moved it 4-1 along partisan lines, with Democrat Rebecca Warren, D-Ann Arbor, opposing.

“Disappointed that the bills being rushed through Competitiveness don’t reflect consensus recommendations of Retirement Task Force threaten to undermine the benefits that firefighters, police other public employees were promised,” Warren tweeted on Tuesday.

The bills introduced in the House and Senate would institute a five-step process to better assess the financial pictures of local governments struggling to fund promised retiree health care benefits. It would put the communities with not enough funding and no feasible plan to fix it — an estimated 20-30 communities, according to Senate Majority Leader Arlan Meekhof, R-West Olive — under a three-person Financial Management Team.

That team, organized under the state’s emergency management act, would have broad powers to rectify the underfunding, including through requiring the municipality to change its budget. If the municipality doesn’t comply and fails to rectify that noncompliance, it can be sent into emergency management.

Here are the retiree health care changes Michigan lawmakers are considering

Rep. James Lower, R-Cedar Lake, a sponsor of the House legislation, said the plan would help avoid situations like bankruptcy, where retirees could see their benefits reduced or taken away.

“Doing nothing is really, really dangerous for retirees,” Lower said.

Also testifying in support of the legislation was State Treasurer Nick Khouri, who said the bills had the governor’s support. The goal, he said, is to create sustainable pension and health care systems for local units of government.

But the bill met with criticism from democrats like Rep. Erika Geiss, D-Taylor, who pointed to the fact that communities were facing decreased revenue sharing payments from the state.

How Michigan’s revenue sharing ‘raid’ cost communities billions for local services

Khouri said the Snyder administration was open to talking about increases in revenue sharing.

But for local police and firefighters, who are counting on the retiree benefits, the

Midland Fire Chief Chris Coughlin of the Michigan Association of Fire Chiefs testified in the Senate committee on behalf of a coalition of police and fire organizations in opposition to the legislation. He said the task force came up with broad recommendations the groups supported, but the legislation jeopardizes what police and fire have been promised.  

“Police officers and firefighters put their lives on the line every day. We cannot support legislation that impacts the promises made in collective bargaining agreements. These promises were made and they need to be kept,” Coughlin said.

The House Competitiveness Committee passed the main bills 5-4 along mostly party lines, with Rep. Jason Wentworth, R-Clare, joining Democrats in voting against the bills. Three of the more ancillary bills in the package, House Bills 5314-5316, on revenue sharing funds, passed 6-0-3 with Republicans voting for them and Democrats passing.

The bills are pending now on the House floor, where they could be taken up at any time. 

The Senate on a tentative agenda put out Tuesday night has the bills listed as going all the way through final passage on Wednesday.

MLive Reporter Lauren Gibbons contributed to this story.

Senate panel OKs retiree health care changes affecting police, firefighters

LANSING, MI — The House and Senate Competitiveness Committees voted on Tuesday to approve a package of bills that aim to assess and address underfunded pension and retirement health care systems in local Michigan communities.

The legislature is 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.

The task force couldn’t agree on the details of how to fix it, but an agreement between House and Senate leaders, along with Gov. Rick Snyder, was the topic of hearings at the state capitol on Tuesday, when both the House Competitiveness Committee and Senate Competitiveness Committee held testimony on identical, 16-bill packages.

The Senate committee moved it 4-1 along partisan lines, with Democrat Rebecca Warren, D-Ann Arbor, opposing.

“Disappointed that the bills being rushed through Competitiveness don’t reflect consensus recommendations of Retirement Task Force threaten to undermine the benefits that firefighters, police other public employees were promised,” Warren tweeted on Tuesday.

The bills introduced in the House and Senate would institute a five-step process to better assess the financial pictures of local governments struggling to fund promised retiree health care benefits. It would put the communities with not enough funding and no feasible plan to fix it — an estimated 20-30 communities, according to Senate Majority Leader Arlan Meekhof, R-West Olive — under a three-person Financial Management Team.

That team, organized under the state’s emergency management act, would have broad powers to rectify the underfunding, including through requiring the municipality to change its budget. If the municipality doesn’t comply and fails to rectify that noncompliance, it can be sent into emergency management.

Here are the retiree health care changes Michigan lawmakers are considering

Rep. James Lower, R-Cedar Lake, a sponsor of the House legislation, said the plan would help avoid situations like bankruptcy, where retirees could see their benefits reduced or taken away.

“Doing nothing is really, really dangerous for retirees,” Lower said.

Also testifying in support of the legislation was State Treasurer Nick Khouri, who said the bills had the governor’s support. The goal, he said, is to create sustainable pension and health care systems for local units of government.

But the bill met with criticism from democrats like Rep. Erika Geiss, D-Taylor, who pointed to the fact that communities were facing decreased revenue sharing payments from the state.

How Michigan’s revenue sharing ‘raid’ cost communities billions for local services

Khouri said the Snyder administration was open to talking about increases in revenue sharing.

But for local police and firefighters, who are counting on the retiree benefits, the

Midland Fire Chief Chris Coughlin of the Michigan Association of Fire Chiefs testified in the Senate committee on behalf of a coalition of police and fire organizations in opposition to the legislation. He said the task force came up with broad recommendations the groups supported, but the legislation jeopardizes what police and fire have been promised.  

“Police officers and firefighters put their lives on the line every day. We cannot support legislation that impacts the promises made in collective bargaining agreements. These promises were made and they need to be kept,” Coughlin said.

The House Competitiveness Committee passed the main bills 5-4 along mostly party lines, with Rep. Jason Wentworth, R-Clare, joining Democrats in voting against the bills. Three of the more ancillary bills in the package, House Bills 5314-5316, on revenue sharing funds, passed 6-0-3 with Republicans voting for them and Democrats passing.

The bills are pending now on the House floor, where they could be taken up at any time. 

The Senate on a tentative agenda put out Tuesday night has the bills listed as going all the way through final passage on Wednesday.

MLive Reporter Lauren Gibbons contributed to this story.

January health premium hike cuts into pay raise, retiree COLA

Federal and postal workers this week will learn how much their health premiums will be going up in January. Later this month, retirees will learn the amount of their January cost-of-living adjustment, which could exceed the pending 1.9 percent white-collar federal pay raise. Or not.

Many workers and retirees confuse a federal pay raise with a retiree COLA. Many politicians — when giving themselves a pay raise — often refer to it as a COLA, simply a catchup with inflation. But the two are very different. COLAs track changes in the cost of living, whereas pay raises are a political-fiscal decision.

President Donald Trump has called for a 1.9 percent January pay raise for nonpostal federal workers. Under the locality pay system, 1.4 percent of that will go to many workers, while an additional 0.5 percent will be granted to workers in places like San Francisco-San Jose, New York City, Washington-Baltimore and other locality pay zones.

Uniformed military personnel would get a 2.1 percent raise next year under the Trump budget.

        Survey: Agency managers view cost, security and analytics as criteria for adopting new data storage technologies.


Later this month, federal and postal retirees (or their survivors) will get the official number of their 2018 cost-of-living adjustment. It’s expected to come in at, or around, 2.2 percent. But the hike won’t be official until mid-October. The same COLA will go to people who get Social Security benefits and to military retirees.

The different numbers underscore that increases for retirees (COLAs) are raises. They are based on inflation, as measured by the Bureau of Labor Statistics Consumer Price Index-W. Pay raises for workers have no official link to inflation. Since the Clinton administration, federal pay raises — when there were raises — were set by the president. That figure prevailed unless Congress increased the amount. But the increases under Presidents Clinton and Bush never matched those that would have gone into effect had the 1990 FEPCA (Federal Employees Pay Comparability Act) formula been followed.

If higher health premiums cut into the pay raise or COLA, both active-duty feds and retirees have lots of options. They can change health plans. In many cases, the low or basic option of a particular health plan offers almost identical benefits at a much lower premium than the plan’s “standard” or high option. There will be an open season in November and December, when everybody in the FEHBP gets a chance to switch plans. Nobody can be denied coverage because of preexisting conditions, and in many cases, people can save $1,000 or more in premiums simply by switching to a lower-cost plan similar to the one they have now, or a different option with lower premiums.

The government will continue to pay an average of 72 percent of the total premium, no matter how much it increases.

The problem is that only about 6 percent of feds eligible to change plans do so. The switch rate is even lower for retirees, many of whom have stuck with the same plan year-after-year, despite premium increases. Many of them could save a lot of money — and lower their premiums — by doing a little shopping. More tips on that as the open season draws near.

Nearly Useless Factoid

By David Thornton

        2 agencies detail workforce reductions, consolidations under gov’t reorganization

Bones are about 22 percent water.

Source: The Water Information Program

Read more of Mike Causey’s Federal Report




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