Last week, companion bills were introduced in the Michigan House and Senate that would attack pensions and retiree healthcare for current and retired local government employees. Earlier this year, Michigan’s governor convened a task force on Responsible Retirement Reform for Local Government. That task force issued a unanimous recommendation that called for increased transparency and oversight of the hundreds of individual pension plans offered by local governments in Michigan. However, rather than adopt the task force’s recommendation, anti-pension ideologues have introduced legislation that goes far beyond what the task force suggested.
The legislation introduced last week would create a five step process for local governments to affirm that their pension plans are financially stable. This includes funding requirements for both pensions and retiree healthcare. If a local pension plan is not deemed to be financially sound, then it would have to create a corrective action plan to improve its funded status. If a municipality is not able to agree to a plan or the state determines that the plan is not being correctly implemented, then the state can impose a three-person “financial management team” on the municipality. This team would have broad powers, including requiring the local government to amend its budget, sell assets or “take any other action relating to the operation of municipal government.” These teams are similar to the emergency managers Michigan’s governor put in place in some municipalities just a short time ago.
Unfortunately, the bills introduced create broad mandates that restrict home rule, jeopardize health care benefits for retirees who have relied on them for years, and create a mechanism where decisions that affect thousands of municipal employees could be made by a trio named by the Governor. The legislation introduced last week has been condemned by police officers, firefighters, and other municipal workers across the state.
Michigan does not need a “one-size-fits-all” approach to local retirement and healthcare benefits. The legislature will begin consideration of these bills this week. Please click here to contact your state legislator and tell them to reject these bills and adopt the unanimous recommendation of the governor’s task force.