Legislation good first step in helping local governments with retiree expenses
Unfunded and underfunded pension and retiree health care liabilities for local governments in Michigan should be a concern we all share.
Earlier this month Gov. Rick Snyder signed legislation to help address the issue. The legislation was a result, in part, of the work done by State Sen. Jim Stamas, R-Midland, and other members of the bi-partisan Responsible Retirement Reform for Local Government Task Force. Stamas was one of two senators appointed to the task force.
The task force reported that “of the approximately 1,800 local general purpose governments in Michigan, roughly one third provide post-retirement benefits. Due to a multitude of factors, many communities are facing challenges in funding the benefits to retirees. The total unfunded pension liability is estimated to be around $7.46 billion. The total unfunded liability for retiree health care is estimated at $10.13 billion.”
Local governments are currently $18.8 billion in the red on their pension and retirement health care obligations.
Stamas said Public Acts 202-214 of 2017 are designed to increase transparency, preserve local control and encourage local solutions. Many local governments have already taken action to address their unfunded liabilities. The proactive reforms will help locals that have not taken steps to resolve their growing debt issue.
While the task force’s recommendations went further than the legislation eventually enacted, Stamas believes it is a start to addressing the issue.
“While this is a step forward toward local retirement stability, I will continue fighting to preserve and protect the promises made to our local workers and ensure they receive the retirement benefits they have earned.”
It might not have been the ultimate solution, but it was a good beginning.