YOU did it!  Thanks to all of your phone calls, emails, and trips to Lansing, we convinced the Legislator's to adopt the Task Force recommendations without the additional "over reach" items that some of them wanted to include.  Listed below is the Gongwer news explanation of what occurred in the Legislature early this monring regarding our Pension/Health Care issue.  The bottom line and very simple version is that our issues and concerns with the proposed legislation were addressed and we supported the bills that were adopted. 

Employers will have to begin reporting pension and health care costs in a uniform manner to the State.  The State may recommend ways to address escalating liabilties but there are no mandates from the State to the local community unless they end up with an emergency financial manager.  Watch for additional information in the near future explaning how this might affect you and your community.

House, Senate Pass Scaled-Back Municipal Retirement Bills

The House and Senate overwhelmingly passed legislation early Thursday morning requiring additional reporting from local governments on their funding of retirement benefit systems in an effort to curb unfunded liabilities. The bills are a scaled-back version of a plan pushed this week by Governor Rick Snyder that would have allowed for more state intervention in underfunded communities.

With police and fire fighter unions strongly opposing the plan pushed by Mr. Snyder, the Republican caucuses in both chambers were unable to get close to the votes needed to pass a plan that would have included a financial management team - similar to an emergency manager - with broad powers to make changes to local government budgets if they could not fund their retirement systems adequately.

Instead, legislative Republican leadership turned to simply codifying the Responsible Retirement Reform for Local Government Task Force released during the summer. The report called for additional reporting and transparency for local governments so the state understands the size and scope of the problem.

The main bills in the package are HB 5298*, which passed 105-5, and SB 686*, which passed 36-0.

Republicans Rep. Jim Lower of Cedar Lake and Rep. Thomas Albert of Belding voted no on the bill. Mr. Albert - who voted no on the entire package - and Mr. Lower were the lead House members working on the original package of bills that was later scaled back.

Democrats Rep. Rose Mary Robinson of Detroit, Rep. Yousef Rabhi of Ann Arbor and Rep. Sylvia Santana of Detroit also voted no.

House Speaker Tom Leonard (R-DeWitt) said the bills were a huge step in the right direction. On why the bills were scaled back before final passage, Mr. Leonard said many of his members had questions about how their districts would be affected.

"Certainly at some point we are going to have to figure out what to do with those municipalities that are in the worst shape," he said. "But again many of our members wanted to find out which of their municipalities are in bad shape. Until we get consistent reporting, until we get transparency, we are not going to find that out."

Mr. Leonard would not say if Mr. Snyder was on board with moving toward codifying the task force report.

Indeed, while Gongwer News Service reported earlier in the evening that Mr. Snyder had decided to pull away from the more far-reaching proposal, a source in the governor's camp said in fact it was the legislative Republican leadership that decided to drop the plan they and the governor had pursued and that the governor was disappointed with the decision not to keep working the original plan.

Police and fire fighter unions in statements following passage of the bills said they agreed with the changes and thanked them for choosing to go with the framework outlined in the task force report.

Senate Majority Leader Arlan Meekhof (R-West Olive) called the revised package a framework and starting point both Republicans and Democrats could agree on.

"Didn't get the touchdown," Mr. Meekhof told reporters, adding that lawmakers "got a few first downs" to move the ball forward in addressing a critical problem in the state. He said as the plan is implemented he expects there to be further work to address the issue, saying those discussions will occur at some point.

Senate Minority Leader Jim Ananich (D-Flint) agreed, saying the task force report is a key way to "make sure all taxpayers are protected" and when it comes to municipal pensions and health care benefits that "promises that were made had to be kept."

"I think it was a good place to go from," Mr. Ananich said, adding that the line of communication will need to remain on the issue during future discussions.

The bills passed do not contain an enforcement mechanism like the plan originally pushed. Instead, they would create a three-member municipal stability board. The board would help develop corrective action plans in communities struggling to fund their plans and provided technical assistance.

Local governments would be required to prefund retiree health care costs for new employees and communities would undergo fiscal "stress tests" to assist them in crafting solutions to any funding problems.

Republican leadership pushed for the package of bills as the local governments throughout the state face $7.46 billion in unfunded pension liabilities and $10.13 billion in retiree health care liabilities.

This week, the House and Senate reported bills that were opposed by public safety unions and local governments. The bills would have created a five-step plan with certain funding requirements and significant state oversight. The fifth step of the previously-discussed plan would have put communities unable to implement corrective plans to fund their retirement systems adequately - as determined by the Department of Treasury - under some version of state control.

Quickly, it was realized the Senate had less than one dozen votes supporting the bills and the House had, at best, 40 votes in support. Around 7 p.m., House and Senate Republicans went into their respective caucus meetings as the decision was made to abandon the original plan for a scaled-back version.

With the change, Democrats were also on board. Rep. Andy Schor (D-Lansing), who served on the task force, said the bills that passed Thursday were a great product and passed overwhelmingly with bipartisan votes.

"This is what we need. This is the step that we need to make sure we know the problem, that we know who has issues, who needs help," Mr. Schor said. "How we can get them information, how we can get them to work together. I think this is going to be a tremendous first step."

Under the bills, local governments would be required to submit annually reports on their retirement systems. The state treasurer would also be able to label a local government's system as underfunded if it was less than 40 percent funded for health care and 60 percent funded for pensions.

Local governments would also be considered underfunded if they are spending more than 12 percent of their General Fund on annual retiree health care payments, though the local governments could receive waivers from being considered underfunded. The treasurer would also annually establish uniform actuarial assumptions of retirement systems.

For local governments labeled underfunded, the treasurer would be allowed to undergo an internal review of the retirement systems and discuss changes implemented with the local governments' designated officials.

The three-member municipal stability board would be made up of residents representing state officials, local officials and employees and retirees. The board would set best practices for underfunded local governments and review corrective action plans for underfunded communities.

Local governments would be required to submit a corrective action plan within 180 days of being labeled underfunded and would have another 180 days to implement the plan. If the plan is not approved, the board would have 15 days to notify the local government.

The board could determine the local government is not in compliance with the act, but there are no penalties outlined in the bill.

Corrective actions available to local governments for retiree health care systems could include requiring cost sharing of premiums and capping employer costs.

The 12 other bills in the packages are mostly technical in nature. The House bills are: HB 5300*, HB 5301*, HB 5302*, HB 5303*, HB 5304*, HB 5305*, HB 5306*, HB 5307*, HB 5308*, HB 5309*, HB 5310* and HB 5313*. The passed with varying votes of 107-3 and 105-5.

The other 12 Senate bills are: SB 688*, SB 689*, SB 690*, SB 691*, SB 692*, SB 693*, SB 694*, SB 695*, SB 696*, SB 697*, SB 698* and SB 699*. Each bill in the package passed 36-0.