UPDATE: Talks Fluid; Legislature Introduces OPEB Reform Proposal

Posted on November 30, 2017 by chackbarth

UPDATE (1 p.m. Dec. 4, 2017): Negotiations on the OPEB (Other Post Employment Benefits) reform package remain fluid. The Michigan Municipal League has remained fully engaged through last week and the weekend, including meetings with the Governor, Treasurer, and legislative leadership to fully understand the various components of the package, and are continuing to express concerns and suggestions. Based upon our review, we have identified additional issues in need of addressing. Chief among them relate to changes to PA 345 which allows the levying of taxes for public safety pensions, and the elimination of the bonding provisions for closed plans. We will be working on this package throughout the week. Please check this blog post regularly for further updates as things develop.

FROM THURSDAY’s blog post on this issue (Nov. 30): Following months of discussions between the League, legislative and administration officials on the need for additional tools to better manage retirement health benefit cost drivers, negotiations took a turn within the last 36 hours.  This shift in content has resulted in identical 16-bill packages being introduced today in both the House and the Senate.  These bills now include a number of provisions that were outside the original scope of those conversations that pose serious concerns for municipalities.

House Bills 5298-5313 and duplicate Senate Bills 686-701 were introduced this afternoon and were referred to the House and Senate committees on Michigan Competitiveness.  We have been told to expect these bills to be brought up by those committees next week, starting on Tuesday, December 5th.

The League has raised concerns over the inclusion of language in this package that opens PA 436, the Emergency Manager law to add in a new provision for an emergency management team to be appointed in communities where the community and its bargaining units are unable to come to agreement on a local corrective action plans designed to address an OPEB or pension funding situation that exceeds specified funding and budget spending thresholds.

Of additional concern, the package includes language mandating the pre-funding of retiree health benefits over a five-year phase-in period beginning in 2019 and mandates every community establish a section 115 irrevocable trust to hold all of those dollars.

The situation around these bills and their potential movement is very fluid right now.  League staff are working with member communities and other local government organizations to review and respond to these newly introduced bills and will be attempting to work with legislative leaders to address the concerns we have with the bills over the next few days.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and [email protected].


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