Michigan Governor’s Task Force Proposes 4 Priority Reforms

The Michigan task force created by Gov. Rick Snyder released a report Tuesday with proposals to the governor regarding pension and health care costs, retiree support, and the provisions of more financial stability and effective delivery of local government services.

Created following Snyder’s announcement in his January 2017 State of the State address, the Responsible Retirement Reform for Local Government Task Force proposed the following four reforms become priorities for Michigan:

• Greater reporting and transparency from all local governments, including reporting using uniform financial assumptions to allow for better comparisons.

• The creation of a pension and other post-employment benefits (OPEB) fiscal stress test system for local governments to help them develop solutions that protect benefits for employees and retirees.

• The creation of a Municipal Stability Board (MSB), which will provide research, training and technical assistance to local governments and help with review and corrective action where needed.

• Meet existing constitutional and statutory requirements to pay pension costs, but also meet a minimum requirement to pay OPEB normal costs for new hires if offered, for example by prefunding new active employee’s current-year obligations.

“Municipalities across Michigan and the nation are facing growing, unfunded long-term liabilities that jeopardize the quality of life in our communities, along with the retirees and employees who depend on these benefits,” Snyder said in a statement. “This is why I asked legislators, state and local government officials, employee representatives, and pension managers and insurance professionals to work together to determine how we can best reform local government pension and health care in Michigan. I thank the task force members for dedicating their time to this pressing issue and look forward to reviewing their recommendations and working with the Legislature to implement reforms.”

This is the second big piece of news in recent days for Michigan pensions; last week, the governor signed Senate Bill 401, a law which will switch the Michigan Public School Employees Retirement System’s (MSPRS) hybrid plan—a combination of a 401(k) and pension—with a new defined contribution hybrid that gives employees a 7% contribution from the state and schools.