Gov. Rick Snyder signs legislation to help local communities threatened by unfunded liabilities

Wednesday, Dec. 20, 2017

LANSING, Mich. – Reforms ensuring greater transparency and reporting on local funding needed to properly fund the post-retirement benefits of local government workers will be enacted under a bill package signed today by Gov. Rick Snyder.

The reforms are recommendations of Gov. Snyder’s Responsible Retirement Reform for Local Government Task Force, which was convened earlier this year to address concerns surrounding the unfunded pension and retiree health care liabilities of local governments in Michigan.

Joined by a group of lawmakers, task force members and others, Gov. Snyder signed SB 686, creating the Protecting Local Government Retirement Benefits Act. The act incorporates four phases for local units to use in addressing their fiscal health and the security of retirement benefits for retired municipal employees:

  1. Transparency through reporting requirements
  2. Identification of potential problems
  3. Review for fiscal distress
  4. Develop a corrective action plan

“This legislation is an important step forward in addressing one of Michigan’s remaining unfunded liability challenges,” Snyder said. “I appreciate the task force’s hard work in developing a framework that will help move more communities toward greater financial stability. I also look forward to a continued cooperative effort as future work occurs on this important issue.”

Comprised of legislators, state and local government officials, and employee representatives, the task force prepared a report of recommendations for Snyder in July that focused on addressing Michigan’s mounting local pension and health care costs, ensuring retiree support, and providing more financial stability and the effective delivery of municipal services.

“By taking steps to identify problems and find solutions now, Michigan is working hard to ensure the worst-case scenarios don’t happen for communities across the state,” Lt. Governor Brian Calley said. “This legislation and the work of the task force is critical to steering local governments toward sustainable systems that ensure retiree support and financial stability.”

The 13-bill package also includes:

  • SB 688, sponsored by Sen. Jim Stamas, amends the Public Employee Retirement System Investment Act to require a system provide a supplemental actuarial analysis before adoption of any proposed benefit change only when an increase in benefits is proposed, and repeals a reporting requirement enacted last year that will now be replaced by new reporting under SB 686.
  • SB 691, sponsored by Sen. Dave Hildenbrand, amends the County Board of Commissioners Act to specify any benefits provided under it would also be subject to the new act.
  • SB 692, sponsored by Sen. Phil Pavlov, amends the Optional Unified Form of County Government Act to provide a retirement plan authorized under it would also be subject to the new act.
  • SB 694, sponsored by Sen. Jim Stamas, amends the Firemen and Policemen Pensions Act to provide certain interest payments from reserve funds allowed under the Act would be subject to the new act.
  • SB 696, sponsored by Sen. Jim Stamas, amends the Revised Statutes of 1846 to make the benefits provided by a township subject to the new act.
  • SB 699, sponsored by Sen. Mike Shirkey, amends the Incompatible Public Offices Act to state that the prohibition on public officers or employees holding two or more incompatible offices does not apply to members of the Municipal Stability Board.
  • HB 5301, sponsored by Rep. Gary Glenn, amends the Reciprocal Retirement Act to require local units in a reciprocal retirement system to comply with the provisions of the new act.
  • HB 5304, sponsored by Rep. Kathy Crawford, amends the act governing charter counties to ensure systems under the act are subject to the new act.
  • HB 5306, sponsored by Rep. Eric Leutheuser, amends the Fire Fighters and Police Officers Retirement Act to provide any unit operating under the act are subject to the new act.
  • HB 5308, sponsored by Rep. Gary Howell, amends PA 339 of 1927, which governs retirement systems for library employees to require they comply with the new act.
  • HB 5310, sponsored by Rep. James Lower, amends the Municipal Employees Retirement Act to make the Municipal Employees Retirement System retirement board subject to the new act.
  • HB 5313, sponsored by Rep. Rob VerHeulen, amends the Home Rule City Act to specify benefits provided under the act are subject to the new act.

The bills are now Public Acts 202-214 of 2017.

For more information on this and other legislation, please visit www.legislature.mi.gov.


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