SAN JOSE, Calif., December 5, 2017—Leaders of the Retirement Security Initiative today testified before Michigan lawmakers in support of the Protecting Local Government Retirement and Benefits Act, a bill that would improve the solvency of municipal pension and retiree health care plans. RSI President Dan Liljenquist and CEO Pete Constant testified before the House Michigan Competitiveness Committee and the Senate Competitiveness Committee, respectively.

“This reform is an important framework to help ensure that Michigan’s local governments are appropriately funding their retirement commitments to their hard-working public employees,” said Liljenquist, a former Utah senator.  

With an estimated combined pension and retiree health care debt of nearly $20 billion, Michigan’s local governments face serious financial challenges. Currently, 245 cities, counties, townships and other municipalities have saved less than 1 percent of funding necessary to pay for retiree healthcare and other benefits. Further, most county governments have less than 10 percent of assets necessary to pay retiree benefits; cities have only 19 percent and townships and villages 20 percent, thus, putting at risk public employees’ and retirees’ retirement security.

“The funding levels for public employee pension and retiree healthcare benefits for the vast majority of local units of government across the great state of Michigan are now at a crisis level,” testified Constant during the Senate Committee hearing. “In fact, nearly one half of all local healthcare plans have less than one cent saved for every dollar of benefits that have been promised to past and current employees.” Born and raised in Michigan, Constant is a retired city police officer, former city council member and a former pension board trustee. 

“The Protecting Local Government Retirement and Benefits Act creates clear, understandable and transparent reporting standards for local employee pension and retiree healthcare benefit plans, while establishing gradual, yet predictable funding schedules,” continued Constant.  “Nothing in this legislation takes away any benefits earned or promised to employees or retirees. Nor does it force local governments to change the benefits they offer to employees, rather it puts them on a path to paying for the promises that they are making.”

Further, the legislation holds local governments accountable by creating a Local Retirement Stability Board to oversee the corrective action plans and a Financial Management Team to assist communities who are unable to independently develop and implement a plan that leads to the long-term viability of the pension and/or retiree healthcare plan. 

“This legislation puts employees first, requiring local governments to fully pay for the valuable work public employees do every day for residents and taxpayers across the state,” concluded Constant. “No more making promises today, and sending the bill to future generations; your children, grandchildren and great-grandchildren.” 

The Retirement Security Initiative believes that public employee pensions should provide retirement security, be sustainable, fiscally sound and responsibly managed so that all retirees and employees get paid what they have earned.