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2017 House Bill 5298: Establish funding requirements for municipal employee retirement benefits
Introduced by Rep. Thomas Albert (R) on November 30, 2017
To establish a new state regulatory and oversight regime for pensions and other post-retirement benefits (OPEBs) offered by local governments to their employees, including retiree health insurance benefits. Note: The bill treats pension obligations and retiree insurance promises similarly. However, while the state constitution requires pensions to be paid-for as they are earned and prohibits any impairment of them, post-retirement health insurance promises need not be funded in advance, are not considered enforceable obligations on taxpayers, and can be trimmed or eliminated at any time. Also, like other Americans, local government employees all qualify for federal Medicare benefits when they turn 65.
The bill is part of a package comprised of House Bills 5298 to 5216 that would impose more state oversight, disclosure requirements and minimum funding requirements for these systems, and authorize “emergency manager”-type receivership provisions for local governments that fail to meet the standards by specified deadlines. Other provisions could potentially include placing property tax increases on local ballots, with the revenue used to provide health insurance benefits to local government retirees.   Official Text and Analysis.
Referred to the House Michigan Competitiveness on November 30, 2017
Reported in the House on December 5, 2017
With the recommendation that the amendment be adopted and that the bill then pass.
Substitute offered by Rep. Daire Rendon (R) on December 6, 2017
To adopt a version of the bill that does not include provisions that would authorize “emergency manager”-type receivership provisions for local governments that fail to meet prescribed retirement benefit pre-funding standards by specified deadlines.
The substitute passed by voice vote in the House on December 6, 2017
Passed 105 to 5 in the House on December 6, 2017.
    See Who Voted "Yes" and Who Voted "No".
To establish a new state disclosure and oversight regime for pensions and other post-retirement benefits (OPEBs) offered by local governments to their employees, including retiree health insurance benefits. Local governments would have file annual reports on the extent to which the future benefits they have promised are underfunded, using standards the state Department of Treasury would be required to establish. Locals that fail to meet certain funding levels, or that spend more than 12 percent of their budget to prefund benefits (or catch up on past underfunding) would be required to submit a corrective action plan. Provisions authorizing “emergency manager”-type receivership provisions for local governments that fail to meet the standards by specified deadlines were not included in the final version of the bill.
Received in the Senate on December 12, 2017
Referred to the Senate Government Operations Committee on December 12, 2017

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