State Rep. Triston Cole of Mancelona today voted in favor of legislation to safeguard the retirement benefits of police and firefighters.
The bills approved by the Michigan House will help identify local governments most at risk of bankruptcy or severe financial hardship due to underfunded retirement plans. The legislation is designed to help local governments avoid financial crisis, so they can continue to pay for promised retiree benefits and public services.
“Our goal is to protect the benefits promised to the people who spent their careers protecting us. We want to preserve retiree benefits – not take them away,” Cole said. “That’s why we must do something to address this developing crisis. If we do nothing, police and fire department retirees will be at far greater risk of losing the benefits they’ve worked hard for and deserve.”
Michigan’s local government employee retirement systems have unfunded liabilities fast approaching $20 billion.
The legislation approved by the House seeks to help communities improve their plans’ finances, mirroring recommendations from a task force assembled by Gov. Rick Snyder earlier this year.
The legislation calls for communities to make a minimum level of payments related to retirement systems for new hires. It creates a reporting system with uniform financial and accounting standards for local government retirement plans. An early detection system will help identify potential funding problems so local governments act quickly to mitigate them. Communities will be vetted through a state treasurer’s fiscal impact evaluation and retirement systems will be flagged as underfunded when municipalities aren’t meeting set criteria to alleviate their debts.
“The state is not intervening in local plans through this proposal,” Cole said. “Instead, we are working to give local communities the tools they need to fix the financial situation on their own.”
House Bill 5298 and companion legislation advance to the Senate for consideration.