Rep. Rendon: Every Michigan community suffers for insolvency of few

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State Representative Daire Rendon today offered a vote of support in the Michigan House for legislation protecting retirement benefits for police, firefighters and other local government employees in Michigan.

Rendon stressed the importance of gathering current information to examine the financial status of communities and ensuring local governments are committed to making normal payments into post-employment benefit systems for employees.

“The rest of us will pay for the insolvency of others,” said Rendon, of Lake City. “We have a few communities in the state that report zero percent funding for employee benefit and retirement plans. By not funding employee pension and benefit plans, those communities are still going back on promises made to individuals when they were hired, and some are working for benefits that they may not receive. It’s dangerous for retirees and puts the viability of communities on unstable ground financially.”

The new proposal will stress transparency and proper reporting from local governments each year to pinpoint those who may be at risk of bankruptcy due to underfunded retirement plans. An early detection method that involves local government will increase the chances of heading off potential funding problems long before they reach the point of financial catastrophe.

The reporting system follows the specific recommendations of a task force assembled by Gov. Rick Snyder earlier this year. The system created by the task force uses uniform financial and accounting standards for local government retirement plans. 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.

“Pensions are constitutionally protected. This plan does not harm pensions and it is not intended to take away benefits through state intervention,” Rendon said. “Our police officers and firefighters work hard and deserve all of the benefits they were promised. They often retire early because the nature of their work can lead to problems with their backs, shoulders and knees. They are relying on promised retirement benefits that must be there 30-40 years down the line. We need a plan to protect those futures, because the current method of avoidance is kicking the can down the road. Communities are just trying to stay above water after the last decade of shrinking property values and lost revenue sharing. We need a real change to protect the benefits of those who protect us.”

Rendon helped advance House Bill 5298 and companion legislation through the House Michigan Competitiveness Committee on Tuesday.