Retirement health benefit waiver approved
A change in the state law to protect local government retirement and health benefits systems necessitated a waiver acknowledging there is enough money in the system to cover benefits by the Bloomfield Township Board of Trustees, which they did unanimously at their meeting on Monday, March 12.
Public Act 202 of 2017, Protecting Local Government Retirement and Benefits Act, requires a local municipality, beginning July 1, 2018, to pay normal costs (the cost of retirement health benefits as they are earned) for new employees and to pay retiree premiums due in its retirement system, if the local government offers or provides an employee, or a former employee hired before the act's effective date, with a retirement health benefit. The act also requires the state treasurer to determine the underfunded status of every local unit of government each year, and to provide for oversight of an underfunded local unit. If a local government is less than 40 percent funded, then its retirement health systems cannot be more than 12 percent of its general fund operating revenue.
Supervisor Leo Savoie said at the board meeting that Bloomfield Township has always been a pay-as-you go community, and the Voluntary Employee Beneficiary Association (VEBA) – a health reimbursement arrangement that allows an employer to contribute on behalf of an employee – has a current balance of $11 million, as of the July 1, 2015 actuarial reporting date required.
“It's more like $13 to 14 million currently, but the state mandates we report it as of a certain date,” he said. “Our intent is to build the VEBA account to a certain amount so that in 20 years, the people on the board will have upwards of $50 million to work with, and the board can decide what to do with it.
“We feel we are in compliance with the state, because we can make payments, we can make payments to a lockbox type savings, which was established in the 1960s.”
Savoie said the township has more than enough resources to meet all of their obligations.
Trustees approved the waiver 7-0.