Unfunded public benefit liability must be addressed
Call it the 600 pound elephant in the living room, the problem that few people in positions of power want to discuss.
Call it what you will but state government appears ready — again — to take on the nettlesome topic of unfunded public employee benefit liabilities that many in Lansing and elsewhere say governments at all levels can no longer afford.
The Associated Press reported this week that conservatives are pushing reform in the face of $14 billion in unfunded liabilities spread across more than 300 communities in the state.
After ending pensions for new state workers in the late 1990s, Republican legislators are now considering moving all newly hired teachers and local government workers to 401(k)-type plans and cutting municipal retiree health benefits, AP reported.
Close to home, Marquette County’s pension obligations through the Municipal Employees’ Retirement System is funded at just 68 percent, according to information included in a recent Mining Journal series on the general issue. That’s $34 million short of where it should be.
In 2016, Marquette County’s $4,395,684 payment to MERS equated to nearly 17 percent of its $26 million general fund budget, the series noted, and that doesn’t include the health department and medical care facility’s portion, which come from separately managed funds.
The county’s circumstance was made even more difficult by the now discredited retire/rehire debacle, where a loophole in the law several years ago allowed more than a score of county workers to rehire early while keeping their old jobs, plus drawing their pensions at the same time.
It’s worth noting an additional $6 million in red ink was poured onto the MERS problem for just that one tiny group of county employees.
The bill for that very legal but patently outrageous program, of course, will get dropped at the feet of Marquette County taxpayers at some point in the future, along with the rest of the unfunded liability mess.
The picture is even worse in the education community where, statewide, the Michgan Public School Retirement System is underfunded by $26.7 billion, according to the Mackinac Center, a conservative downstate think tank.
The organization reports that, statewide, up to 36 percent of many school payrolls is taken up by the school retirement system payments.
Getting all of this fixed will be neither easy nor inexpensive. And, it’s politically toxic, which is precisely why next to nothing has been done about it to date.
Public employee unions, seeking to preserve traditional benefits for its members, will fight any reform, tooth and nail.
Although we could go on and on and on, piling up statistics and other information about the unfunded liability issue, here’s the bottom line: The systems that are in place are not sustainable, using any math we can find.
Reform must happen and we applaud state government for at least starting the process.
The mess we are in didn’t happen overnight and getting it fixed won’t either.
But it’s time to start.