OPEB Reform Efforts Scuttled

Following days of meetings and negotiations, efforts to provide comprehensive reform tools for communities to better manage rising retiree health insurance costs were derailed and a stripped down proposal was adopted in the early hours Thursday morning.

House Bill 5298 and its identical counterpart, Senate Bill 686, served as the main vehicle of the revised package that was scaled back to only address the few areas of limited consensus that were agreed to in the July release of the Governor’s Responsible Retirement Reform for Local Government Task Force report.   While the League was a signatory to this report, we expressed disappointment in the lack of true reform recommendations and had hoped that the Administration and Legislature would expand on those recommendations and provide relief for communities struggling to balance the provision of good health care for their retirees against the ever-expanding budget burden of those benefits.

The final version establishes pension and OPEB reporting based upon existing local annual financial, actuarial valuation, and audit reports.  For communities identified through that reporting as being out of compliance with specified budget affordability and funding thresholds, the language identifies possible benefit level and funding changes that communities could utilize to address that “under-funded” status through a municipally-developed Corrective Action Plan.  A  Municipal Benefits Board is created within Treasury to provide communities with best practices and strategies to assist with the preparation of a Corrective Action Plan and its subsequent approval by that Board.

A number of companion bills were also adopted that League staff continue to review this morning.  We will continue to update members with any additional developments.  These bills will likely receive final legislative action next week and go to the Governor before the end of the year.

You can read the League’s statement on this morning’s action from Executive Director Dan Gilmartin here.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

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