For Immediate Release
Sept. 27, 2012
Contact: Alesha Gensler
Colbeck protects retiree benefits and helps save municipal jobs
LANSING, Mich– A bill allowing municipalities to issue general obligation bonds to smooth the transition from a defined benefit retirement plan to a defined contribution plan passed the Michigan House and was concurred on by the Senate in Lansing, Thursday.
Senate Bill 1129, sponsored by Sen. Patrick Colbeck, R-Canton, would help local units of government that have a history of financial discipline manage spikes in pension and post-employment healthcare expenses. Under the bill, local units of government are able to issue a municipal security to pay all or part of the costs of pension or healthcare obligations for retirees.
“This measure protects the retirement benefits of municipal employees and will help to avoid layoffs for current employees by preventing municipalities from having to pay a spike in retiree benefit payments,”
Under Colbeck’s legislation, before issuing a municipal security the municipality would be required to publish a notice of intent to issue the security and make available to the public a comprehensive financial plan that includes an analysis of the current and future obligations, evidence that the issuance of the municipal security would be sufficient to eliminate the pension or retiree healthcare liability, a description of actions required to satisfy the schedule and a certification of completion and accuracy by the person preparing the plan.
“I would like to thank Senator Colbeck on behalf of the Michigan Municipal League for all his assistance in getting this bill passed,” said Samantha Harkins, director of state affairs for the Michigan Municipal League. “This legislation will go a long way in helping our local units of government remain financially secure.”
Pat Sullivan, city manager of Northville praised the bill.
“This legislation gives the city of Northville and other municipalities a better way to fund pension and retiree healthcare,” Sullivan said. “In our case, it helps us convert to a less costly, 401K-style pension plan which gives us long-term savings for our taxpayers.
“Without Senator Colbecks legislation, we would have faced more deep cuts to pay for that conversion.”
SB 1129 now heads to the governor to be signed into law.