By JAMES MITCHELL
Sunday Times Newspapers
LINCOLN PARK – Unless an alternative plan emerges in the next week or so, about 300 city pensioners will lose current health care coverage that will be replaced with a new, partially subsidized plan.
Under that scenario, the city will continue funding the existing pension system with hops of restoring the needed financing over the next 20 years.
“The silver lining is we’re saving the pension system,” Emergency Manager Brad Coulter said. Coulter met last week with nearly 200 retirees and outlined the strategy for providing group health care coverage while maintaining pension payments.
The city’s under-funded pension systems has been a budget challenge for years, and along with public safety was one of the biggest financial issues that resulted in last year’s state-mandated appointment of an emergency manager.
Coulter said a majority of pensioners he spoke with last week – and during various forums and conferences held over the past six months – understood that the problem has been long in the making.
“Most people understood,” Coulter said. “They know why we’re doing it. The pension system is running out of money. They don’t like it, it’s very painful, and people are upset that everyone ignored this problem before it became a crisis.”
The city’s general employee pension system is currently funded at 22 percent, and police and fire at 31 percent.
“Two of the worst-funded pension systems in the state,” Coulter said. “Both are in danger of running out of money in the next 10 to 15 years.”
The proposal would eliminate the current retiree health care contract and replace it with the option to buy into a group coverage plan that the city would partially subsidize with a monthly contribution, or opt out, accept a cash payment and enroll in a plan offered by the Affordable Care Act.
Approval of the proposed health care strategy would, Coulter said, allow continued funding of the pension system with the goal of 60 percent funding by 2035 – still classified as “at-risk” by actuarial standards, but no longer in danger of collapsing.
Coulter expected to present the final proposal to City Council, which would have 10 days to respond and will likely consider the matter during its meeting March 16.
Under state emergency management guidelines, Coulter said the council has three options: approve the proposal, which would next be considered by state officials for final approval; reject it and provide an alternative plan within seven days; or take no action which would result in the proposal advancing to the state for approval.
The approved plan would save the city an estimated $500,000, which would be applied to general operations as the city continues efforts to eliminate a deficit that had approached $5 million before state officials declared an emergency and appointed Coulter.
Coulter said that during six months worth of meeting and last week’s sessions, no better ideas were heard.
“There are no viable alternatives that were presented,” Coulter said. “Without this our pension system would continue to drain money and would run out at some point in the near future.”
(James Mitchell can be reached at [email protected])