City drops health care
City drops health care
Controversial ‘retirement’ plan stopped
By SCOTT SWANSON, Journal Staff Writer
The Marquette City Commission on Monday voted unanimously on a first reading to cease payments to all retired middle managers and department heads, the latest act by the city following a revelation that some retirees were collecting full retirement health care benefits after only two years of service — regardless of their age.
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The commission also directed City Manager Judy Akkala to prepare a report with recommendations on whether the city should adopt a plan to either pay or supplement health insurance premiums for non-represented employees, and that the report take into account the health insurance retirement plans for union employees as well as those of other municipalities.
The commission acted on a recommendation from city Attorney Ron Keefe, following about two months of investigation.
“Based on our review, we believe that the practice of paying health insurance premiums for retirees not covered by collective bargaining agreements was not authorized by the city commission,” Keefe said Monday. “The city charter requires that all benefit plans be adopted by the city commission, and as a result it is our opinion that these payments on behalf of the retirees were not authorized.”
In the last fiscal year alone, the city paid more than $33,000 in health insurance premiums for former City Manager Gerald Peterson, former executive assistant Michelle Doucette and former arts and culture Director Reatha Tweedie — all of whom “retired” after less than 10 years of city employment.
Under the city’s original defined benefits plan, employees could begin collecting retirement health benefits after reaching the age of 55 with 25 years of service to the city.
In 1998 the city commission adopted a second option — a defined contribution plan. That plan carried only a two-year vesting requirement. While the plan carried a “recommended” retirement age of 50, an age requirement was not mandated.
At that point, several management employees were given the choice to continue under the defined benefits plan or switch to the defined contribution plan, which was designed to allow employees control and portability of their accumulated retirement assets.
Since then, the city had been operating under the opinion that the health benefit portion of the fixed retirement plan was not separated from the pension — meaning that those employees who became vested after two years in the defined contribution plan automatically became eligible for their retirement health benefits, as well.
However, the only linkage between the two-year vesting period in the defined contribution plan and and the eligibility for retiree health insurance was a Aug. 28, 2003, memo from Peterson, according to Keefe’s report, and the change was never approved by the city commission.
“No mention or discussion of health insurance was recorded (in 1998),” the report said. “No change was made to the City Code to describe the new plan. The new defined contribution plan does not constitute a change in the retirement system described in the city charter.”
Akkala said that retirees have 60 days to inform the city if they wish to remain under its plan, which would make them responsible for health insurance costs. The retirees would have an additional 45 days before having to make any payments, she said.
“Hopefully by then, even before then, there will be a policy before the commission and no one will have to reach into their pocket for anything, unless they are not eligible for the policy,” she said.
Reached this morning, Peterson declined to comment.
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