City gets report
City gets report
‘Retiree’ health insurance controversy
| (Journal Photos) |
By SCOTT SWANSON, Journal Staff Writer
MARQUETTE — Several former short-term Marquette city middle managers and department heads have no “right” to receive city-paid health insurance upon retirement, despite prior payments made in their behalf, according to a report from the city attorney.
The next step — whether or not the city will try to deny future benefit payments to the employees — is up to the Marquette City Commission.
At a special meeting Wednesday, the commission discussed the long-awaited report from city Attorney Ron Keefe for 1.5 hours in closed session. After reconvening in open session, the commission voted unanimously to put a 27-page summary of the report on the city’s Web site.
“We reviewed the report we had before us, had discussions with legal counsel and determined we wanted to share the recommendation with the media and the public,” Mayor Tony Tollefson said. “It’s still a work in progress. We will be addressing this as a first reading at our Monday meeting.”
The report was commissioned by the city after it was determined that some department heads and middle managers could begin collecting full retirement health care benefits after only two years of service to the city — regardless of their age.
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 has 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.
But according to Keefe’s report, “No mention or discussion of health insurance was recorded (in 1998). 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.”
The report continues, “The City Commission has sole authority to establish a plan that would provide City-paid health insurance to retired City employees. The City Commission took no action to establish such a plan and received insufficient information regarding actions it was asked to take to constitute ratification of any efforts made by city employees to establish such a plan.”
In addition to recommending that the city acknowledge that non-represented employees have no “right” to receive city-paid health benefits upon retirement, Keefe has recommended that it direct the city manager to seek city commission approval and city attorney review of any statement of employee benefits to be issued by the city, and that the city code be amended for clarification.
The city should also determine if it should implement a city-paid health insurance plan for non-represented retirees, the report said. Currently, incoming middle managers and department heads are no longer eligible for any retirement health care benefits.
The report will be up for a first reading at the commission’s next regular meeting, at 7 p.m. Monday in commission chambers in city hall. A summary will be provided for the public.
“It’s moving along,” Commissioner Mike Coyne said.
Tollefson said he was unsure when a final decision would be made by the commission. He also thanked the legal counsel for his work.
“This was not an easy task to do,” he said. “I think a lot of people thought we were dragging our feet, but it’s a huge document — it took an enormous amount of work to track down that information.”
Previous page: B3 gone from Sawyer
Next page: Behrend to open Alger concert series