City to discuss retiree benefits Insurance debate
City to discuss retiree benefits Insurance debate
By SCOTT SWANSON Journal Staff Writer
MARQUETTE — The Marquette City Commission will hold a special meeting Monday morning to discuss a health care plan for retired employees, one week after the commission voted unanimously to cut off the benefit to all non-represented retirees.
The commission will meet at 7:30 a.m. in commission chambers in city hall.
According to a city press release, the purpose of the meeting will be to discuss a recommendation from City Manager Judy Akkala regarding retirement health insurance.
The release did not specify what Akkala’s recommendation would be, and Akkala could not be reached for comment Friday.
Commissioner Dan Dallas said on Friday that he was not aware of any specifics of the meeting.
“I asked if we would be getting any information beforehand, and was told that Judy would be working on it (Friday) and Saturday,” he said. “She was going to e-mail it to us Saturday, and we were to call her at home ASAP if we had any questions.”
The commission voted unanimously Monday 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.
The commission acted on a recommendation from city Attorney Ron Keefe, following about two months of investigation.
Twenty-five retirees — 17 department heads and eight middle managers — are affected by the commission’s action.
The commission also directed 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.
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.
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.”
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