Wayne County board may ax retiree bonus check Thursday
The Wayne County Commission is expected to vote Thursday on a proposal to eliminate county retirees’ “13th check.”
County Executive Warren Evans put forth the proposal, which calls for eliminating the county’s Inflation Equity Fund, which for the last 30 years has provided retirees with an annual extra payment instead of cost-of-living increases, or a 13th check.
The proposal is aimed at reducing the county’s underfunded pension liability, officials said. The fund’s assets will not be used to help reduce the county’s annual structural deficit, but will be transferred to the county’s general employee pension fund.
“(Evans) has put this before (the commission) simply to recognize reality,” Deputy Wayne County Executive Richard Kaufman told commissioners. “The reality is the county has to do a lot of things to be financially solvent. One of them is it just can’t keep paying more money to (retirees).”
On Tuesday, the panel voted as a committee of the whole to send the proposal to the 15-member commission, which is scheduled to meet next at 10 a.m. Thursday.
Tuesday’s vote was held after a public hearing. No one from the public attended the meeting.
The committee of the whole voted 9-3 to send the matter to the full commission.
Commissioners Alisha Bell, Timothy Killeen, and Jewel Ware, all Detroit Democrats, voted against the resolution. Two commissioners, Martha Scott, D-Highland Park, and Diane Webb, D-Livonia, abstained. Commissioner Irma Clark-Coleman, D-Detroit, was absent.
“What I’m concerned about here is ... we’ve already cut (retirees’) health care and now we’re going after the same people and going to hit them on their 13th check,” Killeen said.
Al Garrett, president of the American Federation of State, County and Municipal Employees Council 25, which represents about 2,000 county employees, blasted Evans’ efforts to eliminate the 13th check.
. “It just seems to me that it’s underhanded and I would have expected more from him,” Garrett said.
Retiree Jeff Taylor, of Wyandotte, said the county is trying to make retirees pay the costs of its mismanagement.
“They’re struggling with how to deal with the unfunded debt they created themselves,” said Taylor, who retired from the county in 1993. “They didn’t bother to fund (the pension) system for years, so their solution is to make retirees pay the debt.”
Taylor said he worked for the Detroit-Wayne County Mental Health Board and the Information Processing Department.
Wayne County has about 5,500 retirees and an employee pension plan that’s underfunded by $910.5 million, according to the most recent actuarial report for the county.
The county created its Inflation Equity Fund in 1984. It allows the retirement board to grant an additional retirement check when the system is overfunded.
Evans’ proposal to do away with the Inflation Equity Fund comes less than a week after Evans announced a settlement in a lawsuit will save the county about $20 million a year on retiree health care.
County retirees whose service ended before Dec. 1, 1990, filed the lawsuit in Wayne County Circuit Court more than five years ago.
They sued the county, claiming it wrongfully reduced their health care benefits. But the county argued it had the right to reduce — even eliminate — their health care benefits.
Under the settlement, retirees who are eligible for Medicare — about 80 percent of retirees — will get a monthly $130 stipend from the county to buy supplemental health insurance for themselves and their spouses, he said.
Retirees who aren’t Medicare eligible will also get a monthly stipend, but it will be based on their income. Those retirees will be able to use the stipend to buy health insurance on the national exchange under the Affordable Care Act.
Evans said he hopes to have the agreement in place by October, the start of the next fiscal year. The court and the Wayne County Commission have to approve the agreement.
The county is wrestling with a $52 million structural deficit. Adding to the deficit, the county has taken about $20 million from its general fund each year to help bolster its pension system.