City considers changes to pension plan

Early projections indicate the City of Monroe likely will face a $1.5 million budget shortfall next year unless it can reduce costs and spending.

City Manager George Brown says it will be "extremely difficult to make those adjustments without instituting further employee layoffs and service reductions."

That is why the city is reviewing possible alternative cost reductions, such as a pension plan administration proposal from the Michigan Employees Retirement System (MERS).
The research still is in its early stages, but officials say rumors are flying around the city hall.
"The city is only in the research phase of looking at the MERS system," said Councilman Edward Paisley. "Any proposed change to the pension system would be subject to collective bargaining negotiations. The city will take any appropriate steps and do what is right before they jump and take any action. People want to jump to conclusions."
To quell some of the rumors, Mr. Brown drafted a letter that will be attached to retirees' and employees' paychecks. He said the city's only motivation is to minimize personnel and public service reductions as much as possible.
"If there appears to be advantages, we will ask council to hold informational meetings with city employees and retirees," he said. "Any change in pension administration would have to be negotiated."
The city manager calls the financial crisis facing state and local government probably the greatest experienced since the Great Depression.
"Because this crisis continues to deepen, the mayor and council have directed city staff to continue to explore and identify potential cost reductions and efficiencies, especially those that would help us to lessen the number of additional employee layoffs," Mr. Brown said in his letter.
"During budget work sessions early this year, I told the mayor and council that staff would explore several options, including services from outside vendors such as insurance and pension administration. Among other things, we have been exploring whether our health insurance and pension administration costs could be reduced while providing the same or better benefits, service and performance."
Monroe has a self-insurance plan. The city pays out the costs for prescriptions and doctor's visits except for catastrophic claims, but the plan is administered by Blue Cross/Blue Shield.
City officials recently reviewed proposals from health insurance providers/administrators and found there would be no cost benefit to change from Blue Cross/Blue Shield.
"We are waiting for a pension plan administration proposal from the Michigan Employees Retirement System (MERS) so that we can review and analyze that potential option for pension administration," Mr. Brown reported.
He will report back to the council as soon as the preliminary research is concluded. Proposals, reports and other data regarding the analysis will be provided to city union representatives and will be made available to employees, retirees and the public.
Mr. Brown said the process, which would require collective bargaining negotiations, would be somewhat time-consuming.
Factors that will be considered include pension administration costs, investment performance, security of city pension funds, quality of service for employees and retirees and possible impact on the city's bond rating.