Governor Rick Snyder has formed a task force to tackle local government retirement reforms; he expressed serious concerns about the proposed income tax rollback going before the House; with state revenues on the rise, he proposed a 2018 budget; and he appointed a Chief of Staff and Lottery Commissioner. These topics and more legislative issues are featured in the February 2017 Karoub Report.

By Jennifer Gomori, MAPE Editor

Having a pension is an important part of a successful retirement savings plan, but something many employers are taking away from their workers and replacing with 401k plans. MAPE works hard to maintain Defined Benefit (DB) plans, a type of pension plan, for its members.

When 401k plans were introduced to employees in the 1980s, it was never the intent of early backers that these would replace pensions.

“401k’s were not designed to take the place of (pensions),” said MAPE Executive Director Fred Timpner. “If all people have is a 401k and Social Security, that will not be enough to maintain the lifestyle they’ve become accustomed to.”

President Stuart E. Raider (left) and Partner Peter M. Mendler of Raider Dennis Agency.In an effort to save money, employers are substituting these market-based plans for pensions. The problem is market volatility can negatively impact 401k savings compared to the steady growth of a DB plan.

President Stuart E. Raider (left) and Partner Peter M. Mendler of Raider Dennis Agency.

“(Pensions are) the most important part because they’re not environmentally changed,” said Stuart Raider of Raider Dennis Agency. “The Defined Benefit is a payout based on a formula, like Social Security. Social Security is the cornerstone of most people’s retirement, although most police and fire aren’t eligible to receive this benefit.”

That makes DB’s even more important to public safety employees, assuring them a certain amount of money will be set aside for their retirement. The plan is ‘defined’ because the formula for calculating the employer’s contribution is known ahead of time. However, DB’s are different from other pensions, where the amount of payout depends on the return of the funds invested. If there is a shortfall from investments set aside to fund the employee’s retirement, employers must make up the difference.

“One of the advantages is the Defined Benefit puts all of the responsibility of the risk on the employer,” Raider said.

But that doesn’t mean DB plans will become a hardship for the employer, Timpner said. “If a DB plan is properly funded by the parties, then there could be minimal or no cost at all to the employer,” Timpner said. “For example, the City of Sterling Heights went years without putting one cent into the pension fund. There were no employer contributions due to the fact that the pension fund was overfunded.”

Some employers are opting instead for Defined Contribution (DC) plans, which are 401k plans. DC plans allow employers the option of making contributions at their discretion and they don’t assume any of the market risks of losses - the employee assumes all the risks. Another drawback of DC plans for employees is that they are accessible to workers before they retire, unlike DB plans.

House Republicans are proposing a roll back of the state’s 4.25 percent state income tax to 3.9 percent in 2018 and eventually eliminating the income tax completely; the Michigan Supreme Court unanimously elected Justice Stephen Markman as its new chief justice; and Gov. Rick Snyder has now appointed three of the four-members of the Michigan Civil Service Commission (MCSC) - including former House Speaker Jase Bolger, the leading legislator behind the enactment of Right to Work in 2012. Click on the January 2017 Karoub Report for more information on these and other legislative topics.

Public employees stop bill that would've ended future retiree health benefits

House Bill 6074, which drew protest from public employees in Michigan and a barrage of calls to State Legislators will not be moved out of the House as part of a package of bills.

Early this morning, the House Local Government Committee reported that the only bill in this package that will be moved is House Bill 6075, which creates reporting requirements between public employers and Michigan Department of Treasury. This bill has no effect on retiree health care.

MAPE Executive Director Fred Timpner wanted to thank MAPE members for their support! MAPE members participated in the MAPO effort, contacting State Legislators to make this victory possible.

However, Timpner also wanted to alert members that is this a temporary win and MAPE members may be called on again soon. Republicans are expected to introduce bills as early as January 2017, after new legislators have been sworn into office, that would negatively impact public employee healthcare and pensions.

In the meantime, Legislators were clearly swayed by the overwhelming involvement of MAPO members.

CLICK HERE TO READ MAPO TESTIMONY

Tami Hough

If you, a family member or friend is struggling with depression, anxiety, trauma, addiction or a physical disability, Hough Counseling and Assessments can help. And there are no out-of-pocket costs for people with medical insurance through C.O.P.S. Health Trust as Hough will waive all co-pays, co-insurance or deductibles in 2017. Hough is owned and operated by Tami Hough, the wife of retired Detroit Police Officer Tom Schneider, who helped develop and run C.O.P.S. Health Trust. Our licensed counselors provide a full range of behavioral health services to clients of all ages and offer educational, psychological and vocational assessments. Our Certified Rehabilitation Counselors specialize in working with persons with disabilities. The office is located in Troy, in the same building as MAPE corporate offices.

Fire Science.org has put together a comprehensive guidebook for women in public service careers. In this guide, readers can access in-depth insights and research about careers in homeland security, forestry, public administration, cyber security, emergency management, criminal justice and paramedics.

This guide highlights careers for women in public service, throughout history and today.

A 2011 report by the Department of Labor found that women are 50 percent more likely than men to work in public sector jobs, with 18.2 percent of all female Americans serving in this arena. Click here to learn more about public service jobs for women and information about potential salaries and education requirements for specific positions.

FireScience.org began in 2012 to provide quality data and information for students pursuing a career in fire science. The website provides tools and resources to help students and professionals make well-informed decisions about their education and career training.

CONTRACT

“Because the part-time Employees were new in our previous contract, most of it was in hindsight to correct a number of issues. I think the management was willing to address a number of things because it was affecting them as adversely as the full-time Employees,” said Union Steward Ray Sharer. “Our focus was long-term benefits for current employees; they had already eliminated retiree health care for the new full-time hires. Prior to the last contract, anybody who retired under the terms was eligible for health care in retirement for themselves and their spouse. It was very challenging to try to find that happy medium for everybody, which was one reason I wanted that larger negotiating committee. We were trying to focus on what was best for the group in years coming.”

“They are subject to four furlough and four unpaid holidays. For the first year of the contract, they can get two days back. I was able to convince the Employer to allow them to use Vacation Time. They could theoretically reduce their furlong days to two,” said MAPE Labor Relations Specialist Joe O’Connor. “Part-time Employees could work the same amount of hours as a full-time person but they wouldn’t get any breaks before or after lunch. We changed it so they have breaks. Part-timers were capped at working 400 hours in a quarter and the problem is the Employer was running out of hours and asking the Union to approve working more hours. We allowed them to work 450 hours a quarter knowing they’ll still be capped by the Affordable Care Act. Some part-time Employees only worked two or three days a week and during any kind of snow emergency, there was nothing forcing the Employer to pay them. The concern was they could switch their scheduled work days. I wanted to be sure they got paid for the hours they were scheduled to work.”

Contract Duration: 3-year agreement, effective 7-1-15 to 6-30-18.
Wage Increases: One-time signing bonus of 1.5% effective July 1, 2015 for each full-time Employee. Tier 2 Employees wages were increased to Tier 1. Tier 2 wages were previously up to 20% lower.
1.5% increase effective July 1, 2016.
1% increase effective July 1, 2017.
Fringe Benefits:

  • During the 2015-16 fiscal year only, Employees may opt to receive compensation on four of the six unpaid furlough and holidays by using Vacation Time. Otherwise, Employees may not substitute paid leave, such as Sick Leave or Vacation Time, for unpaid furlough and holiday hours.
  • In lieu of Vacation Time, Sick Leave and Personal Time, full-time Employees hired after July 1, 2015 will be allotted Paid Time Off (PTO) annually on their anniversary date as follows:
    On date of hire 8 days, 60 hours
    After 1 year of continuous service 18 days, 135 hours
    After 5 years of continuous service 23 days, 172.5 hours
    After 10 years of continuous service 26 days, 195 hours
    After 20 years of continuous service 28 days, 210 hours
  • Full-time Employees may not carry over more than 7 days (52.5 hours) of PTO into a new service year. Any unused PTO in excess of 7 days is lost at year-end. Unused PTO is lost in the case of retirement, resignation or death. PTO is subject to advance approval by Employer and may be used in one-hour or more increments if approved.

CONTRACT

“The highlight of the contract is there was some restoration of eight unpaid days over the life of the three-year contract. We haven’t had raises since 2010 so we had a 1-1/2 percent signing bonus in year one, then 1-1/2 percent raise in year two and a one percent in year 3. There was the elimination of the two-tier salary structure, where new hires after 2012 were at 80 percent value of the current positions in the group. We got some equity things - in years 20 to 22, our group was getting two less vacation days than every other group,” said Local Association Chairman Steve Deon.

“That’s a new group to us and this is the first contract we negotiated for them,” said MAPE Labor Relations Specialist Joe O’Connor. “The group is subject to four furlough and four unpaid holidays. We reduced that to six days, three of each. For the first year of the contract, they can get two days back. I was able to convince the Employer to allow them to use Vacation Time. They could theoretically reduce their furlong days to two. They were one of the only groups in the city that didn’t have Martin Luther King, Jr. Day. We got that as a floating holiday. They were at $1,500 for the health coverage opt out and they got it moved up to $3,000.”

Contract Duration: 3-year agreement, effective 7-1-15 to 6-30-18.
Wage Increases: One-time signing bonus of 1.5% effective July 1, 2015 for each full-time employee. Tier 2 Employees wages were increased to Tier 1. Tier 2 wages were previously 20 percent lower.

  • 1.5% increase effective July 1, 2016.
  • 1% increase effective July 1, 2017.
  • A new Employee’s starting wage step shall not exceed an existing Employee’s wage step for the same position.
  • Every year Employees are eligible to receive bonuses based on job performance as follows:
    1.333% of base pay after 5 years of continuous service.
    2.667% of base pay after 10 years of continuous service.
    4.000% of base pay after 15 years of continuous service.
    5.333% of base pay after 20 years of continuous service.
    6.667% of base pay after 25 years of continuous service.

CONTRACT

“The Tier 2 people were getting 40 hours of Sick Time per year and the Tier 1 were getting 64, so we increased the Tier 2 people. We brought them in line with Tier 1 people,” said MAPE Labor Relations Specialist Joe O’Connor. “The Employer wanted the option to close the township hall down between Christmas and New Year’s. There’s a maximum of three days unpaid. The Employer agreed to pick up one of them, leaving two days where they can take time as unpaid or utilize any time from their Vacation, Sick or Personal banks to make up the other two unpaid days.”

Contract Duration: 3-year agreement, effective 7-1-15 to 6-30-18.
Wage Increases:
3% increase effective July 1, 2015.
2.5% increase effective July 1, 2016.
2% increase effective July 1, 2017.
Fringe Benefits: Tier 2 Employees Sick Time is increased from 40 hours per year to 64 hours, equal to Tier 1 Employees. Increase Sick Time accumulation bank from 80 hours allowed per year to 120 hours.
Job Vacancies: Part-time Employees may not be used to fill a classification in which a full-time Employee has vacated or been laid off. Employer will not be filling full-time positions with part-time Employees.
Furlough Days: Employer may elect to shut down the week between Christmas and New Year’s, creating three unpaid days for Employees. Employer will pay one day and members can use any banked time to supplement the other two days or take them as unpaid.
Bargaining Team: Labor Relations Specialist Joe O’Connor with Association Chairperson Jason Berndt, Secretary Eva Koss and Steward Tom Moilanen.

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