LANSING – Michigan could wipe out $5.6 billion of its unfunded liability for the future health care costs of retired state workers if the Legislature approves a bill package making sweeping changes.

As first reported by Gongwer News Service last week, the Snyder administration is seeking to move all employees under the 401k retirement plan to a health savings account and end the state’s ongoing contributions for health care coverage upon retirement. For state employees on a pension plan, the health care benefit would stay the same.

Also, all employees who are currently required to pay 3 percent of their salary for health care costs upon retirement would see that increase to 4 percent starting October 1. The existing withdrawal has been challenged in the court and state employees have prevailed at the trial court level.

Michigan has a $14.7 billion unfunded liability for the health care coverage state workers receive upon retirement and the legislation (HB 4701 and HB 4702 ) would cut that to $9.1 billion, said Kurt Weiss, spokesperson for the Department of Technology, Management and Budget.

Meanwhile, should the legislation advance to the governor’s desk, it would save the state $50 million in the 2011-12 fiscal year.

The administration is seeking $145 million in state employee concessions, so the bills would take care of about a third of that figure.

The legislation was referred to the House Appropriations Committee, which scheduled a meeting for this week but did not include the bills on its agenda.

PUBLIC EMPLOYEE HEALTH CARE: Meanwhile, the House Oversight, Reform and Ethics Committee wrapped up testimony, but took no votes, Tuesday on legislation requiring either an 80/20 split for health care coverage among local governments and their employees or a dollar cap on costs for employers (SJR C , SB 7 and HB 4572 ).

Todd Tennis, representing the Amalgamated Transit Union, said the state’s transit systems could lose upward of $100 million in federal funding because the bills could be considered interfering with the collective bargaining process, which is prohibited by the U.S. departments of Transportation and Labor.

He said at minimum, the state should get a ruling from the federal government on the effect of the bills.

The National Federation of Independent Business-Michigan testified in support of the bills and the Small Business Association of Michigan indicated its support. Amanda Radaz, assistant state director for NFIB, said the legislation would help local governments that have been ineffective in getting public employees to share the costs of their health insurance.

But the Michigan Association of Counties testified in opposition to the bills, noting requirements on the health care side could push local governments to make up for the increased worker costs on wages or other benefits.

And the Michigan conference of the American Association of University Professors opposed the bill with Executive Director Michael Bailey saying because the state only contributes about 20 percent of the funding for public universities, it shouldn’t be mandating how those institutions handle employee benefits.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

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