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Beline Obeid

Retirees come out swinging


September 20, 2012
CITY OF GROSSE POINTE — Municipal retirees counterpunched this week in an open-ended bout to maintain the level of healthcare benefits.

Heavy-hitters included the retired finance director and a public safety chief.

"These benefits were earned — they are not entitlements," said Karen Johnson, retired two years as finance director. "Changing our healthcare benefits now would be like changing the rules of the race after the race is over."

Johnson spoke at the Monday, Sept. 17, city council meeting.

The council last month explored reductions in retiree healthcare benefits. The goal is shifting some costs to retirees to help the city handle years of reduced revenue.

Also speaking at this week's meeting was James Fox, retired public safety director and former member of the White House Marine honor guard.

"It is obvious this decision was based solely on city financial considerations and did not take any humanitarian factors into account," Fox said. "This is a shameful way to treat people who dedicated their careers of service to the citizens of the City of Grosse Pointe."

Former city manager Tom Kressbach and others listened from the audience.

The retirees criticized City Manager Peter Dame for targeting post-employment benefits and scheduling an informational meeting with retirees last week at five-days notice.

Councilwoman Jean Weipert put Dame's role in perspective.

"What has happened has been at the direction of the council," Weipert said. "We have to explore every option because of the financial situation we're in. To the extent there has been hesitancy in things, most of it has come from the city manager."

"The council sets the policy," added Mayor Dale Scrace. "We look at things analytically to make the best decision for the greater good."

The retiree healthcare fund was established in July 2006 with a $1.5 million transfer from the pension fund, according to Johnson and others.

"By June 30, 2012, the value of the fund dropped to $288,364," said Paul Onderbeke, retired City public safety officer. "The fund repaid the city every dollar spent for retiree healthcare each fiscal year. Dispersed funds for the last six years was more than $2.5 million dollars. The City made no attempt to keep the fund viable or to stretch its life."

Although years of operating cuts allowed city officials to pass this fiscal year's budget without a tax increase, forecasts indicate a significant financial shortfall next year.

"I fully understand the financial constraints the city has faced over the last five years and future liabilities the city may face," Fox said.

He recounted steps the city's taken to reduce employee health care costs, cut staff and eliminate some benefits.

"Now, the city wants to go after the retirees," Fox said.

"The municipal budget system is ill-suited for a contracting budget," said Councilman Chris Walsh. "We're trying to evaluate all options in terms of running a budget that has taken 35 to 40 percent in the face of health care costs that are rising at a clip of 18 percent compounded per annum over the last five years."

To Johnson, the explanation still seemed like swinging after the bell.

"Employees remained in the public sector at much lower comparative rates because of future security," she said. "The security of knowing that at the end of their public service they would have the pension and healthcare benefits that they were promised and that they earned — that was part of the deal."

The city also is considering switching retirees to health saving accounts.

"Health saving accounts have their benefits," Johnson said. "A younger worker would have the opportunity to make tax-free contributions into this account to pay for future healthcare costs."

Retirees can't do that, she said.

"Retirees can only make post-tax contributions and have no time to save for the future, as it is already here," Johnson said.

"Current employees can continue to work and may expect pay raises in the future," Fox said. "Older retirees have no such options."

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