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Posted: 02/06/13

Local budgets could
be affected by PA 152

by CHRIS GRAY
Observer Staff Writer

      Local governments are prepping for negotiations with employees in order to save on expenditures using a newer Michigan law.
       Municipalities and school districts are preparing to make a decision on whether they will comply with Public Act (PA) 152 on health care payments or to figure out their own deal with employees.
       Governing bodies can choose between a hard cap, an 80/20 split or to opt out of complying when it comes to paying for medical benefits.
       Washington Township Supervisor Dan O'Leary said the township decided to opt out of the law, saying the savings from the 80/20 or hard cap options were not favorable. In addition, the township doesn't lose revenue because it doesn't receive statutory funding from the state.
       He said the township is currently in negotiations with six of its seven unions with contracts expiring at the end of March, so the law could play a role.
       "It's useful to have a tool that the Legislature made for us, but what matters is overall savings," O'Leary said. "It wasn't beautifully thought through, and could be refined and create other options."
       Conversely, O'Leary said the law could create a win-win for the township and its employees in terms of savings, and believes the negotiations will end soon.
       "Unions have an extra incentive because on March 26 Right to Work kicks in," he said. "If they don't sign, theoretically, members of the union could pull out of the union."
       Like Washington, Bruce Township is not penalized by opting out since it doesn't receive statutory funding from the state. However, the Board of Trustees previously voted to comply with the 80/20 split for non-union employees.
       Clerk Susan Brockmann said the board was presented with a preliminary 2012-13 budget that shows the 80/20 split, but would re-examine it in the coming months.
       "All office jobs in the township are much lower wages than if you're out in the private sector, so we've tried to compensate by giving better benefits," Brockmann said.
       She, too, had issue with the law, saying the township tried to find a provider that gave health care benefits below the hard cap option, but couldn't do so.
       "We tried to find something comparable that was under the cap, and we can't," she said. "The cap is so low, particularly for a two-person and family level coverage."
       Brockmann said union contracts in Bruce Township will expire in June, noting the law will likely affect how negotiations play out.
       In the Village of Romeo, trustees are preparing to discuss what options are available in terms of saving costs to the village regarding PA 152. Union contracts will expire in June for village groups.
       Village Clerk Marian McLaughlin said the village opted out of the law last year, but hasn't lost any state revenues since employees haven't received pay increases since 2008.
       "All people on insurance programs are on the exact same program, union and non-union," McLaughlin said. "We should decide on something before budget time because contracts will expire."
       Romeo Community Schools, like other districts, had no option of opting out. The district decided to go with the 80/20 split in 2012, netting a savings of $1 million.
       Executive Director of Business Affairs David Massoglia said both the district and its unions agreed on the decision, but do plan to re-visit it on an annual basis.
       "If rates go up enough we could flip-flop where the hard cap would save more," Massoglia said. "We have to take it year by year."