Cost of Retiree Benefits Weighing Down on Michigan

By: Fay Li Email
By: Fay Li Email
According to a MSU report, cities across Michigan are struggling to pay for the unfunded legacy costs of retiree healthcare benefits.

The Michigan Capitol is shown at twilight Thursday, Sept. 24, 2009, in Lansing, Mich. Lawmakers continue work on budget bills that deal with a $2.8 billion shortfall before an Oct. 1 deadline. (AP Photo/Al Goldis)

"We got here because promises were made over many decades to retired people who were working but there was no accounting for it until 2005," said Scorsone.

The price tag for providing healthcare benefits to Michigan's public retirees is huge. According to MSU economist Eric Scorsone, it'll cost the state a total of $13 billion over the next 30 years.

"We got here because promises were made over many decades to retired people who were working but there was no accounting for it until 2005," said Scorsone.

Thursday, Scorsone presented his findings to the House Committee on Financial Liability Reform. He says Detroit is in the worst shape, accounting for over $6 billion of the state's unfunded legacy costs. However, other urban cities like Lansing, Grand Rapids and Flint face similar problems. Smaller Mid-Michigan towns like Dewitt and Grand Ledge are also unspared.

"With the new Affordable Care Act and the new state exchange, there may be some options there to alleviate some of these challenges, other issues would be reducing benefit to retirees or providing the funding, there are really only 3 main options you have," Scorsone said.

Rep. Earl Poleski, R-Jackson, says making changes won't be easy, but doing nothing is not an option.

"In the long term our state will suffer, taxpayers will have to pay more, retirees will find themselves with greater uncertainty and that just doesn't work for everybody," said Rep. Poleski.

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  • by Name Location: Location on Mar 24, 2013 at 10:14 AM
    Why doesn't law makers never take a hit?
  • by Name Location: Location on Mar 22, 2013 at 05:58 AM
    A lot of good comments and they all refer back to government. When you ask others to be responsible for you? You will always, always be short changed! This goes for healthcare, pensions and more!?!?!? 51% of the uninformed
  • by Taxpayer Location: Michigan on Mar 21, 2013 at 11:12 AM
    Anonymous, you called it. Nobody seemed to think long range when they made these promises.
  • by Pete Location: Lansing on Mar 21, 2013 at 03:34 AM
    Yes the old days were different with employers offering pensions and benefits. Also different was pay packages for CEO's and other company ownership that now allow tens and hundreds of million dollar annual pay.
  • by Anonymous Location: Stockbridge on Mar 19, 2013 at 12:22 PM
    "We got here because promises were made over many decades to retired people who were working but there was no accounting for it until 2005," said Scorsone. Q.Who made these promises? A.Governors, Mayors, and other elected officials. This and so many other stories in the news should be a wake up call to todays students.... Seek a career in politics! In what other industry can you blame others when things go wrong, take credit for anything that may go right, squander other peoples money, vote yourself a raise. But be sure to pursue your career in CA, NY or MI so that you will be paid well above the states averages.
  • by LH on Mar 17, 2013 at 06:42 AM
    Once again, nobody is questioning why health care for people needs to be so expensive! For some reason many people like to bash the people who need the health care, and who are the reason it even exists, but they don't seem to question the escalating charges made by the providers. We should be looking at ways to decrease the cost of providing health care in our society so that it can be afforded by the general population.
  • by janby Location: Charlotte on Mar 15, 2013 at 03:35 PM
    Did the measure the unlimited health benefits to elected officials or are they pretending that s not a problem? One term and unlimited care, it must be nice.
  • by Pete Location: Lansing on Mar 15, 2013 at 02:24 PM
    The "cadillac" of wages and benefits are owned by the legislators. The employees were offered a job with pay and benefits listed. Legislators set their own. Always have.
  • by Tax payer Location: Michigan on Mar 15, 2013 at 05:51 AM
    The state, the cities, the counties and the townships are all facing the same financial problems today because of the same reason. Seventy plus years ago someone decided that all people should have the same life style thus equal pay scales. Many of these people did not want to finish high school nor did they attend college and get a degree. However, they still wanted the same pay and benefits that the people who did all this extra work. These are the same financial problems that sent GM into bankruptcy. The only way to end this is to stop paying people more than they are worth and accept that even in a democracy there are different levels of economic wealth based on learned skills and amount of education.
  • by Heywood Location: Location on Mar 15, 2013 at 05:47 AM
    So you're saying that the retirees who helped cause this debacle (many of them knowing full well that the numbers didn't work and were NOT sustainable) bear no responsibility in fixing the problem? The burden should be passed down to the current and future workers who haven't even had the opportunity to get their feet under themselves, but its not right to "go after" the retirees because their unions bargained them these Cadillac pension packages? No wonder our country is doomed!
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