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Retirement Reform Task Force Releases Report

Jul 21, 2017

On Tuesday, the Responsible Retirement Reform for Local Government Task Force released their report of recommendations.  The proposals are focused on addressing local pension and health care costs, ensuring retiree support, and providing more financial stability and effective delivery of local government services.  “The increasing costs of retirement benefits has been a major issue for local governments.  The Governor called for this task force in his State of the State this past January, to focus on the instability surrounding retirement benefits within local governments,” stated Sean Mann of MLC.

The task force included twenty voting members and four ex-officio members.  While members agreed upon principal understandings and concepts to find consensus on four major recommendations, there were some issues task force members discussed but did not find agreement on or determined further examination was needed.  Out of the recommendations they did agree upon, there were four reforms they proposed should be prioritized:

  • Increased reporting and transparency of local units to ensure a full picture of the size and scope of the problem and where the biggest challenges exist.
  • A pension and other post-employment benefits (OPEB) fiscal stress test system for local governments to alert and assist local units in crafting solutions to best position them to continue to serve their residents, while funding their obligations and protecting benefits for employees and retirees. This system should identify and focus action on the local units experiencing the greatest fiscal stress.
  • This system, along with the creation of a new Municipal Stability Board (MSB), should assist in the review of a local unit’s finances and the development of a corrective action plan. The MSB should also provide research, training and technical assistance.
  • In addition to meeting existing constitutional and statutory requirements to pay pension costs, going forward all local governments should meet a minimum requirement to pay OPEB normal costs for new hires if offered, for example by prefunding new active employee’s current-year obligations.

To read the full report, please click here.

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