LANSING – In a move to help reform state government and protect state workers, State Representative Richard E. Hammel (D-Mt. Morris Township) has introduced legislation to create a pre-funded trust that will address the state's retiree healthcare liability. The state House is expected to take up his bill along with a series of bills that look at state retiree health care.
"My top priority has been government reform, and the state must address this potential 20 billion dollar liability," Hammel said. "Currently, we are in a pay-as-you-go system. The creation of a pre-funded trust will allow for investment of the funds and sets up an account that cannot be raided."
The trust is part of a package of bills that deals with several components of the state's retiree healthcare. The trust itself must be approved by the IRS, and creates the vehicle by which the state government can contribute monies securely into an account. This is one step in securing retiree healthcare and helps preserve the benefits that workers deserve. States must express their current liability as required by the federal government. Future obligations, such as retiree healthcare, are part of that disclosure. Failing to address retiree healthcare obligations negatively affects Michigan's financial position.
Representative Hammel testified to the House Retiree Health Care Reform Committee on the need for this legislation and his experience with pre-funded trusts. Under Hammel's leadership as Chair of the Genesee County Board of Commissioners, the County created a similar plan to address their 200 million dollar liability in retiree healthcare. "The state cannot continue to sustain retiree healthcare under the current plan. Securing this trust fund lowers the cost of doing business for Michigan--helping to create an attractive economic climate for businesses," Hammel said. "We don't have any time to waste on this. The trust will not only help us meet federal requirements, but will also help to ensure that Michigan will keep its commitment to retirees."