Traverse City Record-Eagle

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June 8, 2014

Kalkaska Village cuts retiree health care program

TRAVERSE CITY — Virginia Thomas, a former Kalkaska village clerk, council member and mayor, worries about how she’s going to pay for her prescriptions, some of which cost of $300 a month.

Thomas’ health care will be cut because Kalkaska Village officials last month voted to end their retiree health care program.

“I’m not happy. None of us are happy,” Thomas said.

Officials made the move to reduce the village’s unfunded liability. One council member estimated the village had $5.6 million in projected retiree health care costs, an unsustainable amount.

“We tried to reach an agreement with some of these retirees, knowing this was warding off potential bankruptcy for Village of Kalkaska, but as health care costs and insurance premiums continue to escalate, the writing was on the wall,” Village President Jeff Sieting said.

Some retirees have union contracts that will protect their parts of their health care, but seven retirees and one current employee will lose their care. Sieting said it was impossible to predict how much money would be saved.

Village employees used to put parts of their salary into an account that would pay for retiree health care. The fund was supposed to be sustained by future employees, but as village’s full-time employees dwindled to three and health care costs skyrocketed, the fund was no longer sustainable, Sieting said. The health care fund was depleted about two years ago, when the program had to be funded at least in part by the general fund.

“Our question, as a council that represents taxpayers, was is it the responsibility of the taxpayers to continue to pay this, when it was strictly set up to be an employee-funded health care benefit?” Sieting said.

The retiree benefits cost taxpayers about $250,000 in the 2013 year, said council member Daniel North.

Sieting said the letter of understanding between the Village and employees that set up the health insurance account never required taxpayers to take on the burden of paying for retiree health care.

Officials and the retirees expect a challenge in court.

“I think we’re looking at several months of attorney fees as opposed to years and years of unjustified insurance premiums that the taxpayers are on the hook for,” Sieting said.

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