Washtenaw County approved contracts with 15 unions but did not do actuarial analyses
The Washtenaw County Board of Commissioners may have violated state law when it approved 10-year contracts with 15 unions to beat a March 27 deadline to avoid the impact of the state's right-to-work law.
The union contracts allowed Washtenaw County employees to switch from a defined benefit plan to a defined contribution plan. However, a state law says that when a pension is changed, an actuarial analysis needs to be provided at least seven days before the plan is adopted. The law reads: "'[P]roposed pension benefit change' means a proposal to change the amount of pension benefits received by persons entitled to pension benefits under the system."
Patrick Wright, senior legal analyst for the Mackinac Center for Public Policy, said going from a defined benefit pension to no pension could qualify in the eyes of the court as a "benefit change." Instead of pensions, 401(k)-style plans will be offered. Wright said if the courts decided there was a benefit change, the contracts would have to be re-ratified and then right-to-work would kick in.
"This raises serious questions about the legality of these contracts," Wright said.
Washtenaw County Administrator Verna McDaniel said the county didn't violate the law.
"This law addresses changes to increase pension benefits,” McDaniel wrote in an email. "Washtenaw County did not make any changes to increase the defined benefit plan to all our current employees. We closed the plan to new hires beginning next year. We clearly are ending our legacy costs to both our defined pension plan and our health care plan. This saves our taxpayers from future obligations as well as brings financial stability to the organization. The Commission approved 15 collective bargaining agreement/contracts on March 20, 2013 effective March 21, 2013. No changes were made to the defined benefit plan so no actuarial report estimating the cost was needed. However we worked hand in hand with our actuary firm and our financial analyst throughout the negotiation process."
Alicia Ping, a Republican Washtenaw County Commissioner, said she didn't think Washtenaw County staff or the Board of Commissioners intended to violate any laws regarding the new union contracts.