New rule limiting county employees retirement benefits

Wednesday, December 2, 2009

Health insurance became an issue for Marshall County's commission again this year, but instead of employee coverage costs, the issue last week was how employees qualify for insurance when they retire.

Only 13 county employees are unaffected by the commissioners' 14-2 vote, with one abstention, and the decision was influenced by another cost and the prospect of losing $3 millions in federal funding to schools.

County employees, other than those employed by the school system who are covered by a negotiated contract, have seven months to become vested in the retirement system that pays four-fifths of health insurance premiums, according to public records and discussion during the commissioners' meeting on Nov. 23.

Analysis of the employment rolls for the various county departments -- including sheriff's deputies, court employees, trustee, recorder, assessor and highway employees, among others -- shows there are 13 people who might qualify for coverage in retirement. The decision limits retirement benefits for well over 100 employees. That's because their age and time of service prevents them from qualifying.

"To be qualified for this," commissioners decided, "retired employee health insurance premium, employees must have met all requirements no later than June 30, 2010, and have verified their eligibility with the Office of the Director of Accounts and Budgets by that date.

"The benefit is terminated for all other employees as of July 1, 2010," according to changes made in county personnel policies.

Details of the benefit shows that "83 percent of an amount not to exceed the 2008-09 fiscal year insurance funding level of the individual policy will be paid by [the] county..."

The change to the county employees' personnel policy is a result of "a new Governmental Accounting Standard Board ... ruling that requires actuarial valuation and certifications" on potential retirees' benefits, public records state.

In other words, GASB requires an audit of the employees who would become eligible for the benefit if the number of those potential retirees isn't limited to those eligible by the end of the current fiscal year, June 30.

That actuarial study comes with a price tag, according to explanations provided to commissioners on the evening of Nov. 23. The study, which is a detailed audit, was estimated to cost $20,000 to $25,000.

The larger potential cost is more complicated.

If the commission didn't limit retirement costs, the audit had to be completed by an approaching deadline and failure to meet that deadline would result in a conclusion by the State Comptroller's auditors that the county didn't meet generally accepted accounting standards.

That finding of inadequate accounting would trigger a requirement attached to federal funding to the school system this year. The money is from the American Reconciliation and Recovery Act, also known as the stimulus package.

Commissioner Mickey King, chairman of the county budget committee, made the point.

County Attorney Ginger Shofner added other insights.

"A lot of legal think tanks are studying this," Shofner said of employers limiting retirement benefits. "I don't think you're at legal risk."

That's apparently because the county employees aren't working under a negotiated work contract like the teachers.

The commissioners don't have a problem with discounting the benefits of employees not covered by collective bargaining, Shofner explained.

Furthermore, she said, "The individuals on payroll who could retire today could continue to qualify with the change" that starts July 1.

Confirming his opinion of the situation, Commissioner Dean Delk, principal at Chapel Hill Elementary School, said, "If we don't pass this, we'd have to pay back $3 million and have an audit?"

King replied, "Yes."

The audit would take more than two months, be completed by June 30, and an actuary would have to be hired, presumably by issuing a request for proposals from professional firms capable of doing the job.

"I have serious questions about this," Commissioner Rocky Bowden said.

Voting against the amendment to the employees' benefits package were Commissioners Bowden and Tony Williams.

Commissioner Scottie Poarch abstained.

Voting yes were Commissioners King, Delk, Jimmy Wolaver, Billy Spivey, Don Ledford, Tony White, Jimmy Stitt, Seth Warf, Reynelle Peacock Smith, Wilford "Spider" Wentzel, Larry McKnight, Richard Medley, Mary Ann Neill and E.W. Hill.

Commissioner Phil Willis was absent.