12/03/2006

Benefits helped lead to increase

By Brian Mcgillivary

bmcgillivary@record-eagle.com

TRAVERSE CITY — A perk township board members gave themselves and employees costs Garfield Township taxpayers almost $200,000 a year and helped lead to an unannounced November property tax hike.

Elected township board members in 2000 promised themselves and full-time employees lifetime health insurance benefits.

When Peninsula Township's board came under scrutiny in 2004 for similar benefits resulting in an unfunded liability of more than $1 million, Garfield Township's board reviewed its own plan.

"It became readily apparent that because the plan was open-ended there would be a huge liability for the township,” Supervisor Lee Wilson said.

The liability was estimated at $5 million.

It became just as apparent to employees that the board soon would eliminate the benefit. Employees quickly moved to form a union, Township Clerk Kay Schumacher said.

Under the union contract, the board agreed to create pre-funded medical saving accounts for retirees in which they would receive a monthly stipend of $1,350 for health insurance from the time they retire until they reach age 65, when Medicare kicks in and the stipend drops to $850. The stipend ends entirely at age 70.

The previous plan was dropped, and all township employees now fall under the union plan, including the four part-time township trustees, Wilson said.

The township must pre-fund the plan with annual contributions budgeted at $200,000 a year.