City of Saginaw’sUnfunded Liability
Presented to City CouncilBy
Dennis Jordan SPHR, Director of Human Resources
February 3, 2014
Fund Balance
Beginning F/Y Balance % of Budget
2014 - $ 268,881 0.8%
2013 - $1,248,058 3.9%
2012 - $3,970,352 11.6%
2011 - $3,771,779 11.0%
2010 - $1,544,461 4.9%
2009 - $1,455,258 4.4%
Unfunded Liability(s)
% Funded
OPEB - $220,255,745 1.6%
Police/Fire Pension- $ 69,116,726 62%
MERS Pension - $ 76,562,229 47%
TOTAL = $365,934,700
Annual Required Contributions
Police and Fire PensionFY Beginning
2013 - $6,046,388
2012 - $5,845,642
2011 - $5,685,858
2010 - $4,469,001
2009 - $4,453,364
Average Annual Increase = 7.1%
Annual Required Contribution
MERSFY Beginning
2013 - $9,059,568
2012 - $7,576,236
2011 - $6,720,804
2010 - $5,856,972
2009 - $5,104,320
Average Annual Increase = 15.5%
5 Year Projected Pension Contributions
Police and Fire MERS
FY Beginning
2014 $6,475,681 $ 9,979,000
2015 $6,935,455 $11,975,000
2016 $7,427,872 $12,514,000
2017 $7,955,251 $10,631,000
2018 $8,520,074 $ 9,034,000
Possible Pension Solutions
Note: Both Pension Systems Closed to New Hires in 2000Note: Both Pension Systems Closed to New Hires in 2000
•Freeze current participants benefit and change benefit to a hybrid (both DB and DC) or only a Defined Contribution Plan.
•Negotiate changes to current employees in the system to comply with State EVIP Compensation Plan ( Multiplier and/or Adders).
•Move the Police and Fire Pension System to MERS.
Healthcare Strategy
Three Draw Downs on the Healthcare system
Active Employees Future Employees/Retirees
• Active Retirees
Changes to Healthcare
ACTIVEPre 2009 No Deductibles; Co-pays; Contributions
2009 - Negotiated -
– $250/$500 Deductibles
– $1000/$1500 Co-Pays
– $20 per pay contribution
Performed audit of dependent status on active employees (estimated savings of $250,000 annually)
Changes to Healthcare
New Hires
• New Hires (2009) no longer eligible for Retiree Healthcare. Healthcare Savings Plan (HSP) provided for New Hires @ $125 per month.
More Changes to Healthcare
2010 - Initiated annual open enrollment process for Active and Retiree Health Care Participants.
2011/2012 - Negotiated All Actives - – $500/$1000 Deductibles
– $2000/$3000 Co-Pays
– $20/$30/$50 per pay contribution (indexed annually)
– Three Tier Drug plan (7/35/70)
– Created New PT Contract with SEIU – No HealthCare
Retiree Health Care Contributions
Annual Required Contribution
2013 - $16,188,521
2012 - $17,615,866
2011 - $17,836,256
2010 - $20,635,286
2009 - $20,070,947
Actual Contribution
2013 - $8,282,847
2012 - $9,791,130
2011 - $9,515,047
2010 - $8,945,764
2009 - $7,888,799
*726 Retirees
What have we done so far with the Retirees?
July 1, 2013 – Efforts made to move retirees to one plan ( same as current active employees).
•Retirees appealed – Court ordered and injunction. Litigation in process.
•Retiree Association has met with the City on several occasions. Alternative plan offered by City-No agreement at this time.
PPO3 vs PPO4
Current PPO 3 With $10/$40 RX
Proposed PPO 4 With
$7/$35/$70 RX Explanation of Differences
PPO 3 PPO 4$250 $500 $250 vs $500; Diff of $250/yr$500 $1,000 $500 vs $1,000; Diff of $500/yr20% 20% No Difference
$1,000 $1,500 20% up to $1000 vs 20% up to $1500; Diff of $500/yr$2,000 $3,000 20% up to $2000 vs 20% up to $3000; Diff of $1000/yr$1,250 $2,000 Deduct + 20%; Difference of $750 per year$2,500 $4,000 Deduct + 20%; Difference of $1500 per year
$20 $20 No Difference$20 $20 No Difference24 24 No Difference$75 $75 No Difference
Unlimited Unlimited No Difference$10/$40 $7/$35/$70 $3 less for generic, $5 less for preferred brands/$30 more
for non preferred brands$10/$40 $14/$70/$140 $4 more for generic, $30 more for preferred brands/$100
more for non preferred brands Pharmacy Benefit
Up To 90 Day Supply
Pharmacy Benefit Up To 30 Day Supply
Physician Offi ce VisitChiropractic Offi ce Visit
# of Chiro Visits Per YearEmergency Room
Preventive Care Dollar Maximum
Family OOP (Ded Plus % Copay Max)
City of Saginaw Plan Comparison - PPO3 vs PPO4
Actives
Medical Plan Comparison
Single DeductibleFamily Deductible
% CopaySingle % Copay MaxFamily % Copay Max
Single OOP (Ded Plus % Copay Max)
Don’t Shoot the Messenger!