The Orchard Lake City Council extended a pair of personal service contracts just prior to a Thursday, Sept. 15 deadline that calls for municipalities to comply with a pending state law that limits government spending on public employees’ health care.
The contracts of Director of City Services Gerry McCallum and City Clerk Rhonda McClellan were extended one year to June 30, 2014 to mirror the police bargaining unit’s contract set to expire in 2014.
Currently the employees contribute 10 percent to their health insurance. Akin to the police contract, the extended personal service contracts call for a 1 percent increase in employee contributions to health benefits for each subsequent year of the contract rather than imposing a 20 percent requirement as proposed by Gov. Rick Snyder as part of the Publicly Funded Health Insurance Contribution Act.
“We didn’t want these two employees treated differently than the majority of employees in the police department,” Mayor Bruce McIntyre said. “Next year both groups will pay 11 percent and the year after 12 percent.”
The impending law will presumably become official this week. It has already passed both the House and the Senate and awaits the governor’s signature.
“A large number of contracts have been approved around the state for this reason,” McIntyre said.
If the city didn’t make the adjustment prior to the Sept. 15 deadline, the city would be forced to choose from several options, one being the new law could hold the employee to a hard cap of $15,000 that the city could reimburse on all inclusive health care costs. A second option would be for municipalities to pay 80 percent of health insurance costs and the employees would assume 20 percent.
“The concern is that there’s a big jump from 12 to 20 percent overnight,” McIntyre said.
“With the new law, we would pay 20 percent and that’s double our (current) contribution,” McCallum said. “I give credit to Bruce and council that sought to protect Rhonda and I.”
Lastly the city could opt out of the new law, but the process would need to be voted on annually and approved by a two-thirds majority of council members.
“Municipalities can vote not to be bound by the law, meaning they don’t have to follow either of these plans, ” McIntyre said.
Orchard Lake’s AFSCME employee contract expires Dec. 31 and will remain protected until that time.
“We haven’t negotiated the new contract, but will deal with these issues then,” McIntrye said.
The City Council took action on the contracts at a special meeting held Sept. 12.