By Mary Drier
Staff Writer
CARO — In 2014 after hearing public concerns and reviewing several years’ worth of Tuscola County Road Commission audits, the Tuscola County Board of Commissioners asked the road board to address financial issues and to give a progress report.
Tuscola County Road Commission (RC) Director of Finance Mike Tuckey gave an update this week on what was done to address some of those concerns.
One of the initial areas of concern was RC’s post-employment health insurance benefits to employees. Employees hired before to Sept. 16, 2003, receive health benefits for life while those hired after that received health benefits for three years after retirement.
Another concern was that the RC is not obligated to make contributions to the health insurance plan that exceed the annual premium payment amounts, which means they can be paid on a “pay-as-they go basis,” which has caused that account to be under-funded for several years.
Also another area of concern is the RC having two different retirement companies and that each of them is funded differently. The participates in the Municipal Employees Retirement System of Michigan (MERS) and an actuarial determines that rate; and they also participate in the Massachusetts Mutual Life Insurance Company. Plus, the contribution amount of the two groups is different.
The salaried employee group rate contribution by the employer is 15 percent of the annual payroll with the employee rate of contribution 5.4 percent; and the current working foreman group contribution rate of the employer is 5 percent with the employee rate 5 percent.
According to the 2012 RC audit, the liabilities for the MERS plan exceeded assets by about $1.4 million and the trend shows the gap is has been increasing. That audit showed the plan was only 67 percent funded.
For the Massachusetts Mutual Life Insurance plan, previous audits showed liabilities exceed assets by about $405,000 and the plan only being 24.4 percent funded. The 2012 audit stated that both of these plans are “dramatically” under-funded. The auditors also recommend that contributions to both plans need to be “increased significantly” and/or take other steps to improve funding.
“Changes have been made” in those two areas, Tuckey said during Monday’s commission meeting to update what the road commission has done to address some of those concerns that were brought up last fall during a meeting between the two county boards.
“I was here last August. I think we have most of the issues resolved,” Tuckey stated.
In 2010, the road commission’s medical fund was over $13 million. Work was done to bring it down to $9.6 million in 2013, and as of today it’s about $8.9 million for medical funding.
“We were able to decrease that by reducing benefits, increasing co-pays and deductibles, and changing post retries’ medical benefits to a Medicare Advantage Plan,” said Tuckey. “The those changes helped save a lot.”
Adjustments were also made to the pension plans.
“We were able to put in an additional $200,000, and plan is to do that again this year. That fund was 67 percent funded. It’s now 71 percent funded, and we are on pace to be able to do that again this year so that will continue to improve,” he said.
According to Tuckey, once the 2014 audit is complete, he expects the numbers to be better.
“On the health insurance, the report isn’t final,” he said. “We are looking at making some changes to new hires.”
Because those changes are a work in progress, Tuckey declined to talk about them as the board is working on them.
During his financial report, Tuckey also noted dealing with winter weather continues to be expensive and although there wasn’t as much snow fall this winter as there was last winter, “there are still costs.”
“We’ve had less snowfall this year but what we did have blew around so there was that to deal with, and the cost of salt increased this year, about 67 percent” said Tuckey. “The price of salt increased from our order in March 2014 of $40.98 per ton to our order in November 2014 of $63.31 per ton, an increase of 54 percent. As of Feb. 14 this year, the road commission has used 1,477 tons of salt so far this season on state and primary roads, compared to 3,676 tons last season.”
County Commissioner Craig Kirkpatrick, who was the one who brought concerns about the road commission’s finances to the county board, thanked Tuckey for his update, but asked Tuscola County Controller Mike Hoagland to work with Tuckey to review finances to see “if there is room for improvement.”
Mary Drier is a staff writer for the Tuscola County Advertiser. She can be reached at drier@tcadvertiser.com.