One of the ladies at church was lamenting the gutting of police and EMT services in her area. It was her perception that every few years the Sheriff pares a few more patrolmen out of the rotation and the 9-1-1 Call response times for every type of emergency grows.
One of the major drivers for what she sees is due to unfunded obligations coming home to roost.
For example, in Eaton County, Michigan there are approximately 30,000 households and for county-level services there is $62M in unfunded pension obligations* which is roughly $2000 of invisible debt per household.
There is another $50M in unfunded healthcare benefits for retirees for an additional $1700 of invisible debt per household. "But wait" you say, "don't they get Medicare?"
Perhaps they would if they were 65 when they retired, but one of the perks of working for a governmental unit is that many of them offer retirement after working 25 or 30 years and that can leave a big gap until Medicare kicks in. If they worked in most private industries, they would be expected to pick up a job...hey, many of them are not even 50...to get healthcare coverage.
It gets worse
There are municipalities within Eaton County. Let's take Eaton Rapids as an example.
The pension fund has a $5.4M shortfall that is shared by approximately 1700 families for an additional $3200 per household on top of the $3700 owed to the county.
But hold onto your shirt, the unfunded healthcare benefits amount to $10.4M which adds another $6100.
Let's see where that leaves us for a family living in Eaton Rapids: $3700 (county) + $3200 (city pension) + $6100 (city healthcare for retirees) or about $13,000...the cost of a used car.
They are making the equivalent of twice-a-year payments of $260 (1/3 of the property taxes they pay) on a broken-down, used car that is parked behind the barn because it does not run, never will run and it cannot be sold.
The typical household in Eaton Rapids kicks in about $1500 a year in property taxes and there is not as much left over after "servicing" the costs of people who no longer work for Eaton County or the City of Eaton Rapids.
The reason the number of cops and EMTs dropped is because administrators short-sightedly broomed out workers before age 65 and sweetened the pot by offering generous post-retirement healthcare and pension benefits. Those tax dollars coming from citizens are not available to pay for current workers.
Is it fair?
Is it legal or fair to reduce a retiree's benefits after they retire?
I never went to law school, but the answer is probably "It depends."
If the post-retirement healthcare benefits (for instance) are contracts granted on an individual-by-individual basis at the time of retirement then the municipalities are locked in.
If the post-retirement healthcare benefits are negotiated as part of the regular employee contracts on a 3, 4 or 5 year cycle then they can be changed with the next contract.
But is it fair?
It depends on who you ask. If you ask the 55 year-old taxpayer making $30k a year and paying $1500 a year in property taxes...and who has crappy healthcare benefits...then they might believe that it is "fairer" to ask the 55 year-old, city retiree to find their own healthcare premiums rather than siphoning it from the taxpayers' pockets.
I don't know how old the lady at church is but I suspect she is in her middle-60s. I do know that both she and her husband, who might be a few years older, are still working full time.
*All costs for unfunded obligations comes from the Unfunded Michigan website.
Number of households was estimated by taking the population and dividing by three.