Ontonagon Village Council welcomes new year, same old MERS problem

Photo by Dennis Buchner on Unsplash

A major part of the Village Manager William DuPont’s report to the Ontonagon Village Council was in reference to the seemingly eternal problems with the Municipal Employee’s Pension System. This item is the growing obligation to the pension fund of the former employees of Ontonagon Memorial Hospital which the village sold the Aspirus of Wausau in 2007.

The purchase agreement between Aspirus and the village of Ontonagon specifically listed under “Liabilities not Assumed,”  stated “Seller and Buyer acknowledge and agree that except as specifically set forth….Buyer has not assumed and will not assume any liabilities or obligations of Seller or the Business arising from the Hospital employee retirement plan or the Municipal Employers Retirement System (MERS) of Michigan….” This purchase agreement included a provision that Aspirus would maintain “critical access or a substantially similar cost-based reimbursement hospital within the Village limits of Ontonagon….through October 31, 2012.”

In short, the assumption of the MERS pensions was understood to be the Village’s obligation and this was effective Nov. 1, 2007.

DuPont reported that the village currently owes MERS $203,670.84 of which $82,165.52 was due on Oct. 20, 2021. The village made a payment of $15,000 on Dec. 1, 2021.

Regarding the MERS buy-outs, only seven individuals eligible have requested information. A total of 28 former employees are eligible for buy-outs.

The village manager also had a Zoom meeting with Senator Ed McBroom (R) and Rep. Greg Markkunen (R) on Dec. 17 and their recommendations were for the village officials to put together a narrative that would build a case for assistance from the legislature. It should point out that the MERS situation is a result of circumstances beyond the village’s control or planning.

It turns out that there are more than a few other municipalities in the same situation with MERS pension plans and MERS treats these as businesses rather than non-profit municipalities. Possibly forming an alliance with some of these other communities would strengthen the case for help for all.

US Senator Gary Peters (D) has made a commitment to help the village through an amendment to the Butch Lewis Act.

Village President Tony Smydra pointed out that Congressman Bergman (R) has voiced support for the village, but he has voted against the Butch Lewis Act that established funds for helping pension funds that are in trouble. 

Enacted as part of the American Rescue Plan, a plan passed by the Democratic majority in Congress, the current Butch Lewis Act provides a bailout to fund multi-employer pension plans for 30 years. The bill restores pensions to their full amount and increases the national pension insurance cap. Finally, it requires regular reports to Congress on the status of these pension plans as a preventative measure against future collapse.

The plight of the Village of Ontonagon with MERS goes on, but now it appears that Ontonagon is not alone in those problems.