Village struggles to meet Ontonagon Memorial Hospital retirement obligations
The Ontonagon Village Council has continued to prioritize the Municipal Employees’ Retirement System (MERS) obligation by revisiting the situation and getting regular updates from Interim Village Manager Will DuPont.
The village is currently $72,226.44 past due. So far this year, the village has paid $69,000 as of April 12.
The Interim-Manager reported that the current estimates in revenue for the General Fund for the fiscal year is just short of $660,000. The bad news is that within the next few years (possibly as few as two), the payments to MERS will be over $660,000 per year. In other words, the MERS obligations will wipe out the village’s general fund and more.
There are some options. The Segal Report dated March 31, 2020 gave the village a solid guide to help the situation. These are as follows:
1. Corrective Action Plan: This has already been partially implemented. Two of the three village office staff are not part of the MERS pension plan, one is. The rest of the options would have to be negotiated with the union that represents the other village employees, but the current union contract runs through December 31, 2022.
2. Liability Reduction Measures (buy-outs): MERS has confirmed that if buy-outs were agreed to by all 28 former Ontonagon Memorial Hospital employees, this could reduce the village’s cost each month by $50,000-$60,000 with up front cost to the village. This is not a long-term solution, but would provide some relief to the village.
3. Expand Revenue Sources: This could be the most difficult measure to approach. The council has already increased taxes on property owners in the village by 4 mills to the allowable maximum of 15. To raise taxes further would require a referendum vote. Approaching the county for some assistance is being discussed. It has been pointed out that a good number of OMH patients through the years were not village residents, but were county residents. There is no question that having a local hospital has been of great benefit to the entire county.
DuPont was quite direct in telling the council that outside assistance is going to have to come from the county, or the State of Michigan. Some of the short-term measures are being put in place and DuPont told the council that the next step is to offer the retirees buy-outs.
“We have 18 months to do what we can before we get to the next level,” DuPont said.
Trustee John Hamm, himself a former village employee and union member, spoke strongly in favor of the buy-outs concept.
Trustee Michael Mogan listed his priorities to address the matter; Look at the village millage (Council has already raised the millage rate to the limit of the statutory level. To go further would require a vote of the taxpayers); go to the county and ask for help; contact the state representatives (Rep. Greg Markkunen and Sen Ed. McBroom both GOP) and then contact the federal representatives for our area (that is Congressman Jack Bergman, GOP and US Senators Debbie Stabenow and Gary Peters, both Democrats).
It was also suggested that the village offer 401K contributions to former OMH employees who are currently employed by Aspirus.
The first step in offering buy-outs is for the council to adopt a resolution to that effect. This will be prepared and on the agenda for the next council meeting.