Friday, July 27, 2018
NorCo Retirement Board Adopts New Formula For Retiree Medical Benefits
In May, Northampton County's Retirement Board voted to end a practice that was chipping away at pension checks. The Board directed the County to stop deducting medical contributions from retiree benefits after determining that the practice is illegal. Since that time, retirees have paid nothing for their medical care. At a meeting last night, Board members voted to continue the practice of providing free medical care to county employees, as well as spouses and dependents, who retired before 12/31/96. Those who retired after that date will still have free individual medical care, but if they wish to include a spouse, three percent of the base pension will be deducted. If it is a spouse and other eligible dependents, it's five percent.
This change is the result of a 5 to 1 vote. Voting in favor of this pension change were Lamont McClure, Ken Kraft, Steve Barron, Bill McGee and Tom Guth (employee representative). The great dissenter was retiree representative Gerald E. "Jerry" Seyfried. Ron Heckman was absent as a result of a conflict.
Barron explained that, under this proposal, 384 retirees will be paying less, 255 will pay more and 555 will pay no more than they were before. For those who pay more, the average will be about $50 per month. No one will pay more than $150.
In response to questioning by Executive McClure, Barron stated this policy is similar to what happens in other third class counties, including Lehigh County.
When Home Rule was established in 1978, one of the benefits that employees received upon retirement was free medical care. Spouses and dependents were included. This changed when Bill Brackbill became Executive. He first imposed a $10 co-pay, but later changed it to a percentage of the pension. These deductions continued and increased under Executives Glenn Reibman, John Stoffa and John Brown.
Seyfried has long maintained that only the retirement board, and not the Executive, has the authority to change retiree benefits. He has also long argued that it is illegal to reduce a pension benefit. He argued it violates the nonimpairment clause of the Home Rule Charter and Pennsylvania State Constitution, the latter of which provides that "[n]o ex post facto law, nor any law impairing the obligation of contracts, or making irrevocable any grant of special privileges or immunities, shall be passed."
Solicitor David Ceraul advised the retirement board that the county's contract is with the retiree,not a spouse or dependent. Thus, requiring a contribution for a spouse or eligible dependent is no violation of the nonimpairment clause.
Seyfried was unswayed by Ceraul, arguing that this new policy is still a diminishment in benefits. Lamont McClure disagreed, although he told Seyfried that retirees owe him a "debt of gratitude" for his role in correcting an illegal practice.
McClure went on to say that, though the practice of deducting from pensions for medical benefits was illegal, every retiree signed documents agreeing to it. He said he wanted to be fair to the retiree, but "I have an obligation to the county taxpayer as well. I was not going to treat the county taxpayer as a piggybank."
Under Barron's proposal, no county contribution will be needed to fund retiree health benefits. "Do not let the perfect be the enemy of the very, very good," McClure implored Seyfried.
This, incidentally, is a nonissue for employees hired after June 30, 2010. They must provide for their own medical care when they retire. Only half of Pennsylvania counties offer post-retirement benefits. Lehigh County ended them in 1987.
Tom Guth asked county administrators for better literature on retirement benefits. The county agreed to prepare a handbook and will present cost figures at the August meeting.
In other news, the county's pension fund is now 90% funded. Pension Fund manager John Spagnola told the retirement board that, as of two days ago, the fund contained over $415 million. The OPEB (Other Post Employment Benefits) Fund, which pays for retiree medical benefits, stood tall at over $41 million.