In 2014, the City Commission has authorized the City Manager to create a Legacy Cost Task Force to research, study, and explore options that account for the City’s long-term financial liability for providing health care to its retirees.
The term “legacy costs” refers to the current and projected future costs of providing health insurance to City of Kalamazoo retirees. This does not include any pension benefit, which is pre-funded by the City/employees during their employment period.
Legacy costs were a significant contributor to the City of Kalamazoo's structural budget shortfall. A workable solution needed to be found to contain the City’s liability for providing retiree health care and create a committed financing mechanism that did not impact the City’s ability to meet other future funding obligations.
The Legacy Cost Task Force was made up of three City Commissioners, four City administrators, five retired City employees, three current City employees, two representatives from the business community, one higher education representative, and three city residents at-large. Their mission was to study the issue and recommend workable options for the City Commission to consider before the end of the summer of 2014. The culmination of the Task Force work is the issuance of a pdf written report (258 KB) that was presented to the City Commission in August 2014.
The Task Force ultimately recommended that the City issue up to $100 million in “OPEB” bonds pursuant to Public Act 329 of 2012; fund the remaining annual required contribution, the normal cost of retiree healthcare, and debt servie from operating funds; and consider the creation of a City Commission-appointed board to manage and oversee the investment of the bond proceeds for the purpose of financing retiree healthcare legacy costs. The reccommendation was also made to continue efforts to work collaboratively with retirees and employee groups to create an aligned, uniform health care program that focuses on lowering costs, maximizing efficiency, and taking advantage of State and Federal programs.
Legacy Cost Task Force membership
Vice-Mayor David Anderson (Co-Chair)
Commissioner Don Cooney
Commissioner Barb Miller
Jim Ritsema, City Manager (Co-Chair)
Patsy Moore, Deputy City Manager
Jerome Post, Human Resources Director
Tom Skrobola, Chief Finncial Officer
Jim Grace (City retiree)
Sally Hainline (City retiree)
Tommy Sykes, Jr. (City retiree)
Burt Tenbrink (City retiree)
Peg Giem (City retiree)
Chris Hancox (current City employee, KPSOA)
Stephanie Losey (current City employee, KMEA)
Marcia Jones (Current City employee, non-union)
Randy Eberts, Upjohn Institute
Ron Kitchens, Southwest Michigan First
Patti VanWalbeck, Western Michigan University
Vernon Payne (at-large City resident)
Lee Adams (at-large City resident)
Rob Keller (at-large City resident)