Concerns raised over county employee insurance premium increases.

November 15, 2018

Clockwise, from left: Prosecutor Paul Spaniola, Treasurer Andrew Kmetz, Commissoin Chairman Chuck Lange, Clerk Cheryl Kelley, Administrator Fabian Knizacky, Commissioner Wally Taranko, Sheriff Kim Cole.

Concerns raised over county employee insurance premium increases.


By Rob Alway, Editor-in-Chief.

LUDINGTON — Mason County government employees have recently been hit by a significant increase in their health insurance deductibles and co-pays, causing several employees, including sheriff’s deputies, to seek employment elsewhere.

Sheriff Kim Cole, along with two of his sergeants, Magistrate Paddy Baker, and Prosecutor Paul Spaniola, addressed the county finance committee Thursday morning, Nov. 15, with their concerns.

Over the past several years, county employees have taken less pay raises to keep pensions and health insurance intact, Cole said. However, in 2012, the state legislature mandated a 20% cap on what county governments can cover for health insurance. County Administrator Fabian Knizacky said the cap was created to control health care spending by local governments. County employees recently discovered that their 2012 costs will be increasing by between 42% and 46% in 2019.

Cole, Baker, and Spaniola said they acknowledge is not something that the county commission has created. However, they asked the finance committee if there is something the county commission could do to help ease the burden.

“I want you to understand that I know the situation was created with open enrollment and the hard cap, not the county commission,” Cole said. “But, I believe the county has the authority and the resources to help off set this.”

Cole said he currently has five road patrol deputies who are considering looking for employment elsewhere, plus Sgt. Shayne Eskew is set to retire within the month. There are currently 13 road patrol deputies, which means that almost 50% of the current road patrol will need to be replaced, which equals about $225,000 in training. In addition, county taxpayers have authorized the sheriff, through a millage, to hire four additional road patrol deputies beginning in 2019. This would mean the potential for nine new deputies, Cole said.

“I have three new employees,” Spaniola said. “One of those employees is a single mother with two little kids. She may have to go on Medicaid because she cannot afford the insurance. We realize that your hands are tied and we understand Fabian has done more than probably anybody else in the state to get the best health insurance and best rate for the employees in this county. But from the rank and file, from their point of view, they kind of feel that what equates to a $4 an hour pay cut is just too much. In no way are we blaming anyone here, but the employees feel like they have been cast aside. Those of us in this room who are in the top end of the salary scale are not going to hurt, we are going to sting. But, it’s that single mom working in my office that I’m worried about. If something can be done, they need to hear something from you.”

Magistrate Baker echoed Spaniola, saying that she has at least one employee who is considering leaving. “I worry about these families who have young kids,” Baker said. “They are going to really get hurt by this.”

“I think we all expected at one point that we would have costs to share with our health care,” Eskew said. “That wasn’t a surprise. But, what came as a surprise was that it came so big.”

Knizacky said matters concerning the sheriff’s office will need to be addressed with its two unions. He said the unions chose to take smaller pay increases in exchange for the county continuing to pay into pensions and health insurance.

He said the county has options, but none of them may be too popular. He said the commission could decrease the size of the number of people who are employed by the county. “I don’t think that’s a good idea,” he added. He said the appropriations could be made in the county’s equipment replacement fund, allowing the county to save funds.

“We could eliminate putting extra money into the pension funds, but we are 75% funded,” Knizacky said. “Frankly, I don’t want to be 85-years-old and be like the people in Detroit who find out that next year their pension is cut. We need to honor our commitment.

“We could deficit spend. We have reserves. The only thing wrong with deficit spending is you eventually get down to zero. I know some of us old timers remember when the county was down to zero. It’s not a pretty situation.

“We could ask the public for more funds, but frankly our benefit package is better than most taxpayers in this county. Asking the public to pay more so we have better benefits is a tough sell.”

Cole asked if Knizacky foresaw the insurance premium increase to be long term.

Knizacky said he expected premiums to continue to increase, adding though, that two years ago premiums decreased 10 percent because the county employees had a “very good” experience rating. “That turned out good for the county because we put more money in HSAs (health savings accounts) when it turned around.”

“I don’t think any of us came in here expecting to see raises,” Cole said. “If there is anything to lessen this sting, that would be helpful.”

Knizacky said he has been encouraging employees over the past six years to put more money into their HSAs. “But, it’s up to the individuals to do that.”

“You never complained when we put money in your HSA account, not one person complained,” said County Commission Chairman Chuck Lange, a member of the finance committee. “You took advantage of that your entire career,” Lange said to the sheriff.

Knizacky also noted that the county has seen a significant increase in pensions as well.

“The road patrol, for example, went from 13% of payroll to 17% of payroll,” Knizacky said. “The cost of pensions will be 31.92% of payroll for 2019. So, an employee making $50,000 a year on road patrol, we are talking $16,000 for that person’s pension. That’s a cost that is under the union contracts we have in place. The employees at the time of negotiating said that pensions were a priority and the county agreed to fund that pension at a level that it was. Part of the negotiations were also the pay increases and the hard cap on the insurance.”

Knizacky added that the county pays 75% of an employee’s pension and when the county has had extra money it has contributed more. “The pay on pensions has more than doubled in 10 years.”

“I think the thing that bothers me is that we are going to see such a turnover in employees and it bothers me to think that that’s OK,” Baker said.

“You have to look at the whole picture,” Commissioner Wally Taranko, chairman of the finance committee, said.

Taranko said the committee would take the concerns under advisement.

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