Grosse Pointe Shores retirees outraged over spike in costs for health care benefits

By: K. Michelle Moran | Grosse Pointe Times | Published June 23, 2020

 Retired Grosse Pointe Shores Public Safety officer Steve Kwiatkowski — pictured with his wife, Michele, next to the Grosse Pointe Shores city flag in City Council chambers — is among the Shores retirees trying to figure out how to cover the sudden increase in his health care costs.

Retired Grosse Pointe Shores Public Safety officer Steve Kwiatkowski — pictured with his wife, Michele, next to the Grosse Pointe Shores city flag in City Council chambers — is among the Shores retirees trying to figure out how to cover the sudden increase in his health care costs.

Photo by K. Michelle Moran

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GROSSE POINTE SHORES — Former Grosse Pointe Shores Public Safety officer Steve Kwiatkowski was less than a year shy of getting a full 25-year pension when an on-the-job injury in 2010 forced him to retire in 2013. Now, besides taking home a reduced pension, he and his fellow retirees are getting socked with substantially higher costs for the health care they depend on.

Shores retirees received word this month that the Shores City Council — in a May 19 meeting by telephone because of COVID-19 — voted 6-1 in favor of moving retirees to a health care plan in which they have to pay 20% of the costs, similar to the one current employees are on. City Councilman Douglas Kucyk cast the dissenting vote. The council majority noted that 60% of the Shores’ health care budget is for retiree health care. They say the city has an $11 million retiree health care liability, of which $9.2 million is unfunded.

But, as Shores Finance Officer/Treasurer Rhonda Ricketts pointed out, altering retiree health care responsibilities will only save the city about $139,000 a year, $68,000 of which is from increasing their share of the costs to 20%.

Eight of the city’s 35 retirees qualify for a hardship provision because their pension is too low; for 2020, that would mean having a pension of $31,225, said Mark Manquen, a managed health care executive and the founder and president of Manquen Vance.

The remaining retirees say the cost is too high for them to bear, as well, and is in violation of the contracts they signed with the city while they were working. They also say they gave concessions in salary and other benefits during their working years in order to be guaranteed retiree health care.

On top of whatever they were already paying, Shores retirees will now have to pay an additional monthly cost of $124.38 for a single recipient, $285.20 for a couple or $339.82 per family. For a family, that’s an increase of more than $4,000 annually. The change takes effect July 1. Other plan changes, including a $400 deductible for lab tests and diagnostics and a new price structure for prescriptions, go into effect Jan. 1, Manquen said.

Out of the 40 cities Manquen’s firm works with, he told a group of Shores retirees June 17 that about a half-dozen of them are implementing similar policies. When asked directly by retirees to name some of those cities, the only one he cited was Harper Woods.

Kwiatkowski, now 56, tore both of his shoulders apart trying to rescue a man trapped in a trench collapse on Lake Shore Road in 2010. It took five surgeries over 2 1/2 years to restore some function, but the injury “pretty much ended” his career, he said. He and his wife, Michele, have 13-year-old twins at home. Michele said her husband “just missed” the pension poverty exemption cutoff.

“I loved it here,” Kwiatkowski said of his time in the Shores. “We were always told, don’t worry — Grosse Pointe, they take care of their own. (Then) this came up suddenly. … That’s a huge hit. It may mean the difference between paying a bill or not paying a bill.”

Mayor Ted Kedzierski said it comes down to the rising cost of health care.

“At the beginning of the year, Rhonda presented a budget showing we were going to be short about $320,000 (in the 2020-21 fiscal year), and that didn’t include a fire truck that we needed,” Kedzierski said. “Our total city of Grosse Pointe Shores health care cost under covered contracts for 2019 was $795,000, and in 2018, it was $668,000, so health care costs have gone up considerably. So, what we did was very difficult, but our (health care) consultants … (recommended that) we essentially move the retirees to a plan designed to mirror what our active employees receive now.”

While retirees acknowledge that prices are going up, the argument that the Shores can no longer fulfill the obligations it made to them years — and in some cases, decades — ago doesn’t sit well. According to U.S. Census data, Grosse Pointe Shores ranks as one of the 10 wealthiest communities in Michigan.

In a letter, Ricketts asked City Clerk Bruce Nichols to read into the record on her behalf at a June 16 council meeting, she pointed out that the Shores isn’t in dire financial straits.

“Communities that have had similar cost sharing/benefit changes in recent years are communities that were in financial crisis — Wayne County, city of Flint,” Ricketts’ letter reads, in part. “They were not AAA (bond) rated communities (like the Shores). Is it the City Council’s opinion that we are equivalent to these communities?

“Many communities that have been cited by the state of Michigan for underfunded status in their pension fund and/or OPEB (Other Post-Employment Benefits) funds have submitted corrective action plans (to the state) that do not include cost sharing and/or benefit reductions,” Ricketts’ letter continues. “The village of Grosse Pointe Shores has not been cited by the state of Michigan for underfunded status.”

Detective Lt. Scott Rohr is a union representative for his department’s command officers. Rohr said it could cost the Shores more than it will save, as the retirees are considering legal action if the council doesn’t reverse course.

“We are not in dire straits,” Rohr said. “We have a balanced budget. Ultimately, they’re going to get sued (by the retirees). It’s going to cost them tens of thousands of dollars to litigate, and they might not win. To reach in and pull 20% out of the pocket of these guys is not right. It’s not fair.”

And retirees say that the city has other options to fund the shortage. Ricketts said the Shores can still add about 5 mills to its taxes, because they’re well below their Headlee cap. With a taxable value of $297 million in the Shores, Ricketts said 1 mill would generate $297,000 — more than twice the shortfall.

Rohr said the city could also take advantage of its strong bond rating — at AAA, it’s the highest rating a municipality can have — to issue bonds. He said Oakland County did that and ended up not only fully funding health care, but also making money.

Retirees said they also made efforts during their working years to reduce the city’s costs.

“We did a lot of negotiating with the city manager, and we brought up increasing pension contributions to help the city, and we got turned down,” said Tom Collins, who retired last year after 23 years with the DPW.

Ricketts is not only personally impacted by the change — she retired from the Shores several years ago and returned to her existing job under a new agreement — but she’s also hearing heartbreaking stories from worried retirees calling her with questions about the new plan.

“It’s going to be a hardship for most people,” Ricketts said. “When I was hired (by the Shores) back in 1987, I was told, ‘We’re going to take care of your retiree health care.’ It’s the principle. Promises were made. Expectations were there. And now, everything has changed. … I feel for these people. They’re my friends. We’ve got people that (are saying), ‘I won’t (be able to) buy my drugs anymore.’”

A number of retirees and current employees confronted the Shores City Council during the June 16 meeting at Osius Park.

Public Safety Lt. Dave Younk retired in 2012 after nearly 30 years on the force. He called the Shores “a phenomenal place” to work.

“We didn’t take raises at times because the council and the city pushed us to put (the money) into health care,” Younk said. “(Now, the) fifth richest community in this state is going to jam up their employees? This is sad.”

Water Department Supervisor Michael Way, vice president and steward of the union representing the DPW, said he’s worked full time for the Shores for 15 years and part time for eight years before that.

“I was kind of appalled to find out there were changes to the contract,” Way told the council, noting that he wasn’t made aware of these changes. “I can tell you countless stories of holidays I missed, the family events I’ve missed to come to work for you.”

Collins said the increase in costs to retirees amounts to a 23% pension pay cut.

“Would anyone here accept a 23% pay cut?” he asked the council. “It’s a slap in the face (and) a stab in the back.”

Collins and some of his fellow DPW retirees recall getting fire training on their own time so they could assist public safety at a fire scene.

“When public safety went on a fire run, we went, too,” Collins said after the meeting. “We did it for the community.”

It’s not just retirees who are upset. Shores residents like Harry Kurtz aren’t happy about the council’s actions, either.

“Cutting back the Grosse Pointe Shores retiree benefits, significantly, without any real warning, practical explanation or justification, is just another example of the inappropriate actions being taken by our council for the past couple of years,” Kurtz said by email.

Retirees like Collins also blame unnecessary spending for the shortfall.

“It’s ludicrous, how they spend money around here for needless stuff,” he said.

While retires argue the health care changes violate their contracts, city officials say the law is on their side, pointing to a class action lawsuit decided in favor of Macomb County by the Michigan Supreme Court in May 2019. The suit, Kendzierski v. Macomb County, was filed by a group of retired unionized county employees, whose retiree benefits had been negotiated as part of collective bargaining agreements. The workers sought damages and injunctive relief after county officials changed those benefits. The majority on the court concluded that, because the contracts didn’t explicitly spell out that the benefits in the contracts were intended to span the lifetime of a retiree, those benefits were only valid for the duration of the contract. Shores officials believe this means they can now offer the same health care benefits to retirees that current employees receive.

Retired Grosse Pointe Shores Public Safety Director Stephen Poloni, who now serves as the public safety director of Grosse Pointe Park and Grosse Pointe City, sat on both sides of the negotiating table during his career.

“You could ask any union member, any one of the city managers, any attorney on both sides, that they negotiated this (contract) for the lifetime of the (employee),” Poloni said. “It was always a lifetime guarantee.”

People have questioned the court’s decision in the Macomb County case.

“Just because you can doesn’t mean you should,” Rohr said of changing retiree health care benefits. “And I’m not even going to stipulate that you can.”

Retirees said they got letters telling them about the changes on June 12. They have to sign an agreement accepting the changes by July 1, or they’ll lose their health care benefits.

The council’s action isn’t just having an impact on retirees — it impacts current employees, as well.

“It’s problematic retaining the good employees,” Rohr said. “Any action the city does that’s seen as negative to employees is going to have a negative impact on morale.”

Retirees said they would be signing the agreement over the benefit change “by objection.” And they say this isn’t over.

“We’re not going to stop fighting this,” said Deanne Younk, wife of Dave Younk. “It’s a violation of the contract. It all comes down to, we bargained in good faith, and now (the city) did not honor their commitment. It’s what’s right and what’s wrong.”

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