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2013-41(b)
EVIP Employee Compensation Policy
The employee compensation component of the state’s Economic Vitality Incentive
Program (EVIP) includes the following criteria related to defined benefit pension plans
that local units desiring to qualify for EVIP funding must intend to implement, with any
new, modified, or extended contract or employment agreement:
1. For defined benefit pension plans, final average compensation for all employees is
to be calculated using a minimum of 3 years of compensation and shall not
include more than a total of 240 hours of paid leave. (City currently meets this
criterion with 5 of 6 employee groups.)
2. Overtime hours shall not be used in computing the final average compensation for
an employee. (City currently meets this criterion with 4 of 6 employee groups.)
3. For defined benefit pension plans, a maximum multiplier of 1.5% for all
employees who are eligible for social security benefits, except, where
postemployment health care is not provided, the maximum multiplier shall be
2.25%. (City does not currently meet this criterion with the 3 employee groups
having social security benefits.) :
4. For all employees who are not eligible for social security benefits, a maximum
multiplier of 2.25%, except, where postemployment health care is not provided,
the maximum multiplier shall be 3.0%. (City does not currently meet this
criterion with the 3 employee groups not having social security benefits.)
In 2012, the employee compensation component of EVIP was changed to give local units
an optional way to qualify for EVIP funding: by certifying to the Michigan Department
of Treasury that they are in compliance with 2011 PA 152.
PA 152 is the law that creates a “hard cap” on the amount a public employer may
contribute to a medical benefit plan for its employees. PA 152 provides an option to elect
an 80% employer contribution cap rather than the hard cap, and it contains a provision
allowing local units to opt-out entirely through annual passage of an exemption resolution
approved by a 2/3 vote of the governing body. Compliance with PA 152 through any of
these avenues now meets the qualification criteria of the employee compensation
component of EVIP.
The City of Muskegon’s employer cost for employee healthcare currently is below the
hard caps established through PA 152 and, so, the City is in compliance with this law and
can thereby qualify for EVIP funding through this option.
Given these circumstances, the City’s policy with regards to future qualifying for the
employee compensation component of the state’s Economic Vitality Incentive Program
(EVIP) is recommended to be as follows:
1. So long as the City’s employer healthcare costs remain under the “hard cap”
limits of PA 152, the City intends to qualify for the employee compensation
component of EVIP funding by certifying to the Michigan Department of
Treasury that the City is in compliance with 2011 PA 152.
2. Notwithstanding the above, the City intends to continue to implement, with any
new, modified, or extended contract or employment agreement EVIP employee
compensation criteria 1 & 2 (as enumerated above) for employee groups not in
compliance with these criteria.
3. Should the City’s future employer healthcare costs exceed the “hard cap” limits of
PA 152, the City Commission will seek to qualify for the employee compensation
component of EVIP funding through one or more of the following:
a. By utilizing the “Employee Compensation Plan Option” and intending
to implement, with any new, modified, or extended contract or
employment agreement EVIP employee compensation criteria | through 4
(as enumerated above) as well as all other EVIP standards; or,
b. By utilizing the “Public Act 152 of 2011 Option” and electing the 80%
employer healthcare cost contribution cap; or,
c. By utilizing the “Public Act 152 of 2011 Option” and annually
exempting the City from PA 152 by a 2/3’s vote of the Commission.
4. Further, in line with the spirit and intent of EVIP and consistent with the closure
of the City’s defined benefit pension plans to new employees, the Commission
will not support future enhancements to defined benefit pension benefit levels or
terms of retirement.
Adopted: May 14, 2013.
Ann Marie Cummings, MMC
city Clerk
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