“The restructuring of the county retiree healthcare was the single largest contributor to restoring solvency,” said Wayne County Executive Warren Evans.

DALLAS – Fiscally distressed Wayne County, Mich., expects $23 million in fiscal 2016 budget relief from cuts in retiree healthcare benefits that trimmed $850 million from its unfunded liabilities.

The annual savings are expected to grow.

Wayne County Executive Warren Evans has pointed to the county's other post-employment benefit liabilities as one of the factors driving the county into deficit and toward a possible bankruptcy.

"The restructuring of the county retiree healthcare was the single largest contributor to restoring solvency," said Wayne County Executive Warren Evans. "The report demonstrates how critical this restructuring was to stabilizing county finances. We are now able to devote more resources to services for our residents while, at the same time, ensuring retirees have access to affordable health care."

The restructuring reduced its actuarial accrued OPEB liability by 65% in 2015, lowering it to $471 million from $1.32 billion, according to an actuarial analysis that accompanied the county's announcement from Nyhart Actuary & Employment Benefits. The restructuring will bring the county's pay-as-you-go contribution this year down to $17.6 million from $40.4 million.

The county, because of its financial distress, is operating under a consent agreement with the state. Among other things, the 12-page agreement broadens the county's power over labor contracts and allows it try to restructure some of its debt or reach settlements with creditors; the county isn't allowed to issue more bonds without state permission.

The OPEB savings were achieved by switching some retirees to what the county calls more "cost-effective health plans and providing others with need-based stipends to purchase their own insurance."

Without the changes, the county had warned that the actuarial accrued liability was on track to rise to $1.8 billion.

Evans said the healthcare savings are long term because the actuarial report projects only manageable increases in retiree health care costs over the next decade. "We are not kicking the can down the road or resorting to balance sheet gimmicks," he said.

Evans introduced a recovery plan in April 2015 to address Wayne County's ballooning deficit, which averaged nearly $52 million for the previous four years. The county reduced its structural deficit by 93% from $53.4 million to $3.7 million in 2015. It's also trimmed $82.2 million of its larger accumulated deficit.

In September, the county approved a $1.6 billion budget that aligned with the Evans administration's recovery plan. The general fund budget totals $1.15 billion, down from $1.38 billion in fiscal 2015 and $1.46 billion fiscal 2014 budget. The projected 2017 general fund budget totals $1.16 billion.

Evans asked Gov. Rick Snyder in June to declare the county to be in a financial emergency. The consent agreement was one of four options that the county was allowed to choose from after the declaration.

Wayne County carries across-the-board junk-level ratings of Ba3 from Moody's Investors Service, BB-plus from Standard & Poor's and B from Fitch Ratings. All three assign a negative outlook.

The county has no outstanding unlimited-tax GO bonds. It has $700 million of limited-tax GO bonds and expects to have a total of $1.2 billion of tax-supported bonds by the end of fiscal 2016. That figure is projected to decline to $927.3 million by the end of 2017.

The budget proposed that the county issue $75 million of tax anticipation notes in fiscal 2016 and $75 million in 2017. It also proposes the issuance of $210 million of delinquent tax anticipation notes, backed by a limited-tax GO pledge, in 2016 and $200 million in 2017. The county would also float a total of $153 million of drainage district bonds backed by its LTGO pledge by the end of fiscal 2017.

Local publications have reported that some current employees and retirees have criticized the healthcare changes saying their costs are headed up and their employment was based on the expectation of those benefits being in place.

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