According to the Montana Public Employees' Retirement Association, Lewis and Clark County might be required to make an unfunded liability payment of up to $5 million as a result of the county's planned separation from PureView Health Center.
PureView has been affiliated with the county since it was founded in 1994, and the split is scheduled to take place March 1, 2020. As a result, 63 employees will be terminated by the county and subsequently hired by PureView, which means those employees will no longer be members of MPERA.
According to MPERA Executive Director Dore Schwinden, all of the organization's 500-plus members make unfunded liability payments each year to ensure members receive what they are owed. Any organization that separates from MPERA must pay out the unfunded liability amount that would have been paid in the future so the financial burden is not shifted to other members, he said.
"If we were to allow these 60-plus employees to leave the system, that would place an unfair expense burden on those other employers," Schwinden said. "This is not a new thing."
PureView accounts for approximately 25% of the county's total unfunded liability costs. Though the exact amounts are still being calculated, Schwinden said the cost to the county could be around $5 million.
According to a Sept. 20 letter from the Lewis and Clark County Commission to the association's chairman, MPERA staff informed county officials of the possible seven-figure penalty after asking for records of any county employee who had worked at PureView since it was founded.
"MPERA's demands have put the County in an untenable position," the letter from the commission says. "Without a single word of warning, during the extended period when their input would have mattered, MPERA, after the fact, is making an assertion of liability that certainly would have colored the outcome of any separation discussions between Lewis and Clark County and PureView."
Schwinden said MPERA is not responsible for informing the county of its unfunded liability obligations since the information is included in the county's agreement with the organization and has been since 1947.
"It's their responsibility to know the provisions," he said.
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Schwinden said organizations often ask MPERA what the cost would be to separate, and be believes it's unfortunate that the county did not do so.
According to the letter from the county, MPERA's legal rationale for the penalty does not apply in this case. It also says MPERA staff asserted that the affected employees weren't really county employees.
"To the best of our knowledge, when other employees terminated in closely similar situations across the state, and even here in Lewis and Clark County, no such demand has ever been made or position by MPERA taken," the letter says.
The letter goes on to say that Schwinden offered an appeals process "if the county is assessed." County officials argued this is "not the proper venue for this policy discussion" and asked that MPERA staff withdraw the request.
According to the letter, "our taxpayers are being asked to fund an assessed liability that has never been imposed in the 72 years that Lewis and Clark County has a had a contract with MPERA, or any other entity for that matter."
Currently, neither party has filed any litigation against the other. Schwinden said he does not believe litigation will be necessary, but he did not rule it out.
Roger Baltz, chief administrative officer for the county, said the county is sticking to its position and believes there are grounds for MPERA to reconsider the penalty. The situation is expected to come up at an MPERA board meeting in October.
Lewis and Clark County approved the final plan for its split with PureView in August. Jill Steely, executive director of PureView, said the separation would allow the health center to "work at the speed of health care" by taking government bureaucracy out of day-to-day operations.
The county and PureView are parting on good terms, and commissioner Susan Good Geise stated that the health center simply no longer needs the county's help like it did in 1994.