CLOSUP Summer Internships: The CLOSUP State Government Internship
The CLOSUP State Government Internship provides a Ford School graduate student the opportunity to gain experience in state government through a 10 week summer internship. In 2005, through a partnership with the University of Michigan Gerald R. Ford School of Public Policy, the Center for Local, State, & Urban Policy (CLOSUP) and the Michigan Department of Management & Budget (DMB), a funded internship is available in the State of Michigan, Department of Management and Budget in Lansing. The CLOSUP intern will work with senior staff members of the DMB. Proposed projects for Summer 2005 include the following:
- Strategic Plan Review
Satisfying the diverse needs of a large retiree membership is a continuing challenge. In an effort to further improve our process of delivering pensions, related benefits, and other services to promote the future financial security of our members the Michigan Office of Retirement Services will be conducting a comprehensive review of the office's strategic plan. The purpose of the review will be to determine the future direction of the Office of Retirement Services and ensure that the strategic plan is linked to Department of Management and Budget's goals. The strategic plan review will include our objectives, balanced scorecard, and business planning process. The intern would be responsible for: researching and identifying organizations that have successfully implemented strategic changes, making recommendations, assisting in coordination and conducting planning sessions, and developing a plan to implement the agreed upon changes.
- Health Care Program that Provides Rewards for Self Care
Disease management programs are developed to provide incentives for those with chronic conditions to take better care of themselves and to prevent chronic conditions from developing. Individuals with chronic conditions utilize 78% of all US health care services and have total medical expenditures nearly five times higher than those without. The Office of Retirement Services is considering implementing a program to provide incentives for members with chronic conditions to take proper care of themselves and encourage preventive care. Some incentives for proper care could include but may not be limited to co-pay credits on qualified medications and vouchers for medical supplies. Another approach would be to provide incentives for members to live healthier lifestyles. Most chronic conditions develop because of poor lifestyle choices such as overeating, poor diet, drinking alcohol heavily, lack of physical activity and smoking. The goal of the program would be to lower medical expenditures and improve the quality of life for our members in the long run. The intern would be responsible for: researching and identifying options, making recommendations, developing a plan to implement, and designing a way to monitor the progress of the program.
401k Defined Contribution Plan Participation
The 401k Defined Contribution plan (DCRP) is the retirement plan for all new employees hired by the State of Michigan since 4/1/1997. The State contributes 4% of salary for each participant and then matches up to 3% of the participant's contribution. After more than seven years, 39% (8,864 people) of DCRP participants do not contribute anything to the plan and, therefore, receive no matching contributions. We need to find out who these people are and why they are not contributing to the plan. With this information, we can create specific educational campaigns to explain the benefits of plan participation to these people.
The US Treasury Department and the IRS have recently proposed rules that would allow employers to adopt phased retirement. This provision would allow an employee to reduce their workweek and then supplement their income from their Retirement Benefit. This proposal recognizes that some people no longer want to work 100% and then retire 100%. They would prefer to continue working less than full time because they enjoy working or because they have the financial need to continue working at least part time. How would these proposed rules affect the State of Michigan and our defined contribution plans? Would it be beneficial for Michigan to adopt phased retirement? There are currently over 50,000 state employees.
Alternative Funding Sources for DC Administrative Costs
By law, the 401k and 457 plans must be fully funded by the plan participants and may not use the State General Fund as a source of funding. Currently the plan's funding for administrative costs comes from fees rebated from the mutual fund companies through CitiStreet, the plan's third party administrator. We would like to explore other options of funding for these plans.
Under the terms of the CLOSUP internship, the student receives a paid fellowship in two installments throughout the summer. The internship is open to continuing MPP students at the Ford School. Funding for this 2005 internship is generously provided by the family of Paul H. Wileden, MPA '47, in his memory and in recognition of his long-standing career in the Michigan Department of Management and Budget.