(The Center Square) – More than $553 million in funding to underinvested pensions will flow to 120 Michigan communities.
The Protect MI Pension grant program, a $750 million appropriation included in the fiscal year 2022-23 budget, allows local municipal units with pension plans funded below 60% as of December 2021 to receive state funds.
“After a lifetime of hard work, Michigan seniors deserve to retire with dignity,” Gov. Gretchen Whitmer said in a statement. “Today’s Protecting MI Pension Grants will ensure that Michiganders who served our communities as police officers, firefighters, sanitation workers, and in so many other invaluable professions, will receive the stable, secure retirement that they earned.”
The funded ratio is the ratio of plan assets, money reserved to pay retirees in the future, divided by plan liabilities. Plan assets minus plan liabilities equals the net pension liability.
Under the grant program, eligible cities, villages, townships, counties and road commissions were encouraged to review their retirement system funding and apply for a grant by mid-June.
State Treasurer Rachel Eubanks said pension systems are a “major budgetary concern” for local governments.
“Funding these systems enables our communities to uphold their commitment to 25,000-plus public servants and focus on providing the services Michiganders come to expect,” Eubanks said in a statement.
Lansing Mayor Andy Schor said the funding will help local retirees.
“Long-term liability through pension obligations has tremendous impacts on our ability to service our residents and retirees,” Schor said in a statement. “We have implemented smart, responsible changes to bring our unfunded liability down significantly, and this grant will be another great step forward.”
Local units of government from every Michigan region received a grant award.
Tom Ebenhoeh, interim village administrator of the village of Chesaning, said the grant lifts a “huge weight” off the village’s shoulders.
“With an underfunded liability like that, it is constantly in the back of your mind,” Ebenhoeh said in a statement. “Having this relief brings us that much closer to being able to reach our goal of a pension that is secure. It has turned a 20-year project into a five-to-eight-year project when it comes to getting our pension reasonably funded. It also means the extra resources we are investing into the pension now will sooner be available to put elsewhere in our community.”
A $2.6 million injection into the city of Sault Ste. Marie Police and Firefighters Pension should bring the funding level from 52% to 57%, said Kristin M. Collins, the treasurer of the city of Sault Ste. Marie.
More than a decade after the state of Michigan took over the city of Flint due to financial debt, the city will receive $170 million from taxpayers to ensure a secure pension program.
The local governments receiving the most money are:
City of Flint: $170 million.City of Saginaw: $38.6 million.City of Westland: $26.1 million.City of Detroit: $22.9 million.
