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  • Underfunded Communities
    Updated On: Mar 23, 2018

    The Michigan Department of Treasury has compiled the list of local units of government who are reported as under funded.  The reports can be found at:



    First Communities Tagged As Having Underfunded Pensions

    Nearly 120 local governments during the first round of reporting to the state have been found to have underfunded pension plans, retirement health care plans, or both, according to a preliminary information released Monday by the Department of Treasury.

    The reporting was required under legislation passed in December 2017 as part of an effort to curb unfunded liabilities.

    A total of 117 communities in 43 counties were classified as having underfunded one or both types of retirement benefits.

    Communities that were found to be underfunding benefits may apply to the Department of Treasury for waivers, but must approve a plan demonstrating a proactive process to address their underfunded status.

    The intent of the Protecting Local Government Retirement and Benefits Act is to provide more transparency and to allow the state to get a handle on how significant the problem of underfunded local government benefits is in the state.

    Deputy State Treasurer Eric Scorsone said in a statement identifying communities with underfunded benefits is the department's current focus.

    "By working together, we can help ensure the benefits promised by communities are delivered to their retirees and help ensure that the fiscal health of communities allows them to be vibrant now and into the future," Mr. Scorsone said in a statement.

    As passed, the legislation did not include a controversial enforcement mechanism supported by Governor Rick Snyder that would have allowed for more state intervention in underfunded communities. The provision that did not make it into the final legislation would have allowed for financial management team - similar to an emergency manager - to make changes to local budgets if local leaders could not or would not fund their retirement systems adequately.

    Instead, a board will develop correction action plans in communities struggling to fund their plans and provide technical assistance.

    The first municipal stability board meeting to review corrective action plans is scheduled for May.

    Under the new law, local governments are required to prefund retiree health care costs for new employees and communities will undergo fiscal stress tests to assist them in crafting solutions to funding problems.

    Local governments with a fiscal year ending June 30, 2017, or earlier were required to provide information on their pension and health care plans to the state by January 31 of this year. Additional rounds of reporting will be announced for communities whose fiscal years ended after June 30, 2017. Those communities have six months from the end of their fiscal year to file.

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