Discussion to be held on liability shortfalls
A discussion will be held with Bloomfield Township trustees at their meeting on Monday, August 27, regarding defined benefit and Other Postemployment Benefits (OPEB) liabilities, and new state-required actions the township will have to take in order to fund shortfalls in each.
In December 2017 the state legislature passed and Gov. Snyder signed into law, Public Act 202, also known as the Protecting Local Government Retirement and Benefits Act, which requires local municipalities to report and have a collective action plan for each retirement pension benefits and/or retirement health benefits account to the state treasury each plan's funded ratio by specifying assets and liabilities; the annual required contribution, if it is a retiree health care plan; the actuarial determined contribution, if it is a retirement pension plan; and the local unit of government's annual governmental fund revenues.
The state treasury will then determine if the municipality is in “underfunded status.”
Criteria for underfunded status triggers at less than 40 percent for retiree health systems, and less than 60 percent funding of pension systems.
As of January 1, 2018, municipalities must develop collective action plans to show how they will get to a minimum of 40 percent funding in the next 30 years.
“It doesn't sound like a significant number, but Bloomfield Township has been a pay-as-you-go community,” said Bloomfield Township Supervisor Leo Savoie, meaning they are now considered an unfunded community. “When you look at where Bloomfield Township ranks, we're in the 20 worst communities in the state.”
Currently, Savoie said Bloomfield Township has about $161 million in unfunded liabilities. To reach 40 percent over the next 30 years means putting aside about $65 million.
Options for raising the funding status can include voluntary contributions, bonding, millage increases, and payment of ARC for retirement health care, according to a presentation from the state of Michigan.
According to a presentation from the staste executive office, corrective action plans musts be submitted to the Municipal Stability Board, which will review and either approve or deny. The Municipality Stability Board is a three-member panel, comprised of a Dr. Eric Scasone, a resident representing state officials; Daryl Delabbio, a resident representing local officials; and Bloomfield Township resident Barry Howard, representing employees and retirees.