Bloomfield Hills budget focuses on liabilities

May 17, 2019

Bloomfield Hills will be increasing its funding for retiree pensions and health care obligations under a three-year budget plan adopted on Tuesday, May 14, by the city commission.

The budget plan, which includes about $10.9 million in general fund expenditures in 2020, $11.2 million in projected expenditures in 2021, and $11.7 million in 2020, was unanimously approved by commissioners with mayor Susan McCarthy and commissioner Michael Coakley absent.

The budget, which begins on July 1 each year, retains current millage rates for the next three years, but predicts an increase in revenues each year due to increased home values in the city. Millage rates will remain at 9.5 mills for the city's general fund and at 1.1 mills for local roads. The city's library millage, which is set to expire in 2020, is expected to go before voters in August of 2020 for possible renewal. That millage is set at .3759, down slightly due to Headlee rollbacks.

Of particular note in the three-year plan is the city's continued commitment to full-funding of pension contributions and pre-funding retiree health care and other post-employment benefits (OPEB) in coming years.

Bloomfield Hills Treasurer Keith Francis said new state law requires municipalities to ensure pension funds are funded at 60 percent of total costs, with the city's level at over 80 percent. He said OPEB is required to be funded at 40 percent, with the city is on track to have funding at 38 percent by 2022. He said the city isn't required to submit a corrective action plan for being below the 40 percent mark because annual contributions don't exceed 12 percent of total revenues. Still, he said the city is taking measures to increase both OPEB and pension funding.

"We want to get to that 40 percent, so we plan to provide pre-funding for the next three years," Francis said. "Then, when our road rehabilitation projects are done in three years, that's money that can be redirected to OPEB. We are in very good shape right now. There is no issue with the state, and we will provide more in the future."

The budget calls for pre-funding of OPEB contributions of $300,000 in both 2020 and 2021, with a $500,000 contribution in 2022. Pension contributions are also scheduled to increase from $600,000 in 2019 to $1.1 million in 2022.

The budget will maintain a fund balance of 33 percent in 2020 and 2021, with an increase in 2022. The city's internal fund balance policy calls for the unassigned fund balance to be between 30 percent and 35 percent of total expenditures.

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