2018-04-15 / News

STC village approves plan for pension and retirement unfunded liabilities

By Mandilee Hecht
Staff Reporter

ST. CHARLES – The St. Charles village council passed resolutions last Wednesday, April 11 during its last regular meeting related to its pension and retiree health benefits plan.

The first resolution, titled the Pension and Retiree Health Benefits Policy and Action Plan, helps set forth the amount of funds the village will allocate toward unfunded pension liabilities annually. Essentially, it outlines a plan that would have the village contributing an additional $80,000 annually to its pension plan; an additional $30,000 to a legally protected trust fund for its retiree healthcare plan; and $500 per month into a village-sponsored tax-free health savings plan account for retiree medical expenses of those hired after April 8, 2009.

These actions have been set forth in order to reduce the village’s unfunded liability over the course of many years to come, and in order to keep it out of underfunded status, as defined by recent legislation passed in the state of Michigan.

According to the village’s resolution language, the policy statement for the Municipal Employees Retirement System (MERS) for its pension liability states: “In consideration of the financial restrictions of the Village, operational needs to provide basic services to the Public, and economic conditions out of our control, the Village of St. Charles shall contribute an additional $80,000 per year to the MERS DB [Defined Benefit] Pension Surplus Division I above the actuarially determined required contributions. This policy shall be reviewed annually to determine its feasibility and adequacy.”

Its proposed policy statement for the retiree healthcare policy and Action Plan states: “In consideration of the service provided to the Village of St. Charles, employees hired after April 8, 2009 will receive $500 per month deposited into a Village-sponsored Tax-Free Health Savings Plan Account, beginning the month after the employee retires. Retiree may use this stipend for medical expenses only, in accordance with the rules, regulations and statutes governing the use of funds held in such accounts.”

In order to address the village’s current unfunded liability for its retiree health benefits, it has been saving $30,000 each year since 2016 in anticipation of the retiree health trust. An initial deposit of $90,000 will be followed by the annual contributions of $30,000 for the village’s retiree healthcare trust fund, which will be set up in the next few months.

The recommended policy statement for this states: “In order to reduce unfunded retiree healthcare liability, to pre-fund OPEB costs for future fiscal years, and consideration of the financial restrictions of the Village, operational needs to provide basic services to the Public, and economic conditions out of our control, the Village of St. Charles shall contribute $30,000 to a legally protected trust fund created solely for the purpose of funding Other Post-Employment Benefits (Retiree Healthcare.)”

The second resolution, the Public Act 202 of 2017 Application for Waiver and Plan for Defined Benefit Pension, is a waiver of the underfunded status for the village’s defined benefit pension liability, according to St. Charles Village Manager Matthew Lane.

“Public Act 202 of 2017 requires the waiver for those who were considered underfunded by the legislative calculation,” Lane said.

“With the waiver and plan, we have the opportunity to explain how we expect to reach the required funding levels and tell the state what we are doing to address our unfunded liabilities, without having a review by the new municipal stability board,” Lane said.

The recommended policy statement for this states: “In order to reduce unfunded retiree healthcare liability, to pre-fund OPEB costs for future fiscal years, and consideration of the financial restrictions of the Village, operational needs to provide basic services to the Public, and economic conditions out of our control, the Village of St. Charles shall contribute $30,000 to a legally protected trust fund created solely for the purpose of funding Other Post-Employment Benefits (Retiree Healthcare.)”

The second resolution, the Public Act 202 of 2017 Application for Waiver and Plan for Defined Benefit Pension, is a waiver of the underfunded status for the village’s defined benefit pension liability, according to St. Charles Village Manager Matthew Lane.

“Public Act 202 of 2017 requires the waiver for those who were considered underfunded by the legislative calculation,” Lane said.

“With the waiver and plan, we have the opportunity to explain how we expect to reach the required funding levels and tell the state what we are doing to address our unfunded liabilities, without having a review by the new “municipal stability board,” Lane said.

In other news, during the April 11 meeting the village council also approved a Michigan Department of Transportation (MDOT) Performance for Governmental Agencies Resolution. Lane explained this item is simply meant to name person(s) for the village who are allowed to apply for online MDOT permits.

Return to top

Copyright © 2009-2018 Tri-County Citizen, All Rights Reserved

Click here for digital edition
2018-04-15 digital edition