[{"_1":2,"_87":-5,"_88":-5},"loaderData",{"_3":4,"_26":27},"root",{"_5":6,"_17":10,"_18":19,"_20":21,"_22":10,"_23":-5,"_24":-5,"_25":10},"user",{"_7":8,"_9":10,"_11":10,"_12":-5,"_13":-5,"_14":15,"_16":-5},"roles",[],"isAuthenticated",false,"isPremium","planName","subscriptionStatus","featureFlags",{},"insightsBudget","isDevelopmentHost","userPreferences",{},"recaptchaSiteKey","6LcvOJcUAAAAAHsB-gPGfGktcRlKpH7OTIU_dMTD","isImpersonating","impersonation","affiliateStatus","isFreedomPortal","routes/v2/article/layout",{"_28":29,"_30":31},"notFound",true,"relatedArticles",[32,75],{"_33":34,"_35":36,"_37":38,"_39":40,"_41":42,"_43":44,"_45":46,"_47":48,"_49":50,"_51":52,"_53":54,"_55":56,"_57":58,"_59":60,"_61":62,"_63":64,"_65":66,"_67":68,"_69":70,"_71":68,"_72":73,"_74":73},"mediaId",6053300,"mediaKeyId","3375771-a64aa90110cad7b5b58a4bb5c8599e36","parentId",3375771,"title","Police and fire pension contribution jumps $2.2 million as overtime and ‘spiking’ drive liabilities, actuary says","audioSeconds",2068,"startMs",1312000,"endMs",3380000,"viewUrl","/Search/View?dp=1&key=3375771-a64aa90110cad7b5b58a4bb5c8599e36&start=1312&end=3380","thumbnailUrl","https://assets.pipeline.soar.com/3375771-a64aa90110cad7b5b58a4bb5c8599e36/thumbnail_1312000.jpg","articleUrl","/articles/6053300/Dearborn-Heights/Wayne-County/Michigan/Police-and-fire-pension-contribution-jumps-22-million-as-overtime-and-spiking-drive-liabilities-actuary-says","mediaUrl","https://secure.pipeline.soar.com/6053300-9498afa4b709e18d03e0296445169240/orig.mp4?Expires=1773663312&Signature=kz9G6dLafHLKnphV2rut5sbnaOArdtwOUiVBBPLJLTbdNCq1F7OSdEiLFSxrni0~5o8DWmRw9-y8WM~9IrhVfPj4py62~B6TDwJSo2M0KnWpnmetle0yBz0MWKi1d23-sSSSva-S8VDcC5ELFCpkdnTiwIXq5ECx7qapn0ra4mkmJ~Vhuq2Z6sSD2iMYMBX~pkig39asROIWUTRuY543LrdmuEtyBCek0IKNXi6GyMXRv1COBWL4kHsEJpdR4Y5UC4rpGQ792TABxFx0aewoW41Bz~pIKDpwq-ozO6F3Bd3xbsBRsi-YorxTkI6xlQvgXCrFtt9cTYQuPStFKdE82g__&Key-Pair-Id=KUT5TJCACFTXG","author","City of Dearborn Heights, MI","date","2025-05-14T18:46:24Z","article","Francois Pieterse, senior consultant and actuary at Gabriel, Roeder, Smith & Company (GRS), told the Dearborn Heights City Council that the police and fire retirement system’s required employer contribution rose from $5,969,000 to $8,147,000 — an increase of about $2,178,000 — for the most recent valuation period. Pieterse attributed most of that increase to a roughly $2,000,000 jump in payroll largely caused by elevated pay and overtime in the membership.

Pieterse said that the membership count remained roughly stable year to year but that total payroll rose sharply: in the three-year summary the actuary reported active-member payroll of about $9.7 million in 2023 and about $11.5 million in 2024, a roughly 20% increase. \"I think there were 1 member who earned more than a hundred thousand dollars in overtime,\" Pieterse said, noting that excessive overtime in a single year can materially increase an individual’s final average compensation and therefore lifetime pension benefits.

The police and fire plan’s benefit formula uses the best three years of a member’s career to calculate final average compensation, which the actuary described as a design feature that can amplify the impact of high overtime or pay spikes late in a career. Pieterse said that a single year with large overtime becomes part of that three-year average and can produce a significantly larger pension payment payable for multiple decades. The actuary also reported that the plan’s five-year smoothing method is phasing in past investment gains and losses; while recent market gains produced a large dollar gain in 2024, smoothing and prior-year losses left a small unrecognized net loss recognized this year (about $837,000 recognized across years), which added only modestly to the contribution increase.

Pieterse identified three main contributors to the higher contribution: higher employer normal cost driven by pay increases; a spike in payroll caused primarily by overtime and high-pay years; and small changes from an experience study of plan assumptions. The actuary noted that approximately 11.88 million dollars of actuarial loss this year included both investment and liability components, with most of the liability loss tied to pay increases larger than assumed.

Council members and staff discussed whether overtime inclusion and the definition of final average compensation are negotiable in future collective bargaining. Pieterse and staff said those terms are contractual and typically negotiated; the actuary noted that changing the definition (for example, moving to best three of the last 10 years or a consecutive period) likely would affect future hires more than the current retiree population. No contract change or formal motion was recorded at the meeting.

A resident spoke during public comment to say the numbers were \"very disturbing\" and urged elected officials to review the contract language and the city charter so taxpayers are not left with unexpected costs. The resident asked the council to require the pension system participants to bear more risk when investments perform poorly instead of shifting the burden to taxpayers.

Pieterse said the city’s contribution requirement is sensitive to both membership pay patterns and contract terms; he recommended monitoring payroll trends and considering plan provisions as part of future negotiations. The council did not take formal action on the actuarial report during the meeting.","mediaType","Video","parentTitle","5/13/25 - Dearborn Heights Study Session","oneSentenceSummary","Gabriel, Roeder, Smith & Company reported an estimated $2.18 million increase in the police and fire retirement system contribution, driven primarily by a roughly $2 million rise in payroll largely attributable to high overtime and higher pay years that inflate final average compensation.","taxTitle","Dearborn Heights, Wayne County, Michigan","taxId",4162,"location","headline","","shortSummary",{"_33":76,"_35":36,"_37":38,"_39":77,"_41":78,"_43":79,"_45":80,"_47":81,"_49":82,"_51":83,"_53":84,"_55":56,"_57":58,"_59":85,"_61":62,"_63":64,"_65":86,"_67":68,"_69":70,"_71":68,"_72":73,"_74":73},6053305,"Dearborn Heights actuary: general employee pension contribution rises after large salary increases",1489,639000,2128000,"/Search/View?dp=1&key=3375771-a64aa90110cad7b5b58a4bb5c8599e36&start=639&end=2128","https://assets.pipeline.soar.com/3375771-a64aa90110cad7b5b58a4bb5c8599e36/thumbnail_639000.jpg","/articles/6053305/Dearborn-Heights/Wayne-County/Michigan/Dearborn-Heights-actuary-general-employee-pension-contribution-rises-after-large-salary-increases","https://secure.pipeline.soar.com/6053305-e7ee0a142de5f50b20154574fc424b3a/orig.mp4?Expires=1773663312&Signature=JpnlXQMv9vm~1JUELJ6V7iVzNQGJo8F7vNVJij1Qsp1zt1l78C-2IUyvuhQUT5fy4RKbs6UEydycgAD90UW3WAc7u7BGPFgSql0bNMItWcWbaixxiNU3Bvpq7f0uGtkSffAGJu9UfeWcxXLneRn1OIVGiUs1T2lbltGND090zmkXRzLMQTEEvVXO-9tdvOy9Ml1fmwb1zQbfOzOqz~mgRC0lswU1kRX2suxbbTpaaUPX6YImtV04T57JweOhcvtn7yPtDRw1vfbltHgd2OPG32-nsbJk8K2pDcNE96UmU5LIaX7F-gx7O2i0eX4UnYzB8HPi8OwuwBXtKQAsXr72ew__&Key-Pair-Id=KUT5TJCACFTXG","Jason Franken, actuary at Foster & Foster, told the Dearborn Heights City Council that the general employee retirement system’s required contribution increased by about $200,000 for the most recent valuation period, primarily because payroll rose substantially.

Franken said the plan’s projected payroll increased from about $6,660,000 to about $7,140,000 and that the larger-than-expected salary increases over the last three years are the main driver of higher pension liabilities and the increased contribution requirement. \"I don't think any any need for alarm here,\" Franken said about the plan's investment returns and overall status.

The report shows two asset measures: a five-year smoothed actuarial value and a market value; the smoothed actuarial value was slightly higher than market, and the plan earned about 7.1% on a smoothed basis—near the assumed 7% return. Franken said the funded ratio declined modestly from 72.7% to 71.7% on the plan's actuarial basis. Under the uniform assumptions required by state disclosure (Public Act 202), the funded ratio is reported slightly lower at 70.9%.

Franken explained the structure of the contribution requirement: normal cost (the cost of benefits being earned) increased by about $46,000, administrative expenses currently are not covered by contributions (an issue the actuary flagged for future discussion), and roughly two-thirds of the total contribution is an amortization payment to reduce unfunded liability. The plan currently uses a level percentage of payroll amortization and a 17-year amortization period; the actuary noted that under the current method the amortization portion of the contribution is designed to increase about 3.5% per year unless there are favorable future gains.

Council members asked for clarification on whether overtime was included in pay definitions for different employee groups. Franken and staff said the plan uses group-specific definitions of salary; for many general employees only limited overtime is included depending on contract terms, whereas other plans (police and fire) may roll in more overtime. Franken said contributions are calculated using actual end-of-year payroll data and that the normal cost for the plan is about 12.8% of pay while total contribution (including amortization) is about 33.8% of payroll.

The council asked the actuary to make the report available to members; staff agreed to distribute the actuarial report to council members by email for further review. \"There's nothing here... that has me, concerned about what's gonna happen going forward,\" Franken said, summarizing his view that the current unrecognized losses are small relative to the plan’s size.

The presentation closed with the council opening the item to public comment (none were offered for this item) and thanking Franken for the review.","An actuarial review presented to the Dearborn Heights City Council shows a roughly $200,000 increase in the city’s general employee pension contribution driven mainly by large pay increases and higher payroll, while the fund’s funded ratio dipped slightly.","actionData","errors"]

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Police and fire pension contribution jumps $2.2 million as overtime and ‘spiking’ drive liabilities, actuary says

Dearborn Heights actuary: general employee pension contribution rises after large salary increases