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County's pension funding near state thresholds; retirement report shows 72.8% funded for defined-benefit plan
Summary
Ottawa County officials reviewed the Local Government Retirement System annual filing, which shows the county's closed defined-benefit pension plan is about 72.8% funded under the state's calculations; commissioners discussed funding tools and options to manage the unfunded liability.
Ottawa County commissioners received the Local Government Retirement System annual report required by Michigan law and heard that the county's closed defined-benefit pension plan is funded at roughly 72.8% on the state's required basis.
Fiscal Services Director Karen told the committee that the state requires governments to calculate pension and other post-employment benefits (OPEB) using uniform assumptions so the state can compare funding ratios across jurisdictions. "Our pension is funded at 72.8% under the state's funding ratios," Karen said. The county's MERS (Municipal Employees' Retirement System) calculation reported a similar 72.1% funding level in the audit.
Karen also told commissioners the county's OPEB (retiree health care) plan is funded at about 47.6% on the county reporting basis and 48.2% under the state's required assumptions. The state classifies plans as concerning if the pension-funded ratio falls below 60% or if contribution levels exceed a specified share of governmental revenues.
Commissioners pressed staff on trend data and potential actions. Commissioner Brugger asked whether the pension-funded ratio is rising or falling; Karen pointed to trend tables in the financial statements that showed the county's funded ratio moved from the high 60s to about 72% in recent years and noted market performance is a major driver. "It's really driven by markets," she said.
Commissioners discussed tools the county has used in the past, including occasional extra contributions, a 0.3-mill levy that contributes to the pension fund, and issuing pension bonds in 2013-2014. Karen said the county has moved extra contributions into the plan in prior years and that the county regularly meets with MERS and human resources to review plan status.
Why this matters: a funded-ratio reading gives elected officials a snapshot of whether a plan holds sufficient assets to meet future obligations. Lower funded ratios can pressure budgets and lead to state oversight if the statutory thresholds are breached.
Next steps: commissioners suggested scheduling continued monitoring and regular meetings with MERS and staff. Commissioner Tieteples recommended considering pension strategy during upcoming budget and strategic-planning work sessions so future administrators and commissioners can evaluate options for additional contributions or structural changes.
Ending: staff recommended continuing oversight and bringing the retirement report and trend information to commissioners for periodic review as part of the county's budget process.
