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Commission gives direction to prepare proposal for retirees' cost‑of‑living boost and small multiplier increase for active employees
Summary
After actuarial scenarios were reviewed, the board gave administration direction to prepare documentation for a one‑time retiree cost‑of‑living increase of 0.75% per year retired and to study increasing the active employee pension multiplier from 2% to 2.1%; the board asked staff to return with required resolutions and fiscal impacts.
The Kalamazoo County Board of Commissioners on Sept. 16 directed administration and the retirement investment committee to prepare formal documentation for a modest increase to retirement benefits for retirees and for active employees, following a staff presentation and actuarial scenarios.
Administration presented multiple actuarial scenarios prepared with the county’s actuary (GRS). Scenarios included one‑time cost‑of‑living adjustments (COLAs) for current retirees expressed as a percentage per year retired (for example, 1.0% per year retired, 1.5% per year retired, or a scaled/tiered approach). Some scenarios were produced with earlier actuarial data; administration noted later scenarios used updated valuations and would require a new valuation if the board wanted to adopt certain options.
The retirement investment committee recommended against changing the retirement system and instead suggested using the general fund or employee‑benefit fund for a one‑time lump sum for current retirees. Board leadership, however, sought a solution that balanced honoring retirees and limiting long‑term employer contribution impacts.
Vice Chair Taylor said he favored a 0.75% one‑time increase per year retired and advocated also raising the pension multiplier for non‑represented active employees from 2.0% to 2.1% so active employees would share in the change; he said keeping employer contribution increases under $1 million per year was important. Administration provided example cost effects: a 0.75% per‑year (one‑time) retiree increase or comparable tiered alternatives would move the funded ratio modestly and increase employer contribution estimates in the low‑hundreds of thousands annually under the examples run by the actuary.
Commissioners discussed equity for lower‑paid retirees, how many retirees also collect Social Security and how the county’s funded status (the county reported a funded ratio over 100% in the valuation examples) affects choices. Several commissioners said they supported doing something modest and not jeopardizing the plan’s long‑term funded status. At the meeting’s close, the commission asked administration to prepare the required documentation to present a 0.75% per‑year one‑time increase for retirees and a 2.1% multiplier for active non‑represented employees so the board can consider a formal resolution at a future meeting.
Why it matters: Any change to pension benefits affects long‑term actuarial liabilities and the county’s employer contribution (fringe) rate. The board’s direction reflects a compromise to assist retirees while limiting future employer cost increases.
What’s next: Administration will work with the county’s actuary and the retirement investment committee to prepare formal actuarial valuations and the documentation necessary to present a resolution for board action.
