Serving Gogebic, Iron and Ontonagon Counties
Serving Gogebic, Iron and Ontonagon Counties
By RALPH ANSAMI
Ironwood — The city of Ironwood has been underfunding its retirement pension plan and has been cited by the Michigan Department of Treasury to take corrective actions.
A new law requires local units of government to report underfunded retirement benefits and Ironwood has been cited for underfunding its pension plan. For the first round of reporting, more than 110 out of 490 local units of government were identified as having underfunded pension plans or retirement health care plans, or both, according to the Treasury Department.
Ironwood was included in the 110 for its pension plan only. It was not red-flagged for its retirement health care benefits plan.
Ironwood Treasurer Paul Linn on Monday told the city commission the law was pushed by Gov. Rick Snyder.
Linn said the reports calculate the ratio of the general fund against the contributions the city makes and Ironwood ended up in the red.
The pension plan had assets of $8,876,970 as of the most recent audit report, with liabilities of $18,469,060, as of Dec. 31, 2016.
The ratio was listed at 48.1 percent.
In a memo to the commission, Linn listed several areas where the city has been attempting to improve the pension plan funding, including contributing lump sums of $350,000 in 2016 and $278,352 in 2017.
Another step listed has been to require new hires to contribute 6 percent of their wages towards retirement, compared to the previous 4.77 percent.
Linn said the next step in the process will be for the city to send a letter to the state requesting a waiver.
“We’ll submit a plan to the state and hear back as to whether the waiver is granted,” Linn said.
Also included in a list of entities underfunding pension plans was the village of Ontonagon for its retirement pension plan, according to the state.
The city of Crystal Falls, in Iron County, was flagged for both its retirement pension plan and retirement health care plan.
“Collaborating with communities to identify underfunded retirement benefits is our focus,” Deputy State Treasurer Dr. Eric Scorsone said Monday. “By working together, we can help ensure the benefits promised by communities are delivered to their retirees and help ensure the fiscal health of communities allows them to be vibrant now and into the future,” he added.
Local units of government with a fiscal year that ended on June 30, 2017, or earlier, were required to report pension and health care plan finances by Jan. 31, 2018.
It’s likely more local communities will be flagged, as their fiscal years end after June 30, 2017. They are required to report retirement benefit plan finances six months after the end of their fiscal years and will be included in future rounds of reporting.
Identified local units may apply to the Treasury Department for waivers. In doing so, the local unit must approve a plan that demonstrates its underfunded status has been “proactively addressed,” Scorsone said.
Local units that decline to file for a waiver or are denied a waiver must complete a corrective action plan, he said.
Plans are reviewed and approved by a Municipal Stability Board, which is anticipated to meet for the first time in May.
To learn more about the program or for a list of local units determined to have a preliminary “underfunded status,” go to http://www.michigan.gov/localretirementrep.
