Numbers compiled during the past week indicate that Dickinson County and
it's municipalities are faced with a staggering unfunded liability for employee
retirement benefits in excess of $134,000,000.
The figures involved in this report are compiled from two sources:
(1) The Municipal Employees Retirement System and (2) the independent retirement
systems operated by the cities under Public Act 345. These funds are
administered by local boards, with the assistance of investment advisors,
appointed by the city councils.
The numbers expressed in this report are
minimum numbers. They continue to grow by the day, and may be
considerably larger than shown here. Furthermore, while we have made every
effort to make this report as complete as possible, some figures remained
unavailable to us as of the time of this writing.
These figures represent the cost of contractual commitments made by the
governmental units to their employees over the past decades. While the
promises were made, the funds were never set aside to pay for them. That
leaves many of the municipal units with huge liabilities, and no clue as to how
they are eventually going to satisfy them.
CURRENT UNFUNDED LIABILITY AND
CITY OF IRON MOUNTAIN ($49,251,933)
Number of Active Employees - 40
Number of retirees - 70
DICKINSON COUNTY GOVERNMENT ($34,238,389)
Number of Active Employees - 84
Number of Retirees - 86
CITY OF NORWAY ($20,405,638) *
Number of Active Employees - 22
Number of Retirees - 44
DICKINSON COUNTY ROAD COMMISSION ($10,541,746)
Number of Active Employees - 21
Number of Retirees -
CITY OF KINGSFORD ($10,120,019)
Number of Active Employees - 42
Number of Retirees - 39
DICKINSON-IRON DISTRICT HEALTH DEPARTMENT ($9,364,312)
Number of Active Employees - 21
Number of Retirees - 47
AMOUNT CURRENTLY OWED BY EVERY RESIDENT FOR
Dickinson County Government - $1,342
County Road Commission - $421
Dickinson Iron District Health Department -
Total for Dickinson County units - $2,137
City of Norway - $8,162 (Including County
liability - $10,299) *
City of Iron Mountain - $6,566 (Including County
liability - $8,703)
City of Kingsford -
$2,024 (Including County liability - $4,161)
The Charter Township of
Breitung has no accrued liability for pensions or other benefits. According to
Breitung Township Superintendent John Gaudette: "Breitung Township does not have
a defined benefit pension, only a defined contribution pension. Thus we do not
have any unfunded pension liabilities."
Gaudette went on
to say, "Although we offer great health insurance benefits at very low cost to
our employees, we also do not have any post retirement health insurance
coverage. So again, no unfunded liabilities."
How did the County and it's
municipalities end up in such dire shape? This is a process that has developed
over decades, but it won't be long before "the chickens will come home to
It is not fair to blame the employees or the retirees for this
We have watched over the decades as city councils and other
governing boards have skirted the issue of pay for work, by promising lavish
retirement benefits for their employees. It should have been obvious to everyone
that it was going to be difficult, if not impossible, to meet these mounting
obligations. But, they kept "kicking the can down the road."
are now beginning to come due, and as expected, all of the units find themselves
having great difficulty meeting those commitments, while continuing to operate
Most governmental units in Dickinson County have now scaled back and in
some cases eliminated some of the generous retirement plans and benefits handed
out in past years. However, it may be thirty to forty years before this
has any real impact on the unfunded liability situation.
We certainly don't claim to have a solution to this problem.
Our only purpose here is to inform residents as to the debt burden they are
Theoretically, the State Legislature could bring relief to the
municipalities by voiding provisions of the contracts that provide these
benefits to retirees. Several attempts have been made in the Legislature
to do just that, but all have failed, amid strenuous opposition by unions
representing municipal employees. Further, it is questionable
whether such actions would be permitted by the courts, and union officials have
said they will challenge any such actions in the courts.
There are not many
other options available to the municipalities,
according to the MERS report:
In the best case scenario, the
municipalities find some way to relieve themselves of this debt. In the
worst case scenario the municipal operations could be taken over by a State
But what is far more likely to happen, at least for the foreseeable
future, is that the debt will continue to increase and the municipalities will
continue to plug along as they have been, hoping and perhaps praying that
they'll be able to keep things afloat.
Most governmental units are now
taxing at or near the maximum permitted by law, and voters have been less than
receptive to the idea of approving extra millage to retire these debts.
Add to this the recent rulings by the Michigan Tax Tribunal which have stripped
revenue from the municipalities and the County, and the
debts keep mounting.
City Councils throughout the State, as well as
County governments have been expressing quiet panic over this issue in recent
years. However, as outlined above, there appears to be no solution on the
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* We cannot be certain if the numbers stated for the City of Norway are
complete. Our request for figures from the City of Norway have thus far
not been answered.
Our thanks to the following for their
Iron Mountain City Manager Jordan Stanchina
City Manager Tony Edelbeck
Charter Township of Breitung Superintendent John