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 EMPLOYMENT/RETIREMENT STATISTICS

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 - 45

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 RETIREMENT BENEFITS

Dickinson County Government - $1,342
Dickinson County Road Commission - $421
Dickinson Iron District Health Department - $374
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 roost."

It is not fair to blame the employees or the retirees for this situation.

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."

The bills 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 normally.

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 facing.

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 Administrator.

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 horizon.

 

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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 assistance:
Iron Mountain City Manager Jordan Stanchina
Kingsford City Manager Tony Edelbeck
Charter Township of Breitung Superintendent John Gaudette

 

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