State wants Jackson to fix underfunded police pension program

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JACKSON, Mich. (WLNS) — The state of Michigan is telling more than 100 municipalities to whip their pension plans into shape.

 

The state’s treasury department is notifying counties, cities and townships that they need to fix underfunded retirement accounts to ensure retirees get the benefits promised to them.

 

The municipalities have to come up with plans to fully fund the accounts within the next six months.

There are lots of familiar cities on that list, including Lansing, East Lansing, Eaton Rapids, Ionia, and Howell.

 

It also includes Jackson.

 

6 News spoke to Jackson city officials about the retirement fund in question, and why they believe the city doesn’t belong on that list.

 

Jackson Mayor Derek Dobies says over the past decade retirement costs have become big issues for cities. 

 

“As the economy kind of collapsed it became a much bigger problem. Cities across Michigan are trying to recover from it,” Dobies said.

 

When it comes to Jackson, Dobies says the city’s three retirement accounts are in good financial shape.

 

But the state disagrees, putting Jackson on a list of cities that need to fix underfunded retirement funds.

 

Dobies says the state is worried about an old police pension plan for officers who retired before 1974.

 

He says it’s currently 44 percent funded, but the state wants it over 60 percent.

 

The city doesn’t believe that’s necessary.  

 

“I think the youngest actual retiree in that plan is 80 years old. So that plan is kind of aging out, and is closed already. So eventually, we won’t have any members left in that plan,” Dobies said.

 

The mayor says the city doesn’t belong on the state’s list.

    

“I don’t believe that the city’s pension plans are in trouble,” Dobies said. “It doesn’t make sense for us to continue to put more money into that old police and fire pension plan.”

 

Dobies says the city is committed to paying retirees what they’re promised, but continuing to put money into an old account takes away funds that could be spent on city services.

 

He says money for this retirement comes from the general fund, and once it’s put into the pension program, they can’t take it out.

“Move those resources where we need them most, into getting our roads fixed, dealing with public safety,” Dobies said.

 

The city has contacted the state treasury to explain their side of the story.

 

Dobies hopes this will remove them from the list.

 

“I think they’re going to like what the city has been working on to make sure we’re in a strong financial position,” Dobies said.

 

The state treasury department did not return messages for comment.

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