State Funding Helps Michigan Cities Keep Pension Promises to Retirees

Last year, Gov. Gretchen Whitmer’s administration earmarked $750 million toward helping struggling local governments manage their unfunded pension liabilities.(AP Photo/Manuel Balce Ceneta)

By Kyle Kaminski
September 22, 2023

More than $500 million in state funding from Gov. Gretchen Whitmer’s administration will help dozens of communities across Michigan to keep paying government retirees the pensions they’ve earned.

MICHIGAN—More than a half-billion dollars in state grants were awarded to more than 100 communities across Michigan this week to help shore up their retirement savings accounts, keeping them from having to divert funds from other public services to pay retiree pensions.

“After a lifetime of hard work, Michigan seniors deserve to retire with dignity,” Gov. Gretchen Whitmer said in a statement on Wednesday. “Today’s grants will ensure that Michiganders who served our communities as police officers, firefighters, sanitation workers, and in so many other invaluable professions, will receive the stable, secure retirement that they earned.”

Last year, Whitmer’s administration earmarked $750 million toward helping struggling local governments manage their unfunded pension and benefit liabilities to former employees. The goal: Ensure they can keep paying retirees without also being forced to slash essential services.

And this week, the Protecting MI Pension program paid out $553 million to help boost funding for 123 different cities, villages, townships, counties, and road commissions across Michigan.

Most of the cash—about $355 million—was awarded to 10 cities, including $170 million just for the city of Flint; $38.7 million for city of Saginaw; $28.7 million for city of Lincoln Park; $26.1 million for the city of Westland; and $23 million for city of Detroit. The cities of Highland Park, Hamtramck, Harper Woods, Melvindale, and Lansing also each received at least $10 million. 

“Earlier this year, I signed legislation rolling back the retirement tax on our seniors, saving half a million households an average of $1,000 a year, putting money back in their pockets for gas, groceries, or gifts for their grandkids. Today, we are continuing to deliver on our promise to Michigan’s seniors and shoring up municipal budgets across the state,” Whitmer said this week.

And as local governments across Michigan struggle to fund their long-term obligations to retirees, officials say the infusion of state cash will go a long way toward solving the problem.

“Receiving this grant is a huge weight off the village’s shoulders,” said Tom Ebenhoeh, interim village administrator in Chesaning. “With an underfunded liability like that, it is constantly in the back of your mind. Having this relief brings us that much closer to being able to reach our goal of a pension that is secure. It has turned a 20-year project into a five-to-eight-year project when it comes to getting our pension reasonably funded. It also means the extra resources we are investing into the pension now will sooner be available to put elsewhere in our community.”  

Tim Morales, city manager in Saginaw, said rising pension payments have “drastically affected” the city’s ability to provide necessary services to citizens—and that the cash from the state will “significantly improve our financial stability and help provide an overall benefit” to the city.

Hazel Park City Manager Edward Klobucher said the Protecting MI Pension program funding represents “one of the best pieces of legislation for cities to come out of Lansing in decades.”

“Without this grant, the city would have had to place an additional burden on our citizens that they could not afford,” added Benton Harbor City Manager Ellis Mitchell, in a statement. 

Erin LaPere, city manager in Charlotte, also said the grants are particularly impactful for small, rural communities. Dan Stoltman, city manager in Norway, said the funding will bring the city up to 50% funded—and “make the light at the end of the tunnel a little closer and a lot brighter.”

“Especially now, when inflation is taking a bite out of local government’s ability to fund critical community services, the funding will not only strengthen the city’s retirement system, but also provide room within our annual budgets to continue to meet the service expectations of our citizens,” Dowagiac City Manager Kevin Anderson added in a statement on Wednesday.

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Author

  • Kyle Kaminski

    Kyle Kaminski is an award-winning investigative journalist with more than a decade of experience covering news across Michigan. Prior to joining The ‘Gander, Kyle worked as the managing editor at City Pulse in Lansing and as a reporter for the Traverse City Record-Eagle.

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