Cheers to city for solid finances
In Wednesday’s edition of The News, Steve Schulwitz reported on the City of Alpena’s positive audit report covering the fiscal year that ended June 30.
Auditors told members of the Municipal Council that the city had $2.5 million in its general fund cash-on-hand account, enough to cover nearly 25 percent of its yearly expenses. That’s a bit like you having enough money in savings that, if you lost your job today, you could keep paying your bills, without making any cuts, for three months before you needed another paycheck.
That’s good news, but, perhaps most importantly, auditors told the council that the city’s obligations to current and future retirees were 80-percent funded. What that means is that, even if all of its employees retired today and claimed benefits, the city could pay for eight out of 10 of them.
That’s an important milestone, and one that has vexed local governments around the state and the nation. Because we are living longer, retirees are claiming benefits for a longer period of time and the costs to governments and other employers who provide pensions keeps going up. That has strained many municipal budgets.
The Municipal Employees Retirement System of Michigan handled the retirement accounts of 743 local governments across Michigan in 2017, according the group’s most recent actuarial report. Of those, only 194 –about a quarter — were at least 80-percent funded, as Alpena is. The largest number of governments were between 60-percent and 80-percent funded, and 144 were less than 60-percent funded.
That means Alpena is among the best-prepared in the state.
Auditors also said the city’s retiree health care system was 20-percent funded. While that figure seems low, some municipalites in Michigan have paid costs as they went, meaning they have nothing set aside to pay for future retirees’ health care. The average in 2016 was about 14-percent funded, according to the Michigan Treasury.
Kudos to the city for being prudent with the people’s money, and keep up the good work.
(THE ALPENA NEWS)