Overview

 

The City has two separate retirement systems, the Police and Fire Retirement System (P&F) and the Employees Retirement System (ERS). Membership in the Police and Fire Retirement System is restricted to Fire Department employees who hold the rank of firefighter or higher and Police Department employees who hold the rank of patrolman or higher.

 

The Employees Retirement System includes these groups: Teamsters, Exempt, District Court, Executive Pay Plan, and UAW. Elected officials are excluded - they have only a defined contribution plan.

 

Benefit provisions are spelled out in the City ordinances, but those provisions often change when new union contracts are negotiated and months may pass before the ordinances get updated. Actuarial valuations always include a section called "Summary of Plan Benefits," and that section in the latest actuarial valuation may contain the clearest and most up-to-date description of benefits available. Links to the actuarial valuations are below.

 

Unlike other City retirees, retired police and firefighters don't pay state taxes on their pensions (starting with tax year 2013). Senate Bill 409 (analysis), passed in December 2012, exempts pubic pensions from the state income tax if the employing agency does not participate in the social security system. Lansing's police and firefighters do not contribute to or receive benefits from the social security system.

 

The two systems are governed by boards: the Police and Fire Retirement System board and the Employees Retirement System board. The Police and Fire Retirement System board consists of eight trustees: the mayor; a member of the city council selected by the council; the city treasurer; a resident of the city, appointed by the mayor; two members of the Police Department, elected by the members of the Police Department; and two members of the Fire Department, elected by the members of the Fire Department.

 

The Employees Retirement System board consists of nine trustees: the mayor; a member of the city council selected by the council; the city treasurer; the human resources director; three members of the retirement system elected by the members of the system, not more than one from the same department; and two Michigan residents, appointed by the mayor, one a retiree of the system and the other not a member of the system.

 

The Retirement Office website provides names of retirement board members, meeting schedules, budgets and financial reports.

 

Retirements since 2010

Police and Fire Retirement System: Police  Fire

Employees Retirement System

Board meeting minutes

Police and Fire Retirement System

Employees Retirement System

Joint Meetings

Actuarial valuations

 

Actuarial valuation reports for pensions are issued at the end of the year and are based on information from the previous year. They are published on the Retirement Office website. Since retiree health care is not the responsibility of the retirement boards, actuarial valuations for retiree health care are not on the Retirement Office website or anywhere else on the City's website. They can only be obtained through FOIA. Until 2021, they came out every 2 years rather than annually.

 

    Pensions:

 

Police and Fire:

2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021

 

Employees Retirement System:

2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021

   

   Retiree health care (OPEB):

Police and Fire: 2011, 2013, 2016, 2018, 2020, 2021

Employees Retirement System: 2011, 2013, 2016, 2018, 2020, 2021

Pension funding history

 

Pensions are funded from 3 sources: earnings on investments, member contributions and payments from the City. The amounts the City is required to pay are determined by the actuarial valuations. Payments are made at the end of the year, after the actuarial valuations come out.

 

The source of the following is a section in the actuarial valuation called "Historical Funding Progress."

 

Police & Fire Retirement System (P&F)
As of December 31:	Actuarial Value of Assets	Actuarial Accrued Liability	Percentage Funded	Unfunded Actuarial Accrued Liability
2001	280,518,000	249,204,000	112.6%	(31,314,000)
2002	280,686,000	259,282,000	108.3%	(21,404,000)
2003	277,947,000	267,786,000	103.8%	(10,161,000)
2004	275,807,000	279,873,000	98.6%	4,066,000
2005	275,216,000	290,299,000	94.8%	15,083,000
2006	278,839,000	308,193,000	90.5%	29,354,000
2007	293,571,000	315,635,000	93.0%	22,064,000
2008	287,394,000	326,673,000	88.0%	39,279,000
2009	280,342,000	337,315,000	83.1%	56,973,000
2010	276,377,041	359,293,016	76.9%	82,915,975
2011	264,492,738	372,547,509	71.0%	108,054,771
2012	257,898,061	373,083,911	69.1%	115,185,850
2013	277,267,947	383,879,280	72.2%	106,611,332
2014	288,785,965	395,089,321	73.1%	106,303,356
2015	292,531,481	410,189,555	71.3%	117,658,075
2016	294,311,956	424,264,103	69.4%	129,952,147
2017	302,362,351	441,891,242	68.4%	139,528,892
2018	296,163,457	457,988,405	64.7%	161,824,949
2019	286,067,027	463,371,047	61.7%	177,304,020
2020	313,770,079	488,579,829	64.2%	174,809,750
2021	329,564,511	500,182,752	65.9%	170,618,241

 

Employees Retirement System (ERS)
As of December 31:	Actuarial Value of Assets	Actuarial Accrued Liability	Percentage Funded	Unfunded Actuarial Accrued Liability
2001	191,311,000	213,648,000	89.5%	22,337,000
2002	192,920,000	215,405,000	89.6%	22,484,000
2003	199,329,000	221,088,000	90.2%	21,759,000
2004	206,200,000	231,389,000	89.1%	25,189,000
2005	207,881,000	241,882,000	85.9%	34,001,000
2006	208,765,000	251,427,000	83.0%	42,662,000
2007	208,572,000	254,356,000	82.0%	45,784,000
2008	200,600,000	258,331,000	77.7%	57,731,000
2009	193,324,000	262,298,000	73.7%	68,974,000
2010	187,440,590	269,461,935	69.6%	82,021,345
2011	177,100,863	287,306,707	61.6%	110,205,844
2012	167,569,807	293,974,433	57.0%	126,404,626
2013	172,687,582	313,258,746	55.1%	140,571,164
2014	177,259,421	309,924,744	57.2%	132,665,323
2015	176,031,902	308,794,993	57.0%	132,763,091
2016	176,160,086	305,886,505	57.6%	129,726,419
2017	178,646,143	305,030,296	58.6%	126,384,153
2018	172,090,691	303,408,333	56.7%	131,317,642
2019	160,693,641	310,674,588	51.7%	149,980,947
2020	173,353,792	316,451,462	54.8%	143,097,670
2021	177,428,286	312,083,091	56.9%	134,654,805

 

P&F and ERS Combined
As of December 31:	Actuarial Value of Assets	Actuarial Accrued Liability	Percentage Funded	Unfunded Actuarial Accrued Liability
2001	471,829,000	462,852,000	101.9%	-8,977,000
2002	473,606,000	474,687,000	99.8%	1,080,000
2003	477,276,000	488,874,000	97.6%	11,598,000
2004	482,007,000	511,262,000	94.3%	29,255,000
2005	483,097,000	532,181,000	90.8%	49,084,000
2006	487,604,000	559,620,000	87.1%	72,016,000
2007	502,143,000	569,991,000	88.1%	67,848,000
2008	487,994,000	585,004,000	83.4%	97,010,000
2009	473,666,000	599,613,000	79.0%	125,947,000
2010	463,817,631	628,754,951	73.8%	164,937,320
2011	441,593,601	659,854,216	66.9%	218,260,615
2012	425,467,868	667,058,344	63.8%	241,590,476
2013	449,955,529	697,138,026	64.5%	247,182,496
2014	466,045,386	705,014,065	66.1%	238,968,679
2015	468,563,383	718,984,548	65.2%	250,421,166
2016	470,472,042	730,150,608	64.4%	259,678,566
2017	481,008,494	746,921,538	64.4%	265,913,045
2018	468,254,148	761,396,738	61.5%	293,142,591
2019	446,760,668	774,045,635	57.7%	327,284,967
2020	487,123,871	805,031,291	60.5%	317,907,420
2021	506,992,797	812,245,843	62.4%	305,273,046

 

City contributions to retirement funds

 

The amount the City is required to contribute to the retirement funds is determined in the actuarial valuations. Payments are made around the end of the calendar year, soon after the actuarial valuations come out. So, for example, the required contribution for fiscal year 2022, which ends June 30, 2022, is determined in the 2021 actuarial report, which is based on information supplied by the City at the end of 2020.

The calculation of the "Actuarial Determined Employer Contribution" is pretty complicated for regular folk. One part of it is the "Normal Cost," which is the amount that must be set aside for the pension benefits earned in the current year. The other is the "Amortization of Unfunded Accrued Liability," which is this year's payment on the funding shortfall accumulated over the years. The amortization period is 30 years. In the example below, which is from page 15 of the 2021 P&F valuation, a "City Normal Cost Rate" of 15.5% is calculated along with an "Amortization Rate" of 41.0%. The sum of those two rates - 56.5% - is then multiplied by the "Projected Fiscal Payroll" to get the "Total City Contribution."

 

 

Here are the figures for Police & Fire since valuation year 2009:

 

Police & Fire City Contribution Calculation
Valuation Year	Normal Cost Rate	UAAL Amortization Rate	Projected Fiscal Payroll	Normal Cost Amount	Amortization Amount	City Contribution for P&F
2009	15.47%	10.22%	30,442,645	4,709,477	3,111,238	7,820,716
2010	15.15%	15.88%	29,780,315	4,511,718	4,729,114	9,240,832
2011	14.27%	24.83%	25,918,180	3,698,524	6,435,484	10,134,008
2012	15.7%	25.90%	26,983,418	4,236,397	6,988,705	11,225,102
2013	16.9%	24.90%	26,405,725	4,462,568	6,575,026	11,037,593
2014	15.5%	24.70%	27,078,405	4,197,153	6,688,366	10,885,519
2015	14.2%	27.1%	27,876,798	3,958,505	7,554,612	11,521,768
2016	14.2%	30.0%	28,461,908	3,925,393	8,289,043	12,562,547
2017	15.0%	32.0%	28,826,947	4,259,106	9,111,290	13,554,239
2018	14.9%	36.5%	30,046,061	4,416,859	10,831,128	15,457,647
2019	14.9%	42.0%	29,774,287	4,311,568	12,184,933	16,950,155
2020	17.1%	43.0%	30,376,917	5,066,802	12,751,378	18,263,635
2021	15.5%	41.0%	32,138,666	4,862,612	12,860,303	18,165,988

 

Here are the figures for ERS:

ERS City Contribution Calculation
Valuation Year	Normal Cost Rate	UAAL Amortization Rate	Projected Fiscal Payroll	Normal Cost Amount	Amortization Amount	City Contribution for ERS
2009	10.32%	12.31%	30,601,855	3,158,111	3,767,088	6,925,200
2010	10.01%	11.98%	31,547,766	3,157,931	3,779,422	6,937,354
2011	7.50%	24.45%	26,874,899	2,015,617	6,570,913	8,586,530
2012	7.10%	32.60%	23,592,272	1,675,051	7,691,081	9,366,132
2013	8.60%	40.40%	21,521,242	1,850,827	8,694,582	10,545,409
2014	7.90%	36.20%	23,085,894	1,823,786	8,357,094	10,180,879
2015	7.20%	35.70%	23,924,600	1,722,571	8,541,082	10,246,872
2016	7.5%	37.6%	22,593,044	1,645,797	8,249,336	10,185,060
2017	6.4%	35.4%	23,604,264	1,493,978	8,252,934	9,880,932
2018	6.8%	37.1%	24,372,735	1,619,910	8,789,239	10,698,401
2019	6.9%	41.6%	25,453,989	1,711,938	10,307,068	12,349,529
2020	7.5%	39.6%	27,006,263	1,998,654	10,438,162	12,737,487
2021	6.9%	40.0%	26,003,172	1,747,686	10,149,569	12,194,686

 

And here, finally, are the totals for P&F and ERS combined, showing the two components of the city contribution: the normal cost and the amortization of UAAL:

P&F and ERS Combined
Valuation Year/Fiscal Year	Normal Cost	Amortization of UAAL	Total City Contribution
2009/2011	7,867,589	6,878,327	14,745,915
2010/2012	7,669,649	8,508,536	16,178,185
2011/2013	5,714,142	13,006,397	18,720,539
2012/2014	5,911,448	14,679,786	20,591,234
2013/2015	6,313,394	15,269,607	21,583,002
2014/2016	6,020,938	15,045,460	21,066,398
2015/2017	5,681,076	16,095,694	21,768,640
2016/2018	5,571,190	16,538,379	22,747,607
2017/2019	5,753,084	17,364,224	23,435,171
2018/2020	6,036,769	19,620,367	26,156,048
2019/2021	6,023,506	22,492,001	29,299,684
2020/2022	7,065,456	23,189,540	31,001,122
2022/2023	6,610,298	23,009,872	30,360,674

 

Retiree health care

 

In addition to employee pensions, the City has to pay for "other post employment benefits" (OPEB) - primarily, retiree health care - and these costs are outside the responsibility of the retirement boards. They are not addressed in the same actuarial valuation reports mentioned above -  the ones that calculate actuarial pension liability and required payments by the City. The latest retiree health care actuarial valuation reports were issued in November 2021 and based on information provided by the City as of January 1, 2021.

 

These reports are more confusing to me than the pension reports. For example, does it make sense that a report issued in November 2021 is based on information provided as of January 1, 2021? To add to the confusion, there are two sets of figures, one for fully pre-funded and one for partial pre-funded (see pages 5 and 6 of the P&F report). I'm going to flip a coin and use the fully pre-funded figures.

 

This is from page 5 of the Police & Fire report:

 

This is from page 5 of the ERS report:

 

The ADEC (actuarially determined employer contribution) for P&F is $13,178,502 and for ERS it is $7,100,834 for a total retiree health care contribution of $20,279,336. Add that to the $30,360,674 combined total contribution for pensions and we have $50,640,010.

 

UAAL for retiree health care is $149,721,904 for P&F and $79,193,893 for ERS, for a total of $228,915,797. Add that to the $305,273,046 unfunded pension liability and we have $534,188,843. With 49,539 households in Lansing, $534.2 million comes to $10,783 per household. And my figures for UAAL are about $200 million less than what the Lansing State Journal reported in March 2021:

 

Pension and retiree health care payments will eat up about 26%, or $60 million, of the [$227 million] budget. The city is grappling with more than $730 million in underfunded pension and retiree health care costs with payments expected to come due over the next several decades.

 

Local Retirement System Status Report

 

Public Act 202 of 2017 requires all local units of government that have a retirement pension system or retirement health care system to submit reports to Treasury's Municipal Stability Board no later than six months after the end of its fiscal year. Lansing's fiscal year ends June 30. To find the data for any local entity, go to this page on Treasury's website and click on the desired year at the bottom. The report downloads to your computer. It is an Excel file listing local government units by county. At the bottom of the screen are three tabs: Local Unit Summary, Pension System Summary and Health Care Summary. The detail is in the second and third tabs. The data comes from the Forms 5572, Retirement System Annual Report submitted by local units. These reports are supposed to be available on the local units' websites. The following figures come from the report "as of" August 2023:

	Assets	Liabilities	UAAL	% funded
P&F Pensions	289,411,315	502,879,789	213,468,474	57.6%
P&F Healthcare	41,918,165	202,871,379	160,953,214	20.7%
ERS Pensions	153,666,353	312,157,774	158,491,421	49.2%
ERS Healthcare	69,887,591	157,216,430	87,328,839	44.5%
Total:	554,883,424	1,175,125,372	620,241,948

 

Mayor Andy Schor's December 20, 2022 Press Release

 

Mayor Andy Schor announced today that the City of Lansing is realizing significant savings to unfunded long-term legacy costs and has reduced expected liability by nearly $400 million. 

 

Schor prioritized the financial stability of the City early in his first term and took several initial steps to the address the issue. By working with the City’s first Chief Strategy Officer, Shelbi Frayer, and implementing reforms such as administrative rebidding, plan administration changes, and prefunding OPEB by freeing up City funds through other efficiencies and cost savings, the City was able to realize these savings.

 

“Lansing’s long-term financial health was an important priority for me when I first ran for mayor. These costs represent retirees so we have to be cognizant of that, but we also have to recognize the critical impact that our long-term liability will have on future finances in the City and services for Lansing residents,” Schor stated. “By working together and making some smart, responsible changes, we have been able to bring this unfunded liability down significantly. There’s more to do, but this is an incredible step forward.”

 

For years, Lansing has struggled with unfunded actuarial accrued liability (UAAL) obligations, peaking at approximately $907 million in 2020. That total includes the City’s pension costs as well as retiree healthcare obligations, also known as other post-employment benefits (OPEB).

 

In 2012, the City formed a group of outside experts known as the Financial Health Team (FHT) to provide guidance and direction to the Mayor and City with respect to various financial matters. Over the last decade, countless hours have been spent by dozens of volunteer FHT members to work toward the common goal of ensuring long-term financial sustainability for the City.

 

Upon taking office in 2018, Mayor Schor reviewed and acted on FHT recommendations. He worked with the FHT and City Council create and fund the Chief Strategy Officer, a new senior position in City government to focus specifically on the City’s legacy debt and strengthening the overall financial trajectory of the City.

 

	Year	Assets	Liabilities	Unfunded Liabilities
	2020	544,765,633	1,451,713,946	906,951,313
	2021	641,608,155	1,155,021,778	513,413,623
	Change	96,842,522	(296,692,168)	393,537,690

 

“We will always be a willing partner to the city and through our continued collaboration we have made substantial changes to the future viability of the city all while maintaining benefits to past, present, and future employees,” said UAW Local 2256 President Dennis Parker, who serves as Chair of the Lansing Employees’ Retirement System Board of Trustees.

 

“Working together in the spirit of collaboration between my administration, City Council, and our incredible labor force, these goals certainly can be achieved as we continue to focus on securing the long-term stability of the City’s finances,” Schor concluded.