City of Lansing Retirement Systems

Updated May 1,2024

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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

Retirements are announced in the board meeting minutes, and for a few years, I kept lists of them that included a link to the pension calculation sheet. Somebody - probably the police union - didn't like that, so they got the legislature to pass a bill that exempts from the Freedom of Information Act "information regarding the calculation of actual or estimated retirement benefits". That and the fact that my list was getting unwieldy made me abandon it in 2023. Links to the old lists are below. However, new lists have become available that include pension payment totals for the last calendar year for anyone who received a pension payment in that year. They were included in payroll reports that I got through FOIA. The reports for 2021, 2022 and 2023 have this information. Links to those reports are here.

 

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, 2022, 2023

 

  Employees Retirement System: 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022, 2023

   

   Retiree health care (OPEB):

Police and Fire: 2011, 2013, 2016, 2018, 2020, 2021, 2023

Employees Retirement System: 2011, 2013, 2016, 2018, 2020, 2021, 2023

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

2022

323,236,205

522,051,108

61.9%

198,814,903

 

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
2022 164,320,080 310,067,771 53.0% 145,747,691

 

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
2022 487,556,285 832,118,879 58.6% 344,562,594

 

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 2024, which ends June 30, 2024, is determined in the 2023 actuarial report, which is based on information supplied by the City at the end of 2022.

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 2023 ERS valuation, a "City Normal Cost Rate" of 5.2% is calculated along with an "Amortization Rate" of 40.6%. The sum of those two rates - 45.8% - 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

2022

16.7%

?

30,565,795

5,113,279

15,525,622

20,638,901

 

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

2022

5.2%

40.6%

28,718,047

2,989,076

11,381,559

13,165,598

 

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

2022/2024

8,102,355

26,907,181

33,804,499

 

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 February 2024 and based on information provided by the City as of January 1, 2023.

 

These reports are more confusing to me than the pension reports. For example, does it make sense that a report issued in February 2024 is based on information provided as of January 1, 2023? 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 $14,007,15 and for ERS it is $7,089,780 for a total retiree health care contribution of $21,096,945 Add that to the $33,804,499 combined total contribution for pensions and we have $54,901,444.

 

UAAL for retiree health care is $148,377,767 for P&F and $70,991,862 for ERS, for a total of $219,289,629. Add that to the $344,562,594 unfunded pension liability and we have $563,852,223. With 50,137 households in Lansing, $563.8 million comes to $11,243 per household.

 

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.