Amortization of Unfunded Liability

Each year, the City of Lansing sets aside an amount to maintain a fund that will cover employees' pensions and health care when they retire. This amount is determined by the city's actuary. Sometimes - for various reasons like lower than expected returns on investments - that fund comes up short, and extra payments must be made to catch up. When the accumulated shortfall is really large, the payments may be spread over several years, like payments on a home mortgage. Those payments are called "amortization of unfunded liability".

Lansing has two separate retirement systems, one for police and firefighters and one for all other employees. Actuarial valuation reports are done for both pensions and health care for each system, so there are four reports each year. The payments in the chart below come from those reports. Each report has a section that shows the calculation of the "normal cost", which is the amount to be set aside for current employees retirement, and the amortization of unfunded liability. If you click on the amount in the chart, you will be taken to the actuary report for that fund. The page number is where the calculation can be found.