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IM takes steps on unfunded liabilities

IRON MOUNTAIN — Information will be submitted to the state in what may be an ongoing series of filings to bring Iron Mountain into compliance with a new state law dealing with unfunded municipal pension and retiree health care obligations.

Under the Protecting Local Government Retirement Benefits Act, local government plans that have not funded 40 percent of future health care premiums and 60 percent of pension liabilities are subject to extra scrutiny by the state. Those that don’t receive a state waiver could be monitored by a three-member stability board appointed by the governor.

Iron Mountain City Council on Monday reviewed waiver applications both for its Municipal Employees Retirement System pension plan and its retiree health care plan.

The MERS plan has a funded ratio of 38 percent, well below the required 60 percent threshold. The city, however, has always made its actuarial required contribution, City Manager Jordan Stanchina said.

The situation with retiree health benefits is more serious. The city has no pre-funding and faces future liabilities of about $34 million, according to an actuarial report. The city’s annual retiree health cost of nearly $1.5 million represents about 17 percent of the general fund budget.

For both the pension and retiree health obligations, the city can apply for waivers to avoid having to develop corrective action plans. However, it can only include changes that have already occurred.

The council on Monday approved making the state aware of these changes in retiree health obligations:

— Employees hired after 2011 are not eligible for retiree health benefits.

— Employees who retired after 2008 pay 6 percent to 20 percent of the premium cost, depending on the agreement.

— Administrative employees’ health insurance can be reduced if the active employees plan is reduced.

The state will be told about the MERS plan:

— The pension multiplier has been lowered to 2.25 percent from 2.5 percent for American Federation of State, County and Municipal Employees bargaining members.

— The anticipated investment return has been lowered from 8 percent to 7.75 percent.

— Mortality tables have been updated to better reflect life expectancy.

— The actuarial analysis is gradually being adjusted to decrease the number of amortized years, requiring the city catch up faster on its pre-funding.

“The state will review our waiver application(s) and either approve or reject,” Stanchina said, adding he’s skeptical a waiver will be granted on retiree insurance liabilities.

“It’s a problem that needs to be worked on,” he said.

Mayor Dale Alessandrini said the city started addressing its unfunded liabilities seven years ago but has no easy fixes for obligations accumulated through many decades.

The roughly 340 local governments in Michigan that provide retiree health care have $10.1 billion in unfunded liabilities, according a July report from a task force created by Gov. Rick Snyder.

In other action, the council:

— Awarded the 2018 paving bid to Bacco Construction Co. of Iron Mountain, the low bidder at $380,552. The bid was within budget but a little higher than hoped, likely due to rising oil prices, Stanchina said. About 9,575 feet of paving is planned.

— Will allow the Iron Mountain-Kingsford Rotary Club to proceed with plans for a pavilion near the Millie Hill bat cave viewing deck. The proposed structure, with a cement platform and metal roof, would measure about 24 by 24 feet, said Tamara Juul, club president.

— Accepted a $3,000 grant from the Michigan Department of Environmental Quality to assist in cleaning up scrap tires. The program allows residents to dispose of tires at no cost through Great American Disposal. Last year, 1,937 tires were removed from the city through a similar grant. Breitung Township, Kingsford and Norway also received grants this year; details of a coordinated disposal effort will be announced later.

— Agreed to seek bids for a new riding mower for the public works department, replacing a 1996 John Deere model. Up to $10,650 has been budgeted.

— Heard Alessandrini say he continues to believe it’s important the city ask voters to restore funding for a police officer at Iron Mountain Public Schools. The program ended when voters in 2014 rejected a proposed five-year levy of 0.5 mills, or 50 cents per $1,000 of taxable value.

— Heard Ed Felten of Felch Township express appreciation on behalf of American Legion baseball and others for planned improvements at Ranger Field in Iron Mountain. A new scoreboard, dugouts and concession stand will be provided by Laborers’ Union Local 1329 for what will become LIUNA Field, recognizing the Laborers’ International Union of North America.

— Discussed a recent public hearing on Bellin Health’s pending acquisition of Dickinson County Healthcare System. Council member Pam Maule said she was pleased to see good support for Bellin.

— Reappointed Lynda Zanon to the Downtown Development Authority. Zanon had been selected in December to fill a partial term.

— Learned that the spring household waste drop-off will be May 10 through May 12 in front of the Department of Public Works building.

— Heard Stanchina explain alley plowing was delayed after Saturday’s snowfall due to concerns ground conditions were too soft. “It can ruin them real fast,” he said. If temperatures don’t fall, they may not be plowed again this season.

— Noted the city’s compost site no longer will have open access but will be available to residents during designated times to be announced.

— Scheduled its first 2018-19 budget workshop for 6 p.m. Wednesday, April 11.

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