Written by Tanya Terry
The City of Flint initially announced it would receive $170 million dollars to help bolster its pension fund after the Michigan Legislature finalized a $76 billion budget plan to provide dollars to help fund pension plans in underfunded municipalities. However, officials said on July 6 the city will actually receive $220 million. This will bring the funding level of Flint’s pension system funded to 60%: the minimum standards set by the state. As of Dec. 31, 2020, Flint had $559 million in pension liabilities but plan assets of just $149 million. At that time, it was funded at less than 27%.
Flint’s most significant expense for the current fiscal year is retiree legacy costs.
“There’s still discussions to be had with our partners in Lansing, community partners,” said City of Flint Chief Financial Officer Robert Widigan.
“But, this gives us a stable ground so we can actually have those conversations,” Widigan continued. “Prior to this, we were under water and couldn’t breathe. Now, we’re able to stand on solid ground and start to work with all the partners and say: ‘OK. We’re almost to the finish line. How do you help us get beyond that to ensure that this is a discussion that we don’t have to have ever again?'”
Widigan said the average pension in Flint is about $29,000 per year. With one active employee to every four retirees according to Mayor Sheldon Neeley, the help from the Michigan Legislature was badly needed.
The city’s annual pension payment was previously $32 million. According to Neeley, many administrations and emergency managers have “kicked the can down the road,” creating the problem of a structural deficit in the City of Flint for more than a decade and a half.
“So, without this funding, our annual payments for pension were projected to reach almost $40 million a year,” Widigan stated.
He said this was completely unsustainable.
“This will ensure we’re 60% funded, which is required by state law, but more importantly that brings our annual payment down to $18-$19 million,” he added. “As it’s been stated, there’s still work to be done. That’s still a lot of money. But, that ensures we will be able to continue to provide services the residents expect-and again ensures our hardworking employees and retirees receive the funding, the payments they expect to receive.”
According to Neeley, many programs that provide services for city residents will be enhanced through the allocation from the State Legislature. He named St. Mark’s Church, Berston Fieldhouse, Hamilton Healthcare and the Boys and Girls Club at the roundtable press conference on July 6.
The funds from the state are expected to arrive in August 2023.
