CADILLAC — Similar to other counties, Wexford County has been trying to figure out its plan of attack regarding pension obligations.
On Wednesday, the board is scheduled to discuss an action item that could have an impact on that plan. Based on the county's Dec. 31, 2019, annual actuarial valuation report, the county has funded 65% of its pension obligations. Current projections from the Municipal Employees’ Retirement System of Michigan expects the county will be 100% funded by 2039. To reach that goal, the county will have to require annual increases in payments.
The pension obligations by the county have increased for various reasons. According to Wednesday's agenda packet, the county's obligations have increased due to the 2011 elimination of the defined benefit pension to new employees (ie they are not putting into the system), an aging workforce, longer life expectancies, the 2008 recession, and other actuarial calculations.
With a lot of uncertainty surrounding finances in 2021 due to the current COVID-19 pandemic, the county board is scheduled to discuss using some additional monies from the county's fund balance to pay off some of the pension obligations.
The county’s policy "E-8.2 Fund Balance" requires its fund balance for the general fund “shall not be less than 30 percent of the annual general fund operating budget.‘ The county's fund balance, after removing the fund balances of the six special funds that are added to the general fund, is 45.2% of the 2020 general fund operating budget, according to the 2019 audit.
The final 2020 budget for the general fund is just over $13.92 million, according to the information in the agenda packet. As a result of fund balance being higher than needed, the commissioners are being asked to do an additional voluntary contribution to the unfunded pension liability.
While there is additional fund balance, over what the county's policy recommends, with the uncertainty in state funding in 2021, it may not be wise for the county to spend the entire difference between 30% and 45.2%. However, an additional contribution of roughly half the difference would help to increase the county's funded pension liability.
The two options the commissioners will look at include payment directly to divisions which will increase the funded ratio while decreasing monthly contribution. The second option would provide payment to a surplus division which will increase the funded ratio but will not decrease monthly contributions. The second option, however, would help the county become fully-funded sooner.
The Finance Committee suggests the full board approve two equal 2020 payments for a total of 7.125% of the 2020 amended General Fund budget for an additional voluntary contribution to MERS in the surplus division.
Also during the meeting, the board is scheduled to discuss a Memorandum of Understanding with the Northern District Fair Board regarding payments of a front end loader used at the Wexford County Civic Center.
The machine was purchased in June 2018 and the fair board agreed to buy a half interest in the loader for $11,000.
In 2019, the fair board requested a change in the date of the payments due to the County from July 1, 2019, and July 1, 2020, to Sept. 15, 2019, and Sept. 15, 2020. A memorandum was signed by both parties.
Due to the financial constraints and the cancellation of the 2020 Northern District Fair from the COVID-19 pandemic, a new draft memorandum is requesting the second payment of $6,000 due on Sept. 15, 2021. The recommendation by the executive committee is to have the full board approve the new memorandum.
The Wexford County Board of Commissioners is scheduled to meet at 4 p.m. Wednesday in the Commissioners Room on the third floor of the Wexford County Courthouse, 437 E. Division.