The pension bailout will save Flint millions, but not immediately
FLINT, MI — Flint officials expect millions of dollars in annual savings from a state-funded pension system bailout, but the relief won’t come until 2023.
Mayor Sheldon Neeley, union leaders and state legislators provided details of the $170 million provision in the newly passed state budget during a news conference Wednesday, July 6.
Flint’s chief financial officer Robert Widigan said the funding will immediately fund Flint’s pension system 60 percent, bring it to the minimum standards set by the state and raise the city’s annual pension payment to $18 from $32 million in the current fiscal year -Reduce dollars. 19 million annually in future years.
“There’s still work to be done … We still have to tighten our belts (and) continue with these balanced budgets,” Widigan said Wednesday.
Related: Flint gets $170 million in bailout money from the state budget
For the fiscal year that began July 1, Flint’s most significant expenses are retiree estate expenses, including pension expenses, which have quickly grown to $32 million this year.
Pension costs would rise to $40 million in the following fiscal year — a level of funding that Flint officials would have warned would have put them on the brink of bankruptcy.
As of December 31, 2020, Flint had $559 million in pension liabilities but only $149 million in plan assets, which is less than 27 percent funded.
Neeley said his staff and the region’s legislative delegation had been working for months to meet the pension contribution included in the new state budget.
The mayor said during his tenure that he made it a priority to “ensure that our retirees and our city employees have some level of security” in terms of their jobs and their pensions.
He accuses former mayors and emergency finance managers of not having addressed the pension gaps in a sustainable manner.
Flint is a member of the Municipal Employees Retirement System (MERS), a statewide multi-employer pension scheme.
Widigan said Wednesday the average Flint retiree makes about $29,000 annually.
Making these payments has become increasingly difficult as the number of retirees in the city has increased and the number of active employees and the tax base has declined, leaving one active employee to pay for the retirement benefits of four retirees.
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