Unfunded pension liability impacts Chesaning budget
CHESANING – The Chesaning Village Council recognizes unfunded pension liabilities as a serious problem for the village. During the past year, the council made a concentrated effort to reduce unfunded liabilities. The council is now applying all the dividend funds from village investments against the unfunded liabilities.
Administrator Troy Feltman said, “We don’t have a lot of discretionary spending. My priority is making sure we address the unfunded liability.”
Feltman prepared the 2017-2018 budget, which is scheduled for public hearing on Tuesday, Feb. 28 at 7:30 p.m. The budget is just over $3 million, $280,000 of which goes toward paying down these unfunded pension liabilities.
“The most significant change [compared with last year] is the unfunded liability requirements went up by $90,000,” he said. Feltman explained that the village goes through the Municipal Employees Retirement System (MERS). Recently, MERS reassessed the rates and adjusted the average death age upward, from 75 to 77. As a result, the cost to the village has increased by approximately $90,000. “That’s a big hit,” he said.
Feltman explained that the village pension program is only 19 percent funded at this point. The village’s pension obligations are currently $3.2 million. “The unfunded liability is a complex issue. There’s no quick fix for it,” he said.
“That’s going to require fiscal discipline,” Feltman said.
On the plus side, this year’s state shared revenues are up slightly and there was a modest increase in property values, Feltman said. Furthermore, the village is expected to receive an additional $92,000 in revenue for major and local street maintenance this year.
He has recommended no increases in utility billing for water, sewer and solid waste collection in the fiscal year 2017-2018 budget.
But residents should also be aware that with current funding, the village will basically be doing some preventative maintenance on sewer, water and streets, but no major projects.
As for street improvements, Feltman said the village will have another street improvement bond in 2018. During the Feb. 7 meeting, the council hired Spicer Group engineers to evaluate the village’s existing streets to help it determine which streets will be repaired in 2018.
Ultimately, the focus is on paying down the unfunded liability, he explained. “We need to be fiscally prudent. We need to stay the course over the 12-year plan,” Feltman.
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