FLINT, MI -- Flint officials are expecting millions 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 announced details of the $220-million set-aside in the newly adopted state budget during a news conference on Wednesday, July 6.
The city initially announced it would receive $170 million from the state, but officials said Wednesday that the funding will actually amount to $220 million, bringing the funding level of Flint’s pension system funded to 60 percent, bringing it up to minimum standards set by the state.
Chief Financial Officer Robert Widigan said the cash infusion will reduce the city’s annual pension payment from $32 million in the current fiscal year to $18-19 million annually in future years.
“There’s still work to be done … We’re still going to have to tighten our belts (and) continue with these balanced budgets,” Widigan said Wednesday.
In the fiscal year that started July 1, Flint’s most significant expense is its retiree legacy costs, including pension expenses that have increased rapidly to reach $32 million this year.
Pension costs had been projected to rise to $40 million in the following fiscal year -- a funding level Flint officials have warned would have put them on the threshold of bankruptcy.
As of Dec. 31, 2020, Flint had $559 million in pension liabilities but plan assets of just $149 million, making it funded at less than 27 percent.
Neeley said his staff and the area’s legislative delegation worked for months to achieve the pension contribution included in the new state budget.
The mayor said during his time in office, he’s made it a priority “to make sure our retirees and our city workers have a level of security” in their jobs and their pensions.
He has blamed previous mayors and emergency financial managers for not having addressed the pension shortfalls in a sustainable way previously.
Flint is a member of the Municipal Employees Retirement System, or MERS, a statewide multiple-employer pension system.
Widigan said Wednesday that the average Flint pensioner receives about $29,000 annually.
Making those payments has been increasingly difficult as the number of retirees in the city has risen and its active employees and tax base have decreased, leaving one active employee to pay for the pension benefits of four retirees.
