Clarification: Higher MERS bill in Sumpter Twp. was for retirements in 1997

On Page 10 in the March 31 issue of the Independent, we quoted Sumpter Township Financial Director Jim Glahn, CPA, on the budgets under discussion.
The General Fund did well, he said, but there was an extra expenditure when two police officers retired. They had been promised full medical and retirement, but that had been unfunded, so the Michigan Employee Retirement Service (MERS) sent the township a bill for $400,000.
In clarifying the situation, Sumpter Township Police Chief Eric Luke said, “The two officers actually retired in 1997, they being former Chief Clinton Brown and former Lieutenant Wanda Elden. No other current or former police department employees were ever promised, nor will any receive under any previous or current contracts, medical benefits after retirement.”
Chief Luke said the payments increased dramatically over the past couple of years but are scheduled to drop back down to normal starting this coming fiscal year.
Glahn explained that for whatever reason the township board in 1997 gave those two employees medical benefits and pension without either the employees or the employer ever putting anything into the pension fund to pay for it.
He said the township’s MERS payment, which normally is $1,800 per month went up to $25,860 per month, which was about $400,000. In June of this year it drops back down to $1,820.
Glahn said every year an actuary looks at the pension portfolio and the township is in MERS. If the stock market goes down, the payments will go up.
He said in 2008, the stock market loss was so great that they had to write off the loss over 10 years. Two more years of loss has yet to be absorbed, he noted.
Actuaries yearly look at the age of the people in the pension portfolio, if they are married, or if a spouse has died. A lot plays into it, he said.
They had been getting an 8-10% return and it dropped to a 7% return. Anything not covered becomes an unfunded liability.
“It’s kind of complicated,” he said.