In Southeastern Michigan more government entities were found to have underfunded retiree healthcare plans than the number of government entities with underfunded pension plans. According to the data provided by the Michigan Department of Treasury there were 50 underfunded retiree healthcare systems of the 183 government entities that had provided their financial information to the State as of June 9, 2018. A government entity’s retiree healthcare plan is deemed underfunded by the State if it is less than 40 percent funded and has an annual contribution greater than 12 percent of government funds.
Of the municipalities that were deemed funded by the State, Rose Township had the highest funding percentage for municipalities at 331 percent. Other municipalities with retiree healthcare funding above 100 percent are:
- Rose Township: 331%
- Groveland Township: 197%
- Algonac: 163%
- Oakland County: 127%
- Detroit: 121%
- Macomb Township: 114%
- Royal Oak: 107%
- Pontiac (Police and Fire): 105%
- Milford: 104%
- Farmington Hills: 100%
- West Bloomfield Public Township Public Library: 147%
- Brighton Area Fire Authority: 109%
While there was about a dozen different Southeastern Michigan government entities with more than 100 percent of the retiree healthcare plans funded, there were also 37 entities that had 0 percent of the retiree healthcare plan funded. However, not all of these entities were deemed underfunded, rather only 18 were. Not all government entities that fell below the 40 percent threshold were deemed underfunded due to the fact they were contributing less than 12 percent of their revenue to fund the plan. For example, the City of Brighton has 11 percent of its retiree healthcare funded, but according to the Michigan Department of Treasury, the city’s annual contribution to the plan is 10.4 percent of the City’s revenue. This is less than the 12 percent trigger point set by the State.
As with pension systems, funding retiree healthcare systems is vital not only to a government entity’s financial healthy, but also to retention and recruitment of employees.