The Midland City Council convened a special meeting on June 18 to discuss the Midland Firemen’s Relief and Retirement Fund.
According to Mayor Lori Blong, six months prior to the meeting, the city had hired an actuary to validate the numbers provided by the fund and propose solutions to resolve its issues.
“We would like to see a solution as quickly as possible, and our goal here is to understand the current reality of where we stand, and we will then move forward in a future meeting to discuss that and how we will solve it,” said Blong during the meeting.
Brad Heinrich of Foster & Foster, the hired actuarial consulting firm, presented an actuarial valuation study of the fund's financial condition during the meeting.
The meeting revealed that the debt for payouts is growing faster than the contributions. As of December 2023, the fund held $91.5 million, while the Actuarial Accrued Liability (AAL) stood at $203.4 million, resulting in an Unfunded Actuarial Accrued Liability (UAAL) of $111.9 million.
The pension fund currently receives 38.4% of payroll annually, with 28.1% allocated to normal costs and 10.3% directed towards repaying a $22 million debt.
During the meeting, Heinrich recommended transitioning from a fixed contribution rate to an actuarially determined contribution rate each year.
In terms of financial management, both the city and the Midland Fire Department have already implemented measures to address the fund's issues, including increasing contributions and reducing benefits.
The city contributes 24.2% to the pension fund, up from 22.2% starting January 2024, while firefighters contribute 14.2%. Based on the city’s calculations, the city's contributions amount to approximately $6 million annually, and the firefighters' contributions total about $500,000 annually.
In July 2023, members of the Midland Fire Department voted on two items addressing the unfunded liability: removing unscheduled overtime and changing the benefit calculation to consecutive pay periods rather than non-consecutive ones. Both items passed with 81% approval and took effect on Jan. 1, 2024.
During the public hearing, both current and former firemen voiced their viewpoints and concerns about the fund. Firemen expressed concerns during the meeting that, despite benefit cuts, the fund's condition is worsening. They also highlighted that their pay is lower than that of nearby cities, which ultimately affects the retention of trained first responders.
Before concluding the meeting, Mayor Blong announced that the city is working to resolve the firemen’s pension issue.