Michigan Laws 38.2805 – State treasurer; establishment of uniform actuarial assumptions of retirement systems; evaluation system; review and oversight of underfunded local unit of government; determination; calculation
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Terms Used In Michigan Laws 38.2805
- Annual report: means the most recent audited financial statement reporting a local unit of government's liability for retirement pension benefits and retirement health benefits as determined under applicable government accounting standards of the Governmental Accounting Standards Board. See Michigan Laws 38.2803
- Annual required contribution: means the sum of the normal cost payment and the annual amortization payment for past service costs to fund the unfunded actuarial accrued liability. See Michigan Laws 38.2803
- Corrective action plan: means a plan that details the actions to be taken by a local unit of government to address and resolve the underfunded status of the local unit of government. See Michigan Laws 38.2803
- Evaluation system: means the local government retirement and benefits fiscal impact evaluation system created under section 5 to provide for the identification of, and a corrective action plan to resolve, the underfunded status of a local unit of government under this act. See Michigan Laws 38.2803
- Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
- General fund operating revenues: means the sum of all governmental activity fund revenues of a local unit of government as determined by the state treasurer based on applicable government accounting standards of the Governmental Accounting Standards Board. See Michigan Laws 38.2803
- Local unit of government: means any of the following:
(i) A city. See Michigan Laws 38.2803Oversight: Committee review of the activities of a Federal agency or program. Retirement system: means a retirement system, trust, plan, or reserve fund that a local unit of government establishes, maintains, or participates in and that, by its express terms or as a result of surrounding circumstances, provides retirement pension benefits or retirement health benefits, or both. See Michigan Laws 38.2803 state: when applied to the different parts of the United States, shall be construed to extend to and include the District of Columbia and the several territories belonging to the United States; and the words "United States" shall be construed to include the district and territories. See Michigan Laws 8.3o Underfunded status: means that the state treasurer has determined that the local unit of government is underfunded under the review provided in section 5 and the local unit of government does not have a waiver under section 6. See Michigan Laws 38.2803
(1) For purposes of reporting under this section, the state treasurer shall annually establish uniform actuarial assumptions of retirement systems that include, but are not limited to, investment returns, salary increase rates, mortality tables, discount rates, and health care inflation.
(2) The state treasurer shall create an evaluation system and provide for review and oversight under this act of an underfunded local unit of government beginning on the effective date of the determination by the state treasurer that the local unit of government is in underfunded status.
(3) Each year beginning after December 31, 2017, the state treasurer shall determine the underfunded status of each local unit of government.
(4) The state treasurer shall determine that a local unit of government is in underfunded status if any of the following apply:
(a) The actuarial accrued liability of a retirement health system of the local unit of government is less than 40% funded, according to the most recent annual report, and, if the local unit of government is a city, village, township, or county, the annual required contribution for all of the retirement health systems of the local unit of government is greater than 12% of the local unit of government’s annual general fund operating revenues, based on the most recent fiscal year.
(b) The actuarial accrued liability of a retirement pension system of the local unit of government is less than 60% funded, according to the most recent annual report, and, if the local unit of government is a city, village, township, or county, the annual required contribution for all of the retirement pension systems of the local unit of government is greater than 10% of the local unit of government’s annual general fund operating revenues, based on the most recent fiscal year.
(c) The local unit of government has not submitted reports as required under this section.
(d) The local unit of government fails to make the payments as described under section 4(1).
(5) For purposes of the report under subsection (6), a local unit of government shall annually calculate the funded ratios of each retirement system of the local unit of government using the uniform actuarial assumptions established under subsection (1).
(6) A local unit of government shall electronically submit a report in a form prescribed by the department of treasury on an annual basis to the governing body of the local unit of government and the department of treasury no later than 6 months after the end of the local unit of government’s fiscal year. The report under this subsection must include at least all of the following:
(a) The funded ratios of each retirement system of the local unit of government.
(b) Annual required contributions for each retirement system of the local unit of government.
(c) The local unit of government’s annual general fund operating revenues, if any.
(7) The state treasurer shall post publicly on the department of treasury website all of the following:
(a) The uniform actuarial assumptions under subsection (1).
(b) A summary report of the local unit of government reports submitted under subsection (6).
(c) The underfunded status of local units of government as determined under subsection (3).
(d) The current waiver status of local units of government provided under section 6.
(e) Any corrective action plan approved under section 10.
(8) A local unit of government shall post publicly on its website, or in a public place if it does not have a website, the information as provided in subsection (7) that is applicable to that local unit of government.