DALLAS-- Wayne County, Michigan will make an additional $14 million contribution toward its underfunded pension system.
The contribution comes on top of the $63 million that the county is annually obligated to pay into the pension fund but falls short of the $19 million county officials originally anticipated they would be able to afford. The county had $840.5 million of unfunded pension liabilities in 2014 when it released its last pension audit.
Last December, officials determined the county could make a $10 million contribution into the pension fund from funds declared as surplus from its Delinquent Tax Revolving Fund and Property Forfeiture funds, according to said county spokesman James Canning.
The county also anticipated it could funnel another $9 million from fund balances. Following a third-party administered study on its pension system conducted earlier this year, the county determined it would only be able to contribute an additional $4 million from the fund balances.
Canning said the final amount was based on the finalized Comprehensive Annual Financial Report and pension study.
"The $19 million was never a locked in number and shouldn't be characterized in anyway as a shortfall," he said.
On August 2015, the county began operating under a consent agreement with the state due to its financial distress. At the time the city entered into the agreement it faced an accumulated deficit of $82 million, a yearly structural deficit of $52 million, $1.3 billion in unfunded health care liabilities and a pension fund that was underfunded by nearly $900 million.
In April the county's CAFR said that for the fiscal year ending Sept. 30, 2015, Wayne County's accumulated deficit of more than $82 million had been eliminated and the books were closed with a $35.7 million unassigned surplus.
However $30 million of that was earmarked for specific uses, leaving the county with a surplus of only $5.7 million,
Behind the surplus are cuts Wayne County made in retiree healthcare benefits, often termed "other post-employment benefits" that trimmed $850 million from its unfunded liabilities. The restructuring reduced its actuarial accrued OPEB liability by 65% in 2015, lowering it to $471 million from $1.32 billion, according to an actuarial analysis that accompanied the county's announcement from Nyhart Actuary & Employment Benefits. The restructuring will bring the county's pay-as-you-go contribution this year down to $17.6 million from $40.4 million.
The OPEB savings were achieved by switching some retirees to what the county calls more "cost-effective health plans and providing others with need-based stipends to purchase their own insurance."
Without the changes, the county had warned that the actuarial accrued liability was on track to rise to $1.8 billion.
County Executive Warren Evans has said he intends to make the bid to end the county's emergency consent agreement by the end of 2016.
"We don't have an estimated time when that will happen, but the intention remains that we will ask to be released from the state consent agreement this year," said Canning.
Wayne County carries across-the-board junk-level ratings. It has ratings of BB-plus from Standard & Poor's and B from Fitch Ratings. S&P and Fitch both assign negative outlooks.
In February, Moody's Investors Service revised its outlook on the junk-level rating upward to stable from negative in recognition of the county's success in making substantial cuts to its retirement liabilities and other operating expenses.
The rating agency affirmed the county's Ba3 general obligation limited tax debt rating. The county has a total of $518 million of long-term LTGO debt outstanding, of which $336 million is rated by Moody's.
An additional $300 million of short-term LTGO delinquent tax anticipation notes are outstanding, but are not rated by Moody's.