The state Treasury Department is reviewing East Lansing's pension plan and could designate it as "underfunded" based on documents submitted by the city. The department's Local Retirement Reporting Team sent a letter to the city on March 1 informing it of the review.
The pension plan was 80% funded in 2003 but is only 50% funded right now. East Lansing says that's because of "below-average market returns" in recent years. Voters rejected a proposal to establish a city income tax to help bolster the fund. City leaders are now looking into cutting services to free up more money for retirement costs.
East Lansing will be asking for a waiver of underfunded status. The waiver request will be based on the following changes the city has made to address the shortage:
- changing benefits for new hires starting in 2010
- requiring existing employees to pay higher premiums
- putting an extra $4 million into the pension plan over the last 3 years
The city must submit the waiver request by April 16. If the request is denied the state will order East Lansing to submit a plan to fix the shortfall within 180 days. The city could apply for a 45-day extension. FOX 47 and fox47news.com will keep you updated on the process and what it means for city employees and retirees.
