Refuse authority budget reflects pension system payment

By: K. Michelle Moran | Grosse Pointe Times | Published July 30, 2019

GROSSE POINTE PARK — An unexpected — and slight — underfunding in the Grosse Pointes-Clinton Refuse Disposal Authority pension seems to be the only fiscal hiccup from the 2018-19 fiscal year.

During a July 9 GPCRDA Board meeting in Grosse Pointe Park, CPA Lynn Gustafson, who handles the finances for the GPCRDA, said the board needed to make a payment of $43,920 into the Municipal Employees’ Retirement System, or MERS, which manages the GPCRDA’s pension plan.

She said that was because the pension, as of December 2018, was only 118% funded. Because the pension plan is closed — there are no employees contributing to it now, because the incinerator is no longer operating — the GPCRDA needs to maintain assets “equal to 120 percent of the actuarial accrued liability,” according to an audit report.

The underfunding was “due to a drop in the market as of December,” Gustafson said. “It has come up since then.”

The GPCRDA had set aside $26,068 for a pension contribution for the 2018-19 fiscal year, meaning it came up $17,852 short. In the previous fiscal year, 2017-18, it didn’t need to make a pension contribution, because the pension at that time was 133% funded.

Gustafson and GPCRDA attorney John Gillooly estimate that there are between eight and 12 people receiving a pension from the GPCRDA’s former incinerator in Clinton Township, which ceased operations in 1999.

Despite the unexpected cost, Gustafson said the GPCRDA was  able to absorb it because of the increased administrative fee, which went from $1 per ton of trash to $3 per ton of trash as of the start of the 2017-18 fiscal year.

At the July 9 meeting, the board voted unanimously in favor of a budget of $499,900 for the 2019-20 fiscal year, which started July 1. For the new fiscal year, the budget has set aside $27,175 for a pension contribution, although officials are hopeful they won’t need to spend the money, considering how close the pension was to the 120% funding mark during the last fiscal year.

“I would think we should be OK,” GPCRDA Board Chair Brett Smith said. “I can’t imagine paying (into the system) next year.”

Aside from the pension underfunding, “It looks like pretty much everything else is on track,” Gustafson told the board.

The 2019-20 budget is “pretty much flat,” said Smith, noting that it’s almost identical to its predecessor.

Smith praised Gustafson to keeping the GPCRDA’s finances in order.

“I think we’re solvent,” he said. “We have great people running our finances. Our audit always comes back with flying colors.”