South Lyon City Council Discusses OPEB Liabilities
October 30, 2021
By Mike Kruzman / email@example.com
South Lyon City Council completed its multi-meeting review of their financial audit, including pension and other retiree liabilities.
At their first meeting earlier this month, auditors from Plant Moran gave the City an unmodified opinion for their financial audit for their fiscal year which ends on June 30th. An unmodified opinion is the best a municipality can receive. South Lyon’s general fund was found to be “financially sound” with an unrestricted fund balance of $5-million. In terms of legacy costs and unfunded liability, the City’s pension fund is just over 69% funded.
At this past week’s City Council meeting, Council members dove into the other legacy cost, other postemployment benefits, or OPEB. Patricia Tiernan, South Lyon’s Finance and benefits Administrator, said the City provides medical and pharmacy benefits under the OPEB umbrella, and that this affects 45 individuals. The City only started its OPEB Trust Fund 2 years ago and now is at 25.7% funded, which Tiernan said is great.
Councilwoman Maggie Kurtzweil asked about an increased contribution amount over last year, and whether it was due to more individuals drawing off it, or if it was more from costs. Tiernan’s short answer was “yes to both.” Kurtzweil said it sounded to her like this benefit expense isn’t going away, and maybe they should consider additional contributions so what they are putting in doesn’t get eaten away.
Spencer Tawa of Plante Moran, told City Council that there are predictive measures in place for what the City will be paying out over next 30-40 years, and increases are being accounted for to keep the ratio from changing.