Traverse City Record-Eagle

Newsmakers 2012

December 17, 2012

Newsmakers: New officials face big problem

Unfunded pension liabilities an important, costly issue

Editor's Note: Part of a series of stories about people, places and events that made news in the Grand Traverse region in 2012.

TRAVERSE CITY — New administrators were hired in Grand Traverse and Leelanau counties in 2012, and both face one of the most pressing problems for governments throughout Michigan:

What to do about unfunded pension liabilities for public employees.

Grand Traverse County Administrator David Benda, who took office in June, said the unfunded retirement liability for county employee pension plans topped $41 million as of Dec. 31, 2011.

"We have to address that legacy cost, just as every local government is having to do," said Benda. "It's an important issue, but it's not like we are on the operating table struggling for our lives. It is a significant expense in our budget, and we are looking at some options.

"One is to bond for that and stretch it out over a longer period of time and reduce the annual costs," Benda said. "The cost of the bond is very low, and we would need to get a financial planner and consultant to do that for us."

In Leelanau County, where Chet Janik became the county's new administrator in May, the unfunded liability for the Municipal Employees Retirement System is $4.8 million. He said it's a top priority to find a way to pay that bill.

"Right now we have approximately five different pension plans depending on when was (an employee's) date of employment," Janik said. "It took me a while to get a grip on it all."

Janik said he wants to work with the Leelanau County Board of Commissioners to also lower long-term costs for pensions. The county made a $1 million payment to the MERS system last year and just authorized a payment of another $250,000 last week.

"We are looking at modifications to our plans," Janik said.

Benda replaced long-time administrator Dennis Aloia, who departed for a job in Oregon. Benda previously was an administrator in Midland County. He's getting solid reviews from the county Board of Commissioners. The board voted last week to raise Benda's overall pay by about $15,000. His salary is now $120,000.

Benda said he wants to address a structural budget deficit of $1 million and implement a strategic planning process. He also wants to help residents do county business without having to drive to the county government center. He wants to beef up the county's online presence by making sure the county's website has as much information as possible on it, including forms and answers to commonly asked questions.

Benda said he's optimistic about the county's future.

"I think we are in stable financial condition," Benda said. "We have a double AA bond rating, which is very good. Building permits are up, a lot of the jobless rate has dropped in Grand Traverse County. There is a lot of positive economic indicators out there for us."

Janik is a former administrator at Northwestern Michigan College and Charlevoix Public Schools. He took over for Eric Cline, who resigned after a little more than two years on the job. Janik also received positive reviews from his bosses. He heard praise for his work in addressing controversy at the Leelanau County Commission on Aging. Two COA employees resigned after it was discovered the county was overpaying for mileage reimbursements to housekeepers working with the elderly.

Janik's investigation found the overpayments cost the county nearly $100,000.

Janik wants to insure stability in the county's $11 million annual budget in 2013 and develop good working relationships with four newly elected county commissioners.

"Our biggest goal is to be financially conservative," Janik said.

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