TRAVERSE CITY — Finances are again expected to dominate discussion at Wednesday’s Grand Traverse County Board meeting, after administration received both the pension fund valuation and the annual audit earlier this month.
The 2019 valuation from the Municipal Employees Retirement System of Michigan was received June 18, said County Administrator Nate Alger.
Both assets and liabilities of the county’s pension plan are higher than projected and the fund is slightly better off than it was at the end of 2018, information provided by Alger shows.
The county has approximately $54 million under management with MERS, the Lansing-based nonprofit retirement services company that manages pension plans for hundreds of municipal units in the state.
At the end of 2018, MERS rated the pension fund as having a 53 percent funded ratio and a market value funded ratio of 48 percent. At the end of 2019, the funding ratio was 54 percent and the market value funded ratio was 53 percent, Alger’s overview shows.
Funding ratio is an actuarial term that looks at a fund’s performance over time, MERS data shows, while market value is a precise number, a snapshot in time, of an asset’s value on a particular date.
To calculate funding ratio, until recently MERS used an amalgamate of 10 years but switched to a shorter time frame — five years — in 2015, as previously reported by the Record-Eagle.
This process is also know as “smoothing,” County Finance Director Dean Bott said.
Commissioner Gordie La Pointe is not a fan of smoothing, and would prefer to receive financial statements from the fiduciary in plain language, he said.
“If their goal is to be confusing, they’ve achieved it,” La Pointe said, of MERS valuation reporting.
“They make it very complex and almost impossible for anybody to really comprehend what’s going on.”
On June 24 commissioners decided to schedule a study session sometime in July to consider their options for withdrawing from their agreement with the nonprofit fiduciary. Several commissioners, including La Pointe, were critical of MERS’ performance.
The date of the study session has yet to be announced, though Alger and Bott did circulate a portion of the county’s contract with MERS which discusses withdrawal.
“We put in a record amount, 2019 was a good year for the stock market and yet we only moved the needle one point,” La Pointe said in a telephone interview Monday. “Our 13 percent return was disappointing, that’s for sure.”
Also June 18 the county received the results of its state-mandated Comprehensive Annual Financial Report, which County Finance Director Dean Bott will submit to commissioners Wednesday.
Vredeveld Haefner, LLC, a consultant certified public accounting firm in Grand Rapids was contracted to perform the audit and found no significant disagreements in financial accounting of the county’s approximately $39 million 2019 general fund budget.
La Pointe said he plans to ask whether the MERS valuation and the annual audit show the same figures for the pension fund and if not, why not.
The audit shows the pension liability at $94 million and the MERS valuation shows $99 million, La Pointe said.
“From what I can see they show different numbers,” La Pointe said, “and that’s one of the things I want to talk about at the meeting.”
The meeting will be held remotely July 1 beginning at 8 a.m. The public is invited to attend by watching the livestream at http://gtcmi.2.vu/bocstream or by calling 408-418-9388 and entering pin number 792 476 402 when prompted.