Craig Cugini, city manager, city of Ishpeming

ISHPEMING — A grant from the Michigan Department of Treasury will bring the city of Ishpeming’s retirement system to nearly being fully funded.

According to a news release from the city, Ishpeming applied for and received a $1.7 million grant through the Michigan Department of Treasury’s Protecting MI Grant Program. Money from the grant will be applied to a surplus division in Ishpeming’s Municipal Employees’ Retirement System.

“We are truly committed to our current and former employees, and once the audit revealed our system was underfunded, we knew we had to take care of the city of Ishpeming retirees, who served this community and its residents, so they can have a secure retirement,” City Manager Craig Cugini said in the news release. “The first step in turning things around included bonding our pension with taxable bonds to help fund the program, bringing us to 95% in MERS funding, which set us apart from other municipalities facing a similar situation. And then when the Michigan Treasury grant became available, we recognized the funding opportunity as yet another way to ensure our former and current employees are taken care of.”

MERS is an independent, professional retirement services company that was created to “administer the retirement plans for Michigan’s local units of government on a not-for-profit basis.” Earlier this year under the Fiscal Year 2022-23 budget, Michigan Treasury appropriated $750 million to “establish and operate a local unit municipal pension principal payment grant program for qualified retirement systems with a funded ratio below 60%.”

According to the city’s news release, parameters of the funding eligibility allowed for retroactive payments. The city’s Dec. 31, 2021, financial statement audit report showed that Ishpeming’s MERS was 50.3% funded, which is below the 60% ratio.

“Ishpeming took control of a situation that many municipalities were facing several years ago, with market fluctuations causing severe drops in pension fund levels across the country,” state Rep. Jenn Hill, D-Marquette, said in the news release. “The early step to bond the pension, starting in 2021 and concluding in 2022, shows the city’s commitment to its retired public service members. The additional funding secured once available through the state in 2023 shows its strategic know-how in navigating resources for its community.”

In 2017, the city was identified as having an underfunded pension system, which required the city to create a MERS corrective action plan.

This includes the development and implementation of corrective options for the local unit of government to address underfunded status.

This plan along with the monitoring update can be found on Ishpeming’s website under the finance department section.

“A pension is a promise to our current and former employees,” Mayor Jason Chapman said in an email. “Securing another $1.7 million to nearly fully fund out retirement program is a great step to ensure our promise is kept. Our employees, current and former, are one of our major sources of pride as a city. These people have dedicated their lives to our citizens, and it’s our job as a city to protect their futures.”

More information on the Protecting MI Pension Grant Program can be found at michigan.gov/treasury/local/grants/protecting-mi-pension-grant-program.

Dreyma Beronja can be reached at 906-228-2500, ext. 542. Their email address is dberonja@miningjournal.net.