Rogers City Aims to Tackle Massive Pension Problem with Bonds

The legacy cost of pension programs are causing serious financial stress for communities across the state.

An underfunded pension program could leave Rogers City in dire straits.

The city says they have a plan to tackle the issue because if they don’t do it soon, bankruptcy is a very real possibility.

“If this pension issue isn’t addressed there is unquestionably insolvency, bankruptcy and potential emergency management are in this community’s future,” City Manager Joe Hefele, said.

Hefele says out of the more than 500 cities and villages in Michigan, Rogers City may have it the worst.

The city’s pensions are funded through the Municipal Employee Retirement System of Michigan

Right now the city can fund only 47 percent of what they’ll need to, leaving more than $5.8 million in unfunded liabilities.

“Even [with] cutting huge chunks of money, there still isn’t enough money to be able to pay it, there’s no way to bring in any additional revenue to pay it either,” Hefele, added.

It’s incredibly daunting but Hefele says they do have a plan.

Those on pensions will still get their money but the city will effectively end their pension program, offering new employees 401k type plans instead.

To tackle the existing $5.8 million, Hefele says they plan to issue bonds, as a result saving the city millions of dollars over the next two decades.

“The bonding leaves us with a payment that’s affordable, in other words if we don’t do this, very soon our payments are going to shoot up from where they are right now an already high $450,000 up to six, seven, 800,000 dollars a year, which is more revenue than we have at our disposal,” Hefele, explained.

The city hopes to start issuing those bonds by the end of the year.