The big problem with the Norton Shores pension fund | Fox17

The big problem with the Norton Shores pension fund | Fox17

NORTON SHORES, Mich. – Underneath the top-ranked school system and the picturesque setting beside Mona Lake, the city of Norton Shores has a problem.
It may not rear its head today or tomorrow, but in years to come, employees working for the city could be in trouble when it comes to the city’s pension fund.
It’s underfunded – way underfunded.
And if city officials don’t make changes to correct the deficit now, it could spell trouble down the line.
“These retirees are counting on this,” said Norton Shores resident and retired financial advisor Jim Riley.
“If you have a fiscal cancer, and you avoid doing any type of treatment for that fiscal cancer, it will get worse. 
And we have a fiscal cancer.”
Riley came across the problem while reading a Mackinac Center study on underfunded pension funds in the state of Michigan.
“As I looked through the list and got lower and lower and lower, I was shocked to see that Norton Shores - my town - was the 6th lowest funded pension fund of all of the top 100 cities in the state of Michigan,” said Riley.
“That’s a big, scary deal.”
Essentially the underfunding affects two separate reserves: the pension itself, and the post-employment health care fund.
The pension fund, just 51% funded, is short nearly $20 million of where it needs to be.
The health care fund is far worse – just 4% funded and nearly $38 million short, according to documents from the city.
“We have two funds that appear to be really falling off a cliff,” said Riley.
“The annual budget for Norton Shores is about $23 million, so this is almost a little less than three times the annual budget.”
So the question now for Riley and nearly 100 city employees counting on those benefits is, how does it get fixed?
Similar to Detroit’s bankruptcy issue years back, raising taxes would only serve to deter business from coming in or staying for that matter..."
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