Source: Grosse Pointe News Online

Surplus a misnomer

by Brad Lindberg Staff Writer

September 26, 2013

CITY OF GROSSE POINTE — A budget surplus is only a surplus when the extra money isn’t already spent.

“Surplus is a misnomer,” said Councilman Chris Walsh. “You don’t have to figure out ways to spend it. It’s already been figured out.”

Walsh and the City of Grosse Pointe council intend to transfer about $200,000 from last fiscal year’s general fund surplus to cover part of this fiscal year’s retiree healthcare fund.

“It’s either pay now or pay later,” said Kimberly Kleinow, finance director.

Retiree healthcare costs this year are projected to be $450,000, she added.

Until recent years, surpluses were allocated to the capital projects fund.

“We decided to transfer that surplus to retiree healthcare because this is such a growing problem for the city,” Kleinow said.

Retiree healthcare is part of the city’s Other Post-Employee Benefits account, an unfunded liability totaling $4,001,851 for existing retirees. The figure nearly doubles to an unfunded $7,036,940 when current employees are added.

Walsh called it a “looming unfunded liability.”

“We’re talking about huge amounts of money that are going to soon be a big issue for our general fund,” said Councilman Andrew Turnbull. “We need to try to get a handle on it because this is going to eat our budget alive.”

To slow the growing cost of retiree benefits, city officials reduced benefits last year to existing employees.

Before that, new hires were relegated to less costly plans.