Detroit — The city’s financial officer on Monday said the city could add $30 million this fiscal year to pay into the city’s two pension funds, three times more than initially planned.
“It’s our expectation that … we’ll have an additional $20 million-$30 million that we’ll be able to set aside for the pension plans,” said CFO John Hill. “We’ll know that in a few days as we’re finalizing the audit.”
Hill made the remarks during a presentation on the city’s four-year financial plan to the Detroit Financial Review Commission.
His plan follows remarks by Mayor Mike Duggan in his State of the City address in February that a $491 million shortfall looms for the city’s pension funds, where massive legacy costs come due in 2024. He said his administration would bring in an expert to analyze estimates and had plans to set aside $10 million a year over two years from a budget surplus aimed at reducing the pension fund deficit.
The funds pay pensions to an estimated 20,000 Detroit retirees.
Bruce Babiarz, a spokesman for the Police and Fire Retirement System, applauded the news that the city could add more to lower the pension deficit.
“By addressing the issue proactively and potentially making a commitment of funding of up to $30 million to the Retirement Systems in this fiscal year, the city is clearly taking this important issue seriously,” he said in a statement.
Tina Bassett, spokeswoman for the city’s General Retirement System, said she was also pleased to hear the news.
“It’s wonderful,” she said. “We expect the city to keep its agreement and we’re watching it very closely.”
Last month, Duggan proposed a $1 billion balanced general fund budget for the 2016-17 fiscal year and presented it to the City Council. The proposed budget also calls for kicking in $10 million to the pension funds each year through 2020.
Detroit’s “grand bargain” relieves the city of much of the contributions to the General Retirement System and Police and Fire Retirement System through 2023. But in 2024, the city would have to start funding a substantial portion from its general fund.
On Monday, Hill said the city general fund had a $34.1 million surplus as of Jan. 2016.
The Detroit Financial Review Commission is charged with monitoring the city’s finances in the wake of its historic municipal bankruptcy.
Michigan’s Legislature established the Detroit Financial Review Commission in 2014 as a condition of the “grand bargain,” which sent some state money to bolster Detroit’s pension funds, as well as gathering donations from private foundations and the Detroit Institute of Arts to protect city-owned masterpieces from being sold off to pay creditors in the city’s bankruptcy.