Transparency is the key to providing future accountability

Published 10:30 am Thursday, May 7, 2015

Michigan is facing a looming problem that is already affecting our schools and all levels of state government: our unfunded accrued liability, also known as legacy costs. These costs are the difference between the retirement benefits promised to or earned by public employees and the amount of funds available to provide them.

It was reported last year that Michigan’s unfunded liability exceeds the entire state budget.

We must shine the light on our liabilities during the state’s budgeting process to improve public accountability, ensure we address the problem and protect these important systems now and in the future, especially in the era of term limits.

That is why I have worked with Sen. Darwin Booher to introduce legislation to require that the state’s unfunded liabilities be included during the budget process — beginning with the governor’s budget plan in February.

Senate Bill 292 would require that the governor’s budget recommendation include the current Unfunded Accrued Liability (UAL) for retiree health care and pensions. SB 293 would require the state’s revenue estimating conference participants to report on the state’s unfunded liabilities. Conference members review economic forecasts and financial data to estimate how much the state can expect to budget for in the next fiscal year.

Our reforms are about ensuring that lawmakers and the public have a comprehensive picture of the state’s financial situation when making critical budget decisions.

Most importantly, it’s about supporting the thousands of people who currently rely on the state’s retirement systems or are counting on them to be there when they retire and ensuring that our children and grandchildren are not stuck with a multi-billion-dollar bill.

Our plan is a two-part solution: identify what we need to pay down; and show what we are doing about UALs in each department budget.

Thankfully, in the last four years, we have accomplished a great deal when it comes to reducing our debts — investing more than $700 million annually to prefund our UALs and putting us on pace to eliminate our unfunded liabilities within three decades.

It is vital to continue this plan in the future to protect residents’ hard-earned pensions as well as the fiscal health of our state.


Sen. John Proos, R-St. Joseph, represents Southwest Michigan.