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ESCANABA -- The city of Escanaba approved resolutions Thursday to exit the Michigan Municipal Employees Retirement System, commonly known as MERS, and self-manage the investments that support the program.
At the start of Thursday's meeting, Tara Langham addressed the council during public comment to present a letter from MERS CEO Kerrie Vanden Bosch. Langham did not read the letter, but shared responses to some of the concerns raised by the council the last time MERS presented to the council on Oct. 5.
Specifically, Langham said MERS provided a list of the private investments backing the defined benefit pensions in February. She also said that, despite concerns the valuation from MERS could not be independently justified, the programs investments are calculated by a custodial bank that is regularly audited, and MERS itself provides regular financial reports.
"I provide you this information tonight just to highlight that we do have a deep commitment to the city and and a track record of transparency to our members," said Langham.
However, City Manager Jim McNeil, who had been sent the letter prior to the meeting, took issue with some of MERS responses to the city's concern.
"There were a couple of things in the letter that I thought were misleading," he told the council.
According to McNeil, the city requested more detailed information about MERS investment holdings than was provided. He said the city was provided with a list of investment managers, but was not given enough information for the city to know what the actual investments were.
"It wasn't the level of transparency that we had asked," said McNeil.
He said it was also not a Freedom of Information request, as stated in the letter.
While McNeil did not argue that the assets were valued by a third party, he said the way the assets were valued was not shared with the city.
"There are a variety of ways for valuation. We're familiar with what they are, and it would have been nice to at least have a peek and make sure that we're comfortable with the assumptions used," he said.
There were also concerns from the city about MERS' actuarial smoothing policy, which was changed after the 2008 financial crisis. MERS pointed to the new methods used, but McNeil was more concerned with the program's track record.
"Our point was that there's a track record of poor policy, and it's been repeated time and time again," he said.
The council voted in a 4-1 split vote to pass a resolution terminating the agreement with MERS. They then voted in a second 4-1 split vote to approve a resolution adopting its own plans and policies, pending minor typographical corrections by an attorney.
Voting against both resolutions was Council Member Todd Flath. He did not provide reasoning for his vote Thursday.
In other business the council
-- Approved a retention agreement with Edelson PC and Goodman Acker PC related to ongoing litigation that could provide the city with funding to treat for PFAS, per- and polyfluoroalkyl substances, in the water supply. The city's PFAS levels are not at a level of concern, however participating in the suit may prepare the city if treatments are mandated in the future.
-- Approved the purchase of two 2023 GMC Savana cargo vans for the water department with ladders and other on-vehicle equipment, for a cost of $88,000. The vans will be purchased using grant funding and, according to Water Superintendent Jeff Lampi, necessary for ongoing waterline replacement work.
-- Approved retaining the services of C2AE for engineering services related to lead service line replacements at a cost not to exceed $2,320,900. The services are part of an American Rescue Plan Act (ARPA) grant through EGLE's Drinking Water State Revolving Loan Fund, which awarded $20 million to the city for the line replacements.
-- Approved retaining C2AE for engineering services for the water treatment plant filter bed rehabilitation project in an amount not to exceed $8,000. The filter repair in necessary to produce clean, potable water for residents.
-- Approved obtaining the services of Pearson Asbestos Abatement to carry out a non-destructive inspection of the Ludington lift station to search for asbestos, lead, and cadmium. The inspection, which is necessary whether the building is demolished or renovated, will cost $2,000. Funds were budgeted for the inspection.