Charters and Public School Academies
Governmental Accounting Standards Board (GASB)
Charters and Public School Academies
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The following terms are used in the Employer Contribution Rate Tables published by ORS each year.
Employer Contributions: The total percentage of reportable compensation charged to all Michigan Public School Employees Retirement System reporting units, which is the sum of Pension Normal Cost, Pension Unfunded Actuarial Accrued Liability (UAAL), Early Retirement Incentive Program, Health Normal Cost, Health UAAL, MPSERS UAAL Rate Stabilization and (in fiscal year 2014-15) the One-Time MPSERS Liability Prepayment.
Member Contributions: The contributions the employer withholds on behalf of the member related to Member Investment Plan (MIP), Basic, Pension Plus, Pension Plus 2, 3% healthcare contributions, Defined Contribution (DC), and Personal Healthcare Fund (PHF), including the employer matching contributions toward DC.
Pension Normal Cost: This portion of the contribution rate is determined each year by the retirement system's actuary and is charged as a percentage due on payroll. This represents the cost of pensions for active employees earning another year of service credit in the retirement system.
Pension Unfunded Actuarial Accrued Liability (UAAL): This portion of the contribution rate is also determined each year by the retirement system's actuary and is charged as a percentage of payroll. The UAAL is the difference between the retirement system's assets and the pensions accrued (for past service) to current and future retirees. Each year, a payment is made against the UAAL reflecting the amortization payment and interest. NOTE: The combined pension and health UAAL contributions are capped at 20.96 percent of payroll for non-university reporting units (2012 PA 300) and at 25.73 percent of payroll for university reporting units (2016 PA 136).
Health Normal Cost: This portion of the contribution rate is determined each year by the retirement system's actuary and is charged as a percentage due on payroll. This represents the cost of retirement healthcare benefits for active employees earning another year of service credit in the retirement system.
Health Unfunded Actuarial Accrued Liability (UAAL): This portion of the contribution rate is also determined each year by the retirement system's actuary and is charged as a percentage of payroll. The UAAL is the difference between the retirement system's assets and the health benefits accrued (for past service) to current and future retirees. Each year, a payment is made against the UAAL reflecting the amortization payment and interest. NOTE: The combined pension and health UAAL contributions are capped at 20.96 percent of payroll for non-university reporting units (2012 PA 300) and at 25.73 percent due on payroll for university reporting units (2016 PA 136).
DB: Defined Benefit employer contributions for active Defined Benefit members (Basic, MIP, Pension Plus, Pension Plus 2, and members in the health care premium subsidy), qualified participants and former qualified participants.
PHF: Personal Healthcare Fund (PHF) is a defined contribution plan. A DB retiree with PHF is also a qualified participant in the DC plan. Employers pay DC/PHF employer contributions and UAAL per PA 75 of 2010 and PA 300 of 2012.
DC: Defined Contribution employer contributions for qualified participants (Pension Plus, Pension Plus 2, Defined Contribution, and Personal Healthcare Fund).
Qualified Participant: an employee who is a participant in the Pension Plus, Pension Plus 2, Defined Contribution (DC) plan and/or the Personal Healthcare Fund (PHF).There is no distinction between pre- and post-retirement qualified participants in the DC plan. They are either working or not, with DC/PHF employer contributions and UAAL per PA 75 of 2010 and PA 300 of 2012.
Former Qualified Participant: an individual who was a qualified participant and who terminates employment. When former qualified participants are hired by a reporting unit, they become qualified participants.
MPSERS UAAL Rate Stabilization: State funds are appropriated for MPSERS unfunded liabilities obligations in excess of the statutory cap of 20.96% for non-university reporting units (per PA 300 of 2012) and the statutory cap of 25.73% for university reporting units (per PA 136 of 2016). Reporting units who pay UAAL contributions receive monthly payments from the State of Michigan (November – August), representing the amount of UAAL contributions above the rate cap. These payments represent a funding source to help reporting units pay their retirement obligations. The Office of Retirement Services invoices each recipient reporting unit each month (November – August), and reporting units are expected to submit funds in the same amount back to ORS by the due date shown on the invoice.