Public Act 202 of 2017 Waiver Application Criteria

Background

As required by Public Act 202 of 2017: “The state treasurer shall issue a waiver of the determination of underfunded status for a local unit of government if the state treasurer determines that the underfunded status is adequately being addressed by the local unit of government.”

Approval Criteria

General guidelines are listed below to help your local government decide whether to apply for a waiver. Ultimately, waiver approval or disapproval is at the discretion of the State Treasurer; however, waiver applications should generally demonstrate at least one of the following seven criteria: 

• In general, local governments that were previously granted a waiver should demonstrate improvement in their underfunded status in the subsequent year. Improvement can be measured by an increase in the funded ratio and/or a decrease in the Actuarially Determined Contribution (ADC) as a percentage of governmental revenue.
• There was a mistake in the filing process and the local government is not actually underfunded.
• Using updated data, such as a more recent actuarial valuation, the local government is not underfunded.
• If a local government fails to calculate an ADC within their audited financial statement and triggers underfunded status, the local government may file a waiver application to Treasury that includes the calculated ADC.
• The local government demonstrates their underfunded status will be addressed within four years.
• The local government is a non-primary government (e.g. road commission, authority, etc.) and demonstrates their ADC is less than 10% of governmental revenues for pension systems or less than 12% for OPEB systems.
• When adding enterprise fund revenues used specifically to pay retirement costs with governmental fund revenues, your ADC as a percentage of combined revenues is below 10% for pension systems and less than 12% for OPEB systems.