State Retiree Benefits Fact Sheet – Michigan

Michigan faces a substantial bill coming due for health care benefits for retired state employees, and even greater costs are likely to emerge for retired teachers. Michigan is also struggling with its pension benefits—its contributions to the pension system have suffered in recent years because of the state's budget problems. About 10 years ago, Michigan took the unusual action of shifting new employees to a defined contribution plan. The only other state that has followed this path in recent years is Alaska. Even so, Michigan has a substantial number of employees still in defined benefit plans. The state showed a slight uptick in the funding level for its defined benefit plans in 2006, but it has fallen short of paying the annual required contribution in the last five years. On the non-pension side, Michigan is one of a handful of states that has a long record of calculating the costs of retiree health care benefits, which other states are just now evaluating. It is one of just 13 states that had set aside any assets for that bill as of 2006.