Audit shows "clean" opinion; commission approves corrective action plan for retiree health care

Plant Moran auditors told the Mount Clemens City Commission the city received an unmodified (clean) opinion on its 2018 financial statements and showed improvements across major funds, but auditors flagged retiree health (OPEB) as the primary long-term liability requiring attention.

Auditor Dave Harrington summarized the report: "It's called an unmodified opinion... a clean opinion," and said general fund revenues for the year ended June 30, 2018 were about $10,900,000 with an ending fund balance of about $5,200,000. He told commissioners the pension plan actually shows an asset, but the city's OPEB liability was approximately "52,000,000." Harrington and auditor Joe Warner stressed the positive trend while noting the health-care liability remains the largest single exposure.

In response, the commission approved a corrective action plan required by Michigan Public Act 202 to address underfunded retiree health benefits. The plan commits $50,000 in fiscal year 2019, $500,000 in fiscal year 2020, $500,000 in fiscal year 2021, and annual contributions of $180,000 beginning in fiscal year 2022 continuing through 2045. City staff said implementation must start within 180 days of Municipal Stability Board approval and that the plan aims to reach at least 40% funding of the actuarial liability within 30 years.

The commission also approved an investment management services agreement with Robinson Capital Management, LLC to advise on investing cash and managing portfolios; estimated annual fees are $7,500 for portfolios in the $3–5 million range. Commissioners praised staff for financial improvements and credited voters for supporting millage increases that helped restore fund balance.

What the decisions mean: The audit's clean opinion affirms that city financial statements can be used for decision-making. The corrective action plan establishes a funding path for OPEB obligations required by state oversight rules. The investment agreement provides professional advisory support for the city's cash and portfolio management.

What’s next: Staff and the commission will continue reviewing retiree health cost savings with bargaining groups, insurance advisors and providers and will begin implementing the corrective action plan when Municipal Stability Board approval triggers the 180-day start requirement.