MARQUETTE — Northern Michigan University was returned funds of about $9 million as a result of an error in billings by the Michigan Public State Employees Retirement System (MPSERS) that occurred over the past nearly two decades. NMU President Fritz Erickson said the funds will be designated for future payments on NMU’s share of the MPSERS unfunded pension liability, which exceeds $40 million that will be owed through 2036.
NMU is one of seven universities to be returned funds. From 1945-56, Michigan colleges that were moving to university status were mandated by the state to participate in the MPSERS program. This impacted seven of the state’s current 15 public universities.
Although the universities stopped participating in MPSERS in 1996, payments to fund the pensions of participating employees have been required to continue since 1997. During the development of updated statements in compliance with new Government Accounting Standards Board requirements, the Michigan Office of Retirement Services found that the seven universities had been overcharged for pension fund payments to MPSERS.
“Since 1997, some payments made each year were not reported to the actuary, creating an overpayment to the pension fund,” Vice President for Finance and Administration Gavin Leach says. “As a result, the seven MPSERS universities, including Northern Michigan, paid more money into the system than required by law and are entitled to be returned those excess payments.” He added that it is important to understand that the overpayment involves university money only and not funds contributed by employees to their pension accounts.
Upon discovering the error, the Michigan Office of Retirement Services worked with actuaries to compute each university’s overpayment, including accrued interest. The funds were returned to the MPSERS universities on Tuesday.
NMU President Fritz Erickson expressed appreciation for the immediate response by the state in addressing the overpayment issue.
“The response of Michigan’s Office of Retirement Services has been impressive and we thank them for their quick work on this matter,” said Erickson. “It is important to understand that the funds being returned are not a windfall. They will need to be held in reserve and used for meeting our future MPSERS obligations.”