Mr. Robert Attmore, Chair
Governmental Accounting Standards Board (GASB)
401 Merritt 7
PO Box 5116
Norwalk, CT 06856-5116
Dear Mr. Attmore:
On behalf of Michigan’s 28 public community colleges, the Michigan Community College Association would like to comment on the accounting changes that are being proposed by GASB 68 which would require a new “Net Pension Liability” reporting on college financial statements to represent each college’s share of unfunded liability from the Michigan Public School Employees Retirement System (MPSERS) plan. This will be a significant change for every community college and k-12 school district in the State of Michigan.
As you may know, state law in Michigan requires public k-12 school employees and community college employees to participate in the MPSERS which is administered by the State Office of Retirement Services. The State Treasurer serves as the investment officer, who takes direction from the 12 member MPSERS board, most of whom are appointed by the Governor. Therefore, control, management, and oversight of the system lies 100% with the State of Michigan, with essentially no responsibility or authority given to the colleges to control program structure or system expenditures.
It is our opinion that since participation in MPSERS is required by State law and that the State controls all aspects of the retirement program, that any resulting unfunded liability of the system should be presented on the financial statements of the State of Michigan, and not on those of the individual colleges. With these proposed changes, colleges will see significant liability reflected on their balance sheets with a corresponding reduction in unrestricted net assets which could have devastating effects on future borrowing, community relations, and fund raising. The new requirements of GASB 68 seem to be a misdirected, unfair, unwarranted, and an unjustified intrusion into local college finances.
Thank you for the opportunity to comment on what we believe to be a serious matter related to financial reporting. We hope that these comments result in the re-examination of the GASB 68 recommendations.