State Dials Back Pollyannaish Pension Assumptions, Admits Deeper Hole [Michigan Capitol Confidential]:
"Although the unfunded liability of the Michigan school employee pension system increased by another $2.4 billion in 2016, it wasn’t for the usual reasons.
Instead, it was because Gov. Rick Snyder's administration became more conservative in estimating future returns on pension fund investments.
In 2016, pension managers stopped assuming that their investments would return an average of 8 percent annually in the future, dropping their predictions to 7.5 percent instead.
If a fund’s managers expect lower investment returns than they did before, the fund needs to have more money in contributions up front to meet its obligations.
The problem with the school pension system is that the state was already not saving enough.
So the change increased the pension system’s unfunded liability — the gap between how much it does have and how much it should have to cover its obligations — from $26.7 billion to $29.1 billion..."