MENOMINEE —  The Menominee County Board of Commissioners voted Tuesday to invest more money into its MERS account as the stock markets continue to be volatile. With the current COVID-19 coronavirus pandemic, the stock markets have seen several steep inclines and declines over the past few weeks and the county hopes to invest more money while it remains low.

“MERS (Municipal Employees’ Retirement System) of Michigan is an independent, professional retirement services company that was created to administer the retirement plans for Michigan’s local units of government on a not-for-profit basis,” according to the organization’s website.

“As everybody probably remembers we have a half-million dollars set aside now and we’re making additional payments to MERS,” County Administrator Jason Carviou said Tuesday.

The initial plan was for Menominee County to invest $10,000 a month into its MERS account over 50 months, but if market conditions become “right” the county would consider investing more money into its account.

Carviou said now may be the best time make additional payments into MERS.

He recommended adding a $25,000 lump sum into the MERS fund from the half-million dollars Menominee County has set aside for future MERS investments. On top of this, he said to increase the county’s $10,000 a month investment to $30,000 until the stock market recovers and then go back to the current $10,000.

“Basically, when the market place was at a high it was just over 29,500 points, roughly four weeks or so ago, it dropped to a low of 18,200 points Monday. Today (Tuesday), it’s up over 2,100 points and it’s currently sitting at 20.704 points. That’s a 33% increase in one day since 1933,” he said.

Carviou said the stock markets are in flux: “it’s not even a roller coaster right now. You’re at the Rocky Mountains and then Illinois.”

He explained to the board there are two competing economic theories to explain the steep incline and decline the stock market has seen over the past few weeks.

The first theory is that the stock market plummeting was caused entirely by the coronavirus outbreak but the underlying economy is still strong. Once the executive orders that dictate people to stay in doors and to shut down non-essential places of employment are lifted, the economy and stock market will recover.

The second theory states that the COVID-19 pandemic exposed issues the economy already had and this is actually the beginning of a recession.

Carviou said MERS has an “overall portfolio that isn’t invested completely in the stock market, so we (Menominee County) has not seen as much loss as an individual’s stock portfolio would see.”

Menominee County’s losses over the past three weeks are about 4% whereas the average stock holder’s losses are closer to 8%.

He explained that Menominee County would see higher gains as the stock markets recover, the more money it has invested. MERS will invest the county’s money the day its received.

“Regardless of what happens here, as long as the stock market recovers slowly, putting more money in will be beneficial for us,” Carviou said. We’ve lost all this money and we will be paying out benefits with that, by putting more money in we will pay those benefits and let our portfolio recover.

“I don’t know what the best way to go is, because I don’t know if there will be a recovery or a recession; but I do believe you need to put in some risk to get some reward every once in a while.”

On top of the investment from the general fund, Carviou also recommended the county board to take money from the Menominee County Road Patrol fund balance to put into its MERS plan.

“They have plenty of money in their fund balance right now to cover it. The plan would be to put $50,000 lump sum, upon approval, and then $20,000 a month over the next six months, unless the stock markets do something funky and we can pull that money,” Carviou said.

Commissioner Jan Hafeman suggested instead to put the $50,000 in now and to “play the rest by ear.”

“We need to see how it’s actually trending,” she said.

Carviou said he can’t give the county board an exact day he would put money into the county’s MERS account. He must watch the markets and choose a good time to make that investment, especially since the markets have been erratic.

“At most you’re only risking $75,000 and you would have to see a catastrophic drop in the stock market to lose that $75,000 before it’s paid out in benefits anyway,” he said.

Hafeman said: “You’ve just seen that catastrophic drop.”

Carviou said he did believe the stock markets have dropped as low as they will get, or very close to it.

“There has to be a floor here. If we haven’t hit the floor already, then we must be getting pretty close. Anything more than this, the economy would suffer greatly if it goes down much more,” he said. “That’s my personal opinion, I’m not an investor.”

Commissioner David Prestion, who attended the meeting remotely using a conference call, said he agreed with Carviou. 

Commissoiner Larry Schei, also via conference call, agreed with Prestin.

Carviou said the board needs to make a decision right away because of how volatile the stock markets have been and if there’s another major upswing, the time to invest would have passed.

The commissioners voted unanimously to allow Carviou to make additional payments into MERS, as discussed, over the next six months.