Posted on 06/05/2015 9:55:16 AM PDT by MichCapCon
The unfunded liability of the Michigan public school pension system increased from $25.8 billion to $26.5 billion from 2013 to 2014, according to an actuarial report released in May. The system's growing costs have been called a “budget killer” and are taking an increasing amount from the funding Michigan devotes to schools.
The state has agreed in recent years to essentially pick up increases in the cost of the school pension system. These payments have risen from $155 million in 2012 to $796 million in 2015, according to the Senate Fiscal Agency.
Democratic politicians and union representatives have claimed that increased state payments are taking money away from the classroom, although the cost of the system is the same either way, with the money ultimately all coming from the same source: taxpayers. The claim also presumes that expenses for teacher fringe benefit should be excluded from what are considered "classroom costs."
Meanwhile, the retirement system's growing costs affect every school district in the state.
For example, Ann Arbor Public Schools is currently embroiled in contract dispute with its teachers union. Both the union and the school board have filed unfair labor practice complaints against the other as the current contract nears expiration.
The state’s payments to Ann Arbor Public Schools to cover employees' pension costs has increased from $2.2 million in 2011-12 to $10.9 million in 2014-15, according to the Michigan Department of Education.
“Michigan is struggling to pay for massive unfunded liabilities for school employees,” said James Hohman, the assistant director of fiscal policy for the Mackinac Center for Public Policy. “Neither teachers nor taxpayers benefit from promising pension benefits and paying for them later. This is a risk that needs to be contained by closing the system.”
Unlike new state employees and many new local government employees, new teachers are still entering the pension system.
Sen. Phil Pavlov, R-St. Clair Township, has introduced Senate Bill 102 that would close the Michigan Public School Employees' Retirement System defined-benefit plan to new school employees hired starting July 1 and instead replace it with a 401(k)-type pension plan. That plan would make it impossible for the state to rack up additional unfunded liabilities.
MPSERS has 204,512 retirees and beneficiaries receiving payments. The average annual pension is $21,667. There are 199,674 current employees enrolled in MPSERS.
Pension liabilities are killing many local governments.
Bankruptcy is the biggest danger facing USA.
Much bigger than ISIS+AL QAEDA combined.
Those numbers are astronomical. It’s really hard to believe.
How hard is it to understand?
Who would vote Democrat if they can’t give you stuff?
What? Are they going to run on their fiscal responsibility with taxpayer money?
If they can’t give stuff to their voters, the Democrat Party is dead.
My sister in law took early retiremeent years ago in her early 50’s from the MI school system. Always the LIB moonbat, she may be in for an unpleasant surprise.
Don’t believe that a state can go bankrupt.
They can cut pensions and benefits.
Once again MCC writes a story only telling half of it.
Yes Teachers are still entering the retirement system, however the plans are now defined contribution and NOT defined benefit plans that were around years ago. It was in the late 80s when employees had a choice to either stay in the original plan or opt for the MIP plan. Which offered yearly COLA increases for retirees, but they had to contribute up to 6% of their pay to join it.
Then in the Early 90s all new hires were required to join the MIP plan and the older one was not available.
In 2012 they went to another plan. A defined contribution plan that you also are now mandated to pay into for your healthcare portion in addition to the retirement.
Finally, Most of these stories NEVER go back to the root of the problem that the Politicians created themselves. Going back to the Blanchard Administration the Governors didn’t fully fund the retirement system. That has happened in all Administrations since...The administrators of MPERS also decided when the Stock Market was soaring in the late 90s to give each retiree an extra check each year. No one took a second to think just perhaps the good times would ever stop.
But it is the Employees that are to be blamed. Not the politicians and Fund Managers that rode off in the sunset with their Million dollar golden parachutes.
The employees should be blamed; teachers’ unions are the de facto owners of the Democratic Party (which is why Obama injects the hiring of new teachers into every discussion, regardless of whether or not it is relevant to the subject matter at hand).
These pension liabilities have destroyed NJ; teachers aren’t the victims here, but the parasitic vampires that destroyed NJ businesses and our middle class. Who would buy a home here when the current costs of the teachers current salaries alone would cost you $500 per month? After the Asbury Park Press released all of our teachers’ salaries online, the myth of the underpaid teacher was forever laid to rest and Governor Christie (their sworn enemy won two terms fairly easily. The scales have fallen from the taxpayers’ eyes, and they see the enemy for who they are.
N.J. is not Michigan. Unless you can rebut Politicians willfully neglecting their duty to fund the plan for over 25 years or hold accountable those appointees that mismanaged the fund you are just using talking points.
I don’t know or care about what happened in N.J.. This article was about Michigan in case you missed that little detail.
One other point, the two biggest checks this retirement system pays out every month is to Former Governor Engler and Lt. Governor Cherry. Both Republicans.
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