Posted on 11/08/2016 5:44:32 AM PST by MichCapCon
The Livonia public school district is like many around the state suffering the double whammy of declining student enrollment and skyrocketing pension costs.
Since 2011, a reduced enrollment has cost Livonia $13 million in state funding, while its pension expenses have more than doubled, from $12.2 million in 2011 to $26.3 million in 2016. Combined, the double-hit represents a $25 million reduction in annual cash flow. The district’s total state revenue has remained level over that six-year period at $106 million despite the drop in enrollment.
If an $80 million annual countywide school property tax increase is approved by voters Tuesday, Livonia is expected to get a $5.6 million annual funding bump. That will cover half the recent pension cost increases.
But Livonia Superintendent Randy Liepa said that looking at only state aid dollars and retirement costs does not provide a full picture of school finances.
“You have to look at all components to tell the correct story,” Liepa said in an email. “Enrollment decline is a significant factor in loss of funding.”
Liepa is hopeful that changes made in 2012 to the state-run school pension system may help going forward.
“While the retirement system may still have its challenges,” he said, “the reforms implemented in 2012 helped to address what would have been a much more dire situation for local districts as it relates to funding the required payments from the system.”
The Legislature made tweaks to the system in 2008, 2010 and 2012, but those haven’t come close to halting increases in the state-run system’s unfunded liabilities. They have grown from $8.9 billion in 2008 — when the first round of revisions was enacted — to $26.7 billion in 2015. Over the same period, the system has gone from having enough reserves to cover 83.6 percent of its obligations to just 60.5 percent today.
“There is no lack of money going to school districts — the state is spending more and more each year. But the extra dollars are going toward an underfunded pension system,” said James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy. “School district officials should instead ask to close the system, stop the underfunding, and then the dollars will go where they would like it.”
Hohman says the only way to contain and gradually reduce the unfunded liabilities is to close the system to new employees, who would instead get employer contributions to their own 401(k)-type accounts.
Rising Pension Costs Bury Michigan TAXPAYERS Despite Past Tweaks to System
My, a lot like how the Soviet Union and East Bloc died because everything was taken out of everywhere just to prop up Big Daddy in Moscow.
Just like everyone in the private sector.
Let’s see.......an industry whose failed product, illegal political activity, and violation of constitutional rights still deserves to get paid life-time golden parachute benefits for working part-time.....come on you silly Taxpayers, get with the program
Unfortunately, the past 10 years has normalized the concept of the bailout, even worse, via bailouts for very rich people. It’s going to be a hard sell to start saying no now.
We can demonize teachers and teacher unions for pension expenses but that would be like having sour grapes over a neighbor’s new car deal that we didn’t get. Michigan’s legislature and governor created and agreed to the terms of the Michigan teachers pension system. They alone are to blame for agreeing and enabling a BAD deal. Donald Trump speaks to similar government stupidity per our stupid trade deals. We shouldn’t be cursing Mexico for agreeing to NAFTA. We should be blaming our stupid U.S. trade deal negotiators and politicians who agreed to harmful trade deal terms and conditions.
Geez! Who knew letting someone retire after 30 years, regardless of age, could go wrong?
Here in DeKalb County, GA the county was letting certain “teachers” take early retirement only to be rehired as “consultants” with a six digit salary.
Plus, more and more “fertile” illegals are dumping their kids onto the backs of the tax payers for school taxes and every other welfare goody out there.
Ain’t this just swell, folks?
Wonderful gifts of love, I tell ya’!
What is never mentioned in these articles is the fact that for 20 years the Managers of that fund who was appointed by the Governor used inflated interest expectations on the fund to give the Governor a justification from funding it the way the Constitution says they were supposed to. The legislature goes along with it because the “savings” to the State gets doled out elsewhere like State Development Authority that buys jobs at 500,000 each...
Had the State done what they should have there would have been plenty of funds instead of what it is now. They were even so craven with their interest expectations they Gave out an extra Check (13 instead of 12) for a few years to the retirees.
The biggest check that is cut a month out of this retirement fund is Former Governor John Engler and former Lt. Governor Cherry.
Imagine that! The same two that played games with it’s funding ...
#8, They changed that after it became known that scam was available here in Michigan.
Now if you retire out of the system you can’t work for a Organization in the retirement system or a Business that provided basic services to one and earn more than 1/3 of what your Average Income was based on for your retirement.
Until that there were Superintendents that were retiring and then coming back as consultants making almost as much and when they retired.
Most taxes are for gov’t pensions. Not fixing anything. Just feathering their nest.
We have a similar and related problem with our Social Security trust fund. For years, it ran a surplus with income coming from baby boomers. Those excess funds should have stayed put for when they would be needed to fund baby boomer SS benefits. But no, like any government account with a surplus, our beloved Congress raided the Social Security trust fund in the fat years and replaced the surplus with IOUs. Now, that same body is crying about the shortfall in SS, which is a shortfall their predecessors created.
We need a purge - big time!!
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