Opinion | Retirement must be factored in with considering teacher salaries

Royce Humm

Royce Humm is executive director of Michigan Association of Retired School Personnel, which represents nearly 40,000 retired public school employees.  MARSP is an independent, nonpartisan association, which advocates exclusively for retired public school employees’ pension and health care benefits.

A recent Guest Commentary in Bridge Magazine on Michigan education spending cited stagnant teacher salaries as a barrier to improving Michigan’s K-12 education system.  As a follow-up, we would add that making good on the promise of a decent retirement for school personnel should also be a high priority and goes right along with the goal of paying teachers a competitive wage and enhancing the education of Michigan children.

Taken together, competitive salaries and a solid retirement program will go far to help recruit qualified teachers and other school personnel.  As we analyze where we need to make changes to improve education, we shouldn’t view retirement system costs as being in competition with operations budgets for school districts.  

The column by the Citizens Research Council put a spotlight on the increased cost of funding teacher retirements borne by school districts, but didn’t explain two key factors:

  1. The state’s failure to keep school funding in line with inflation; and
  2. Past decisions by policymakers in Lansing that led to underfunding the retirement system, although it is now on more solid footing thanks to multiple recent reforms.

After adjusting for inflation, total K-12 education funding declined by 30 percent between 2002 and 2015, according to the 2019 Education Policy Report by Michigan State University.  Seventy-four percent of the decline was due to declining state support for schools. Per-pupil revenue declined 22 percent during the same period. Among all states, Michigan is dead last in K-12 funding growth.  

We believe it’s the state’s responsibility to make teaching more attractive through competitive wages, up-to-date facilities and an adequately funded pension system, which has not always received the support it deserves.

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Tim L
Wed, 01/08/2020 - 1:20pm

A good example of a past decision that has led to the under-funding of the Michigan Teachers Retirement System was the legislative action in November 1997 in response to the Durant decision. The state was ordered to pay back districts for the under-funding of special education. One remedy was, that rather than continue to use the multi-year average model of retirement system asset valuations, the retirement system assets were revalued on a current day valuation, creating hundreds of millions of actuarial "surplus" dollars. These surplus retirement funds were then "given" to districts in the form of future reduced district retirement contribution for existing teachers. This was a major cause of the future funding shortfalls in the fund.