When Flint Community Schools Superintendent Linda Thompson made news that she was going to retire, what was missed was the fiscal impact of her leaving the school system.

Thompson worked 36 years for the Flint school district and will be 57 when she retires. A public school employee who worked 36 years for Flint schools and made Thompson's average salary of $175,649 the past three years would earn a pension of $94,850 a year.

If that 57-year-old retiree received a pension for the 26 years of his or her life expectancy with a 3 percent cost of living annual increase, it would grow to $204,552 a year.

"They are getting lavish benefits from an underfunded pension system,” said James Hohman, a fiscal policy analyst with the Mackinac Center for Public Policy. "But the terms are the terms. The problem with the pension system is the politicians don’t put enough money aside for it. It's not her fault that politicians can't be trusted to manage a pension."

Thompson's benefits are part of the guarantees written into the contracts she worked under in her time in the district. The generous terms highlight the need for serious reform of the taxpayer-funded teacher pensions systems.

The Michigan Public School Employees' Retirement System’s unfunded liability has reached $22.4 billion. One reason is the state tacks on a 3-percent annual cost of living adjustment to many of the pensions of public school retirees.

The state law was changed in 2010 so that public school employees hired from July 1, 2010 and after do not get the 3 percent cost of living adjustment.

A 2010 study done by the Mackinac Center for Public Policy found that only 6 of 24 major private companies in Michigan had a defined benefit pension plan similar to what teachers are offered. And none of the 24 private companies offered cost-of-living increases.  

If federal tax cuts that are under review are not extended, Michigan residents could end up paying the equivalent of double their state income tax rate, according to an analysis by the Tax Foundation.

The Tax Foundation looked at the alternative minimum tax (which includes the child tax credit), the Bush tax cuts (which refers to changes to the tax codes that lowered income tax rates) and the 2 percent tax cut to employee-side social security payroll taxes that all expire at the end of the year.

The tax cuts are part of the so-called “fiscal cliff” debate.

Michigan residents would lose on average 4.63 percent of their income if the tax cuts were lost. The Michigan personal income tax rate is 4.25 percent.

"It's asking Michigan residents to effectively pay their state personal income tax twice and even a little more," said Michael LaFaive, director of the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy.

The Tax Foundation’s Nick Kasprak said a Michigan family of four has a median household income of $72,336 and would see a $3,349 tax increase from the various fiscal cliff provisions.

Michigan ranks 37^th out of the 50 states in terms of percentage of income lost to the tax increases.

"This is because Michigan is a middle-income state, and the combined effects of all the fiscal cliff provisions tend to hit low-income (Bush tax cuts are generally a fixed percent of income at low- to mid-part of the income scale) and high-income (the AMT hits upper middle income families) states hardest. States in the middle not as much,” Kasprak said.

President Barack Obama has said he wants to extend the Bush tax cuts to all but the wealthiest 2 percent of Americans.