Superintendent Makes False Claim About Her Salary, Benefits

Total compensation includes money taxpayers contribute for retirement and benefits

By Tom Gantert | January 2, 2014

An Oakland County public school superintendent who makes $180,853 a year says it is misleading to say the $17,992 her district contributes for her health care and another $40,650 to cover her retirement costs are part of her total compensation.

And the Oakland Press claims many other superintendents agree with her.

Farmington Public Schools Superintendent Susan Zurvalec claimed the Mackinac Center for Public Policy was misleading the public by including retirement and health care insurance costs in her total compensation after the local newspaper reported it, citing a database provided by the free market think tank.

The Oakland Press did a story about the cost of superintendents and cited Zurvalec and her total compensation of $277,900. The superintendent said her total compensation was $212,275 without state-required contributions for insurance and retirement costs.

The Oakland Press reported that "like many superintendents, Zurvalec objects to the way total compensation is computed by the Mackinac Center."

"Any payments toward health insurance benefits and retirement payroll costs, mandated by the state, are not received as compensation," Zurvalec was quoted as saying in the story. "The Mackinac Center's continued practice of including retirement payroll costs and insurance as compensation received by superintendents is misleading the public."

The Mackinac Center's database breaks out separately the total compensation by salary, insurance and pension costs and does not include federal payroll taxes districts pay for their employees.

"If they stopped paying for her health insurance and retirement benefits, I'd bet she would notice," said Audrey Spalding, education policy director at the Mackinac Center.

The U.S. Bureau of Labor Statistics also includes insurance and retirement costs when it releases its employee compensation reports, which are cited by national media.

"Those benefits can add up to 30 percent of your total intake from a company," said Elizabeth Ashack, an economist for the Bureau of Labor and Statistics. "You have another 30 percent in benefits paid out to you where you don't see the cash but the company is paying for you."

What some superintendents are shrugging off are billions in expenses when it involves public school teachers in Michigan. Taxpayers paid $1.98 billion dollars for teacher insurance in 2010-11 and another $2.46 billion for contributions to state and local retirement, employer social security and worker compensation, according to the state's Center for Educational Performance and Information.

Additionally, the unfunded liabilities in the Michigan Public School Employees Retirement System have climbed to $24.3 billion.

Farmington Public Schools contribution to MPSERS not only covers the cost of Zurvalec's retirement health care and pension, but also an extra amount to try to cover that $24.3 billion liability, said James Hohman, assistant director of fiscal policy at the Mackinac Center.

Zurvalec didn't respond to a request for comment.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.

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Public-Private Compensation Gaps Still With Us

The public sector's misconception of reality

By Michael D. LaFaive | January 2, 2014

For many years the Mackinac Center has pointed out that on balance government employees do better financially than those who pay their bills.

This was driven home for me recently by new statistics reported by the Wall Street Journal. The gist was characterized by one snarky newsletter title, "Sorry About the Recession, America, But Don't Worry About Washington."

Specifically, average median household income in the nation's capital city rose 23.3 percent between 2000 and 2012, while the typical household in the rest of the country experienced a mere 6.6 percent rise. This is a wide gap, but not surprising given the way political and economic power is becoming increasingly centralized in Washington.

Is there a similar pattern unfolding in Michigan's relationship with its capital city? From 2000 through 2012, in Ingham County — home to the state capitol and many government employees — median household income grew 28 percent faster than the state as a whole, according to U.S. Census data (6.3 percent versus 4.9 percent).

None of this is news. In 2007 I authored, "What Price Government," which used broad statistics and anecdotal evidence to show that state employees do better economically than those in the private sector.

In his 1996 study, "Capital Crimes: Political Centers as Parasite Economies," Richard Vedder explores hypotheses that people who work in the "parasite economy" — politicians, civil servants, lawyers and lobbyists — successfully work to advance their own interests at the expense of everyone else.

The term, "parasite economy," was coined by writer Jonathan Rauch. I've cited him before in reference to one component of this state's "parasite economy," the Michigan Economic Development Corp. (see: "Milking the Cow of State Development Departments").

In both Michigan and the nation as a whole, citizens are paying a premium to keep government employees living in the style to which they have become accustomed and giving them ever more areas of life into which to intrude. Yet there is little or no evidence that all these "investments" have made life much better — just the opposite, if anything.

It's not just public sector payroll that's expanding in our capital cities, either. The vast expansion of government in the past decade — including the creation of a "deep state" in "homeland security," financial regulation and social welfare realms (the NSA, Dodd-Frank and Obamacare, among many others) — has greatly increased the potential rewards for favor — or protection-seeking special interests to hire lobbyists and other sorts of influence peddlers.

Perhaps we should try a fresh new approach instead: Fewer government employees, with less to do, and more balanced compensation for the ones who remain.