News Story

Like A Broken Record, MEA Complains About 'Insufficient Funds'

Since 1990s, education spending has been a priority; has increased under Gov. Snyder

How much money does it cost to educate a student? According to the Michigan Education Association, the answer is always the same: "more."

Despite the facts, the union claims that Michigan's schools are in dire straits due to a lack of adequate funding. But records show that the MEA and allied groups have been making these same claims for years — during good times and bad, and under Republican and Democratic governors.

In spite of its one-state recession throughout most of the 2001-2010 decade, Michigan still ranks 23rd among the 50 states and the District of Columbia in per-pupil spending, and 8th when adjusted for per capita income, according to the U.S. Census Bureau.

Nonetheless, the MEA and its allies maintain year after year that Michigan's education system is suffering from insufficient funding.

"The MEA has been pushing the same tired narrative for at least 18 years despite the fact that real per-pupil revenue for schools increased over this time period," said Audrey Spalding, director of education policy at the Mackinac Center for Public Policy. "It would be refreshing to see the MEA put forward an innovative proposal to help students succeed instead of the repeated requests for more money."

The drumbeat began early

Even during the late 1990s, when the state's economy was robust and revenue repeatedly exceeded expectations, the MEA found reasons to complain.

The passage of Proposal A in 1994 resulted in an additional $1 billion for Michigan's School Aid Fund. However, in the years immediately following Proposal A's implementation, the MEA quibbled over a lack of specific funding for items ranging from reducing class sizes to providing more professional training for teachers.

Often during the late 1990s, state officials were happily surprised by higher than expected revenues. But not the MEA. The union always argued that the bulk of the windfall should be spent on schools.

Al Short of the Michigan Education Association said the proposal to fold the extra revenues into a second year is [Gov. John Engler's] way of balancing the rest of the budget 'on the back of education.' (Gongwer, July 1, 1998)

'The [MEA] will be asking the Legislature for more support for certified teachers as well as for funding for more professional development training and for smaller class sizes. Public school reform must ensure that every school is a quality school, every teacher is a quality teacher and every student receives a quality education,' said MEA President Julius Maddox. 'The MEA is prepared to take risks and do whatever it takes to fix what is wrong with public education.' (Gongwer, Jan. 25, 1999)

'The state is putting our retirees in jeopardy,' said MEA President Lu Battaglieri, in a statement. 'He said the current funding system does not provide for stable costs to districts, which could translate to unstable benefits for retirees.' (Gongwer, April 14, 2000)

In 2001, as the state's economy slipped into a recession, revenue began falling short of expectations. But for Gov. John Engler, education spending remained the No. 1 priority. He tapped the state's rainy day fund and employed other budgetary maneuvers to keep K-12 spending up. Meanwhile, the MEA advocated for delaying scheduled tax cuts and other measures so education spending would continue to increase.

This practice of viewing continued education spending increases as sacrosanct and "never enough" continued after Jennifer Granholm became governor.

'Our schools, colleges and universities need to be fully funded,' said Al Short, the MEA's director of government affairs. 'When times are tough, education pulls us through. We cannot afford to balance the budget on the backs of Michigan's children.' (Gongwer Nov. 5, 2003)

From 2000-2012, median household income in Michigan plummeted 19.2 percent. But even during Michigan's severe economic downturn, education spending moved upward. But still not enough, according to the MEA.

Referring to a $100 per pupil increase instead of a $175 per pupil increase, Al Short MEA lobbyist said: 'We've got to have additional revenue. We can't handle basic services in this state on the current revenue stream.' (Gongwer, May 18, 2005)

In 2006, the MEA spearheaded a drive to place a K-16 mandatory funding proposal on the statewide ballot. Known as Proposal 5, the proposal would have amended the State School Aid Act of 1979 to require inflationary increases in appropriations for K-12, community colleges and higher education, and fund specific guarantees within the K-12 budget. Michigan voters rejected the proposal by a 62-38 margin.

In the year of the state's near shutdown in 2007, education spending continued to increase and the MEA continued to complain.

'K-12 schools are expected to get a 1 percent increase in funding for the fiscal year, and that is not enough investment into education when lawmakers say it is their top priority,' [Doug] Pratt [MEA spokesman] said. (Gongwer, Oct. 5, 2007)

'Schools have already been forced to reduce services, increase class sizes and cut programs, including early childhood. Sports and arts programs have been cancelled across the state as well, but those measures may not be enough to keep many districts in the black. The Legislature's delay and deep funding cuts will surely mean even more drastic reductions for the state's 1.6 million students midway through the school year.' (2009 MEA news release)

The American Federation of Teachers followed the MEA's lead at an education spending rally at the state Capitol during Gov. Jennifer Granholm's last year in office.

'They talk about funding cuts in this building (state Capitol) like it's just numbers," said David Hecker, president of [the American Federation of Teachers] (AFT) Michigan. 'The bottom line of what goes on in this building is students get screwed.' (Gongwer, June 24, 2010)

Targeting Gov. Snyder

In January 2011, Rick Snyder became governor. In his first budget, Michigan's per pupil spending was cut $100; the first and only such cut since Proposal A. That $100 per pupil went to shore up the teachers' benefits. The teacher pension fund has an unfunded liability of $24.3 billion.

The MEA held rallies at the Capitol to protest the cut and ran TV ads attacking Republican lawmakers in their districts. In subsequent budgets Snyder increased per pupil spending.

But even as the governor proposed an increase in spending, critics decried it as "absolutely not enough."

Recent claims that state spending on K-12 education has been getting cut under Gov. Snyder are untrue. The current state portion is $7,545 per pupil, which is $661 more than the $6,884 in former Gov. Granholm's final budget. According to the most recent numbers available, Michigan schools get $12,644 per pupil, when federal dollars are included.

Other groups related to education have also repeatedly called for more spending, no matter how much it was being raised.

MEA spokesperson Nancy Knight did not 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.

News Story

Pension Costs Mean Tighter Budgets For Classrooms, Taxpayers

MPSERS has unfunded liability of $24.3 billion

Randy Liepa, superintendent of the Livonia Public Schools, says his district will pay just under $30 million this year for its pension and health care costs.

The district has to spend the money to cover the costs of the state retirement benefits plan, which has an estimated unfunded liability of $24.3 billion.

Just for Livonia Public Schools' employees, the state of Michigan is chipping in another $6.4 million to cover the costs of the Michigan Public School Employees Retirement System (MPSERS) for 2013-14.

The teacher pension system has become an issue in the ongoing debate over state funding. Many school administrators, union officials and politicians don't want to recognize it as part of state funding because it isn't part of the per-pupil foundation allowance that schools receive to pay for day-to-day operations.

The skyrocketing cost for the pension system shows how K-12 spending is increasing while also tightening the budget for other classroom costs.

"I do not want to gloss over the help retirement reform provided to local school districts," Liepa said in an email. "We recognize that without the reform packages passed by the Legislature in recent years, our budgets would have been even worse off. School administrators had been asking for retirement-cost reform in our legislative platform for several years, and we applaud the state Legislature for addressing the issue."

The state put in some complex reforms in 2012 that included greater employee contributions and allowing new hires to choose a 401(k)-type plan in lieu of the traditional annual pension. That lowered the MPSERS unfunded liability by $561 million in 2013.

"I can go back to the late 1990s when school officials began to discuss the retirement system and its costs to local school districts," Liepa said. " … The Legislature has taken on retirement reforms. This will, in the long run, be financially helpful to school districts and will make the system work for employees. In the short term, the state is holding our retirement costs to current levels through the reforms."

The real long-term solution is to close MPSERS, said James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy. In its place, he added, the state should get all school employees on a 401(k)-type plan where the obligations of employers are are calculated and paid on an annual basis, in the form of contributions to personal accounts. 

"The defined benefit pension plan has become too expensive," Hohman said. "Retirement benefits in the private sector cost 5 percent to 7 percent (of payroll). MPSERS costs roughly 30 percent of payroll and the contributions are neither predictable, affordable nor current. That is, there are large gaps between what they've set aside to pay for pensions and what they expect it costs. … The recent retirement reforms do little to make the pension system more predictable, affordable or current. Superintendents should call for the system to be closed, but instead have only applauded tinkering with contribution rates."

Beginning in 1997, all new state employees except teachers were shifted away from the pension system. In 2012, the Michigan Senate passed a bill that would  have shifted teachers to a defined contribution plan, but the Republican-led Michigan House killed the bill.

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.