Michigan’s major government pension funds are underfunded and will require billions for the foreseeable future just to begin catching up. But some argue that multiple years of solid investment growth will eliminate this problem. While nothing would alleviate pension problems like a few years of solid returns, it is unlikely that such sufficient growth will occur.

A report from consultants R.V. Kuhns and Associates looks at the possibility that the state will return to full funding with investment growth. Currently, the state assumes that it will get an 8 percent return on the money it sets aside to pay for pensions (though a small percentage of the teachers' fund assumes a 7 percent return). The state, however, has received on average 5.5 percent to 5.7 percent since 1997. This is one of the main reasons why the state government's pension system for public school employees is underfunded by $17.6 billion. In order to catch up on liabilities, the report shows that returns would need to average 11.7 percent to 12.7 percent for the next decade.

The report also uses a series of assumptions about investment performance. Only under the rosiest of scenarios will the funds return to full strength by 2020, a “75th percentile” event (see report for more details).

The state can ensure that it has enough money to pay for retirement benefits already earned by closing its pension fund to new members. This contains the increase in unfunded liabilities while offering new employees affordable retirement benefits.

According to news reports, some individuals associated with the Tea Party movement have publicly called for a recall campaign against State Senate Majority Leader Randy Richardville, R-Monroe. One of the issues cited is Richardville's stated opposition to right-to-work legislation.

Sen. Richardville's position on that issue appears to be at odds with most of the Senate Republicans who chose him for the leadership position. As earlier reported by CapCon, 17 of the 26 Republicans who now hold the majority in the 38-member state Senate have already voted for a right-to-work measure while serving previous terms in the state House. Five current Senate Republicans were not in the House when these votes took place: Colbeck, Jansen, Kahn, Nofs and Pappageorge.

Twenty votes are needed to pass a bill. Lt. Gov. Brian Calley — whose vote breaks Senate ties — has also voted for right-to-work measures in the House.  

Some other voting record analyses suggest that Sen. Richardville has been among the most “moderate” of Republicans. For example, the MIRS news service compiles an annual “most conservative” ranking based on votes from the past year. For 2010, only two Republicans in the Senate had a ranking more "liberal" than Richardville’s 70 percent on selected "conservative" votes. For 2009, only six GOP senators came in below his 74 percent “conservative” record.

Richardville was selected to be leader by his Republican Senate colleagues at the start of 2011, and under his leadership the body has failed to vote on a House-passed bill to stop the transfer of $28 million from home health care providers to the SEIU  (see CapCon “skimTRACKER”). In 2009, Sen. Richardville co-sponsored a bill that would have given explicit statutory authorization to this practice.

Past CapCon articles have noted other positions taken by Sen. Richardville likely to put him at odds with limited government Tea Party groups:

• While Gov. Rick Snyder has capped the previously unlimited state film subsidy program at $25 million annually, Richardville said that amount of money “isn’t enough” and that he was working to increase it to $100 million.
• In 2009, Richardville voted with Senate Republicans to block drivers license renewal after three unpaid parking tickets. The bill was criticized as ineffective and simply a way for state government to get money to fund other programs. Many legislators eventually recanted their vote.
• In 2007, the Legislature approved a $1.358 billion tax hike. While Sen. Richardville voted against the tax hike, he supported the vast majority of the new spending paid for by the tax hike.

Sen. Richardville has also raised Republican and Tea Party eyebrows by receiving several thousand dollars in campaign contributions from the Michigan Education Association teachers union.

On the other hand, Sen. Richardville voted with the Michigan Chamber of Commerce 91 percent of the time in 2011 and has long maintained that he is a conservative.