Other Big State Universities Tighten Their Belts — U-M Has Much To Learn

By Jarrett Skorup | April 3, 2012

The Wall Street Journal reports that tightening state budgets and declining state funds are forcing public universities to make choices in funding priorities.

Ohio State University is considering leasing their university-run parking lots and privatizing other assets “including two 18-hole golf courses, a small airport and a power grid.” The University of Kentucky and Portland State University are also instituting plans that would partially transfer dormitory operations to a private company.

The plan illustrates how "institutions don't have the resources they once did, and so they are trying to leverage every dollar possible," said Peter Eckel, vice president at the Association of Governing Boards of Universities and Colleges in the article.

The University of Michigan has complained of state appropriation cuts and President Mary Sue Coleman recently wrote a letter to President Obama asking for greater public support for higher education. Yet during a statewide and then nationwide recession, her university increased staff numbers and still enjoyed a skyrocketing boost in revenue. U-M also owns and operates two golf courses and spends an average of $129,000 per degree.

Other public universities in the state are not so cost-effective, spending $7,000 per degree above the national average.

Many politicians complain about high tuition rates at colleges and universities and often pursue political remedies that further entangle government and education. This ignores the point that subsidizing any industry often means a misallocation of resources. Just as a slight decrease in K-12 spending has meant greater efficiency in Michigan K-12 school districts, so budget trimming for higher education means a better use of those dollars.

When privatization is well-managed and not merely a front for sneaky forms of government borrowing, it generates better outcomes for government entities, including state universities and their students.

In contrast, defenders of an unsustainable state university status quo call to mind Ronald Reagan’s refrain: “Government is not a solution to our problems, government is the problem.”

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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MEA's Underpaid Teacher Claims Don't Fit With The Facts

Union says average second-year teacher with a master's degree makes less than $12,000 a year after deductions

By Tom Gantert | April 3, 2012

The Michigan Education Association’s newest strategy is to portray their teachers as underpaid while hoping no one is paying attention to the figures they are using to make their case, says one education policy expert.

“Clearly, their facts are not straight,” said Michael Van Beek, education policy director at the Mackinac Center for Public Policy.

It started when Steve Cook, the MEA’s president, said in a Detroit News op-ed that one teacher who contacted him was in his second year of teaching with a master’s degree and made $31,000 a year.

Michigan Capitol Confidential looked at the contracts of the lowest-paying school districts in the state and couldn’t find a contract that paid a second-year teacher with a master’s degree $31,000 a year.

However, in an interview with another newspaper, Doug Pratt, the MEA's spokesman, took what Cook described as the salary of one teacher and turned that $31,000 into the “average salary” of a second-year teacher with a master’s degree.

It’s hard to imagine any second-year teacher with a master’s degree earning $31,000 a year in Michigan, much less it being the statewide average. Consider that Eau Claire has the lowest average teacher’s salary in the state. The Eau Claire teachers’ contract states a second-year teacher with a master’s degree made $34,385 a year in 2010-11. And districts like the Troy School District pay a second-year teacher with a master’s degree $49,132 in 2011-12.

Neither Pratt nor Cook responded to an email seeking comment.

Pratt told the Livingston Daily News that “the average second-year Michigan teacher with a master's degree currently takes home $500 every two weeks after taxes and employee health care and pension deductions, and if he or she opts for a deduction toward child care.”

In the article, Pratt is attributed with saying that current school employees pay 3.9 percent of their salary toward retirement benefits. James Hohman, a fiscal policy analyst at the Mackinac Center, said teachers contribute on a sliding scale; up to 6.4 percent of their salary to the state pension plan and are paying another 3 percent of their salary for retiree health care. They also can pay up to 20 percent for health care costs under the new state law, but many districts negotiated contracts with lower cost-sharing. For example, that Eau Claire teacher would pay 10 percent of health care costs, or about $1,769 a year for the MESSA family plan.

Van Beek questioned Pratt’s logic of including child care costs and pension contributions when talking about how much after tax money a teacher has in discretionary income.

“It (child care costs) is like adding your grocery bill,” Van Beek said. “It’s a cost that you incur if you have children and decide to work outside the home. It’s a cost everyone incurs one way or another. If you have kids you have to take on costs to take care of them. Just like you have to eat to live, you have to buy food.”

Van Beek said that pension contribution will generate a yearly pension of about $30,000 to $40,000 during retirement and shouldn’t be considered a cost, but a savings.

“They can retire when they are 55 and have subsidized post-retirement health care benefits and have a defined-benefit pension that grows by 3 percent every year,” Van Beek said.