School District Describes $13 Million Increase in Spending As Budget Cut

In her May 25 blog, Lake Orion Public Schools Superintendent Marion Ginopolis said the district made $19 million in reductions since the 1999-2000 school year.

Teachers have not received lucrative step increases for two years and teachers are now paying 10 percent of their health care premiums. Yet, Lake Orion’s expenditures — adjusted for inflation — increased from $65.3 million in 1999-2000 to $78.2 million in 2011-12.

A major factor for the increased spending was the higher costs of the Michigan Public Schools Employees Retirement System (MPSERS). School districts pay a percentage of its total payroll for pension and retirement health care benefits.

Lake Orion’s contribution to MPSERS in 1999-2000 was $3.6 million. At the time, the district paid 11.66 percent of total payroll. By comparison, the district paid $4.4 million in health care costs that same year.

But in 2011-12, the MPSERS contribution rate increased to 24.46 percent and the district had to contribute $9.9 million. The MPSERS cost had almost equaled the district’s $10.3 million health care tab.

"With approximately 82 percent of our budget allocated to personnel, these increases in retirement costs and health care have had a significant impact on our expenses,” Ginopolis said in an email.

Michael Van Beek, the Mackinac Center for Public Policy’s director of education policy, said school districts have known about these expenses.

"Sure, MPSERS rates are determined by the state, but school districts (or at least the associations that represent them), by and large, have never been serious about making the system sustainable,” Van Beek said.

A Mackinac Center for Public Policy study in 2010 found that MPSERS was not likely to be affordable long-term.