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Schauer Calls For Long-Term Solvency Of Pension System; As State Senator Voted To Underfund It

Bill from 2007 specifically took from employee retirement system

Gubernatorial candidate Mark Schauer says one of his plans if he is elected is to ensure the long-term solvency of the Michigan Public School Employees Retirement System (MPSERS).

However, as a state senator in 2007, Schauer voted along with most other legislators specifically to underfund that system. House Bill 4766 balanced the budget by reducing the pension fund contribution — which is one of the reasons MPSERS today has an estimated unfunded liability of $24.3 billion.

Schauer’s education plan would also require all charter public school employees to participate in MPSERS. The expanding unfunded liabilities on membership, however, show that adding more people into the system would likely increase underfunding gaps.

Schauer’s campaign did not respond to a request for comment.

Adding more employees to spread the increasing cost of MPSERS is not the solution, says Michigan Association of Public School Academies President Dan Quisenberry.

“The MSPERS system is broken,” Quisenberry said. “It’s draining precious resources from all classrooms ... The system needs further reform to make it healthy, and even adding in every person teaching in a charter school would not make the system stable.”

Quisenberry pointed out that many of the people who work in public schools, charter and conventional, are actually employed by private companies, and are not a part of MPSERS.

Gary Naeyaert, executive director of the Great Lakes Education Project, notes that there are only about 4,000 charter school teachers who are not part of the fund, accounting for less than 2 percent of the system's membership. There were 223,769 active members in MPSERS as of Sept. 30, 2012 (the most recent available).

Pushed by Gov. Snyder, the Legislature made complex reforms in 2012 that had employees make greater contributions and allowed 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.

Still, the system costs roughly 30 cents on every dollar school districts pay out in salary to fund. The past underfunding has cost taxpayers much more and tightened the budgets for districts.

James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy, said the long-term solution is to close MPSERS and have the school employees on a 401(k)-type plan like other state employees and workers in the private sector.

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

Schauer Education Plan Looks To Shut Down Successful Charter Public Schools

A 2013 study by Stanford University found that Detroit students in charter public schools were performing far beyond those in the Detroit Public Schools district. The study is the most comprehensive yet done, individually tracking students and holding for race, poverty level, English language learner, special education status and more.

Although many considered the study a success for charter public schools, gubernatorial candidate Mark Schauer apparently has a different view on school choice in Michigan. He’s dedicated a lot of his “education plan” if he were to be governor to dismantling charter public schools in the state.

Schauer’s plan wants to stop the “unrestricted expansion of poor quality charters and cyber-only schools” and “provide for strict quality control over new charter and cyber schools.” Schauer also wants to remove “the profit motive” from charter schools. Schauer’s campaign didn’t respond to an email questioning just how that would be done.

All charter public schools in Michigan are authorized by either a public university, a community college or a conventional school district, but they can be run by management companies. If the state was to restrict "for profit" management companies from being involved in schools, many schools rated very highly would be shut down.

For example, the Leona Group runs Cesar Chavez Academy in Detroit. That school has a graduation rate of 85 percent; far beyond its conventional school competitors. It was also named one of the top high schools in the state on report cards done by both The Center for Michigan and the Mackinac Center for Public Policy.

“We’re fascinated by his obsession with the schools that enroll 8 percent of the students with no ideas about how to improve performance at the schools that enroll 92 percent of the students,” said Gary Naeyaert, executive director of the Great Lakes Education Project, a pro- school choice advocacy organization.

Naeyaert called Schauer’s education plan a “warmed over MEA wish list,” referring to the Michigan Education Association teachers union.

Audrey Spalding, director of education policy at the Mackinac Center, said Schauer’s education plan focuses strictly on charter public schools.

“I don’t see a word in there about accountability for conventional schools. I find that very interesting,” Spalding said.

As for charter schools' profitability, many of the largest critics have done well financially themselves protecting conventional school districts.

For example, David Pickler, president of the non-profit National School Boards Association, criticized “for-profit”charters in 2013 while his organization paid its executive director nearly $500,000 a year.

Vickie Markavitch has been a vocal critic of “for profit charters” in her role as Oakland County Schools superintendent. In 2012, Markavitch had a total compensation of more than $250,000 while the Oakland Intermediate School District had 15 executives making between $123,000 and $190,000.

Dan Quisenberry, president of the Michigan Association of Public School Academies, said parents don’t care who’s running the school.

“They only care about how well their students are achieving,” Quisenberry said. “Some of the highest-performing schools in the state are managed by for-profit companies, so why would we want to limit their ability to help students achieve?”

Spalding said that if charter public schools are unsuccessful, they close. That’s not the case with conventional public schools.

“If the school is serving the student’s need, what is his (Schauer) problem with it?” Spalding said. “What exactly is wrong with National Heritage Academies providing a better opportunity for kids? Parent don’t have a problem with it.”

About 220,000 students use some form of public school choice in Michigan.

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.