School District Gives Teachers Raises, Has Deficit, Blames State that Gave Them an Extra $5 Million

One of the state’s larger school districts said because its teachers were underpaid it would give raises as high as 7.4 percent in 2014-15. But now Grand Rapids Public Schools faces a projected $8 million deficit for 2015-16.

Grand Rapids Superintendent Teresa Weatherall Neal points the finger at state government for not giving her district more money. And that’s after the district received a $5.6 million increase in state dollars for the 2014-15 school year despite having 37 fewer students, according to numbers from the Michigan Department of Education.

Neal’s comments appeared in a June MLive article in which she claimed state funding is inadequate and the fact that the district outspent its revenue “is largely due to Lansing's inability to take action.”

The average salary of Grand Rapids teachers was $51,899 in 2013-14, the most recent year for which data are available from the Michigan Department of Education. While that put teacher incomes well ahead that of most city residents, it was the lowest average teacher salary of the 19 conventional public school districts in Kent County.

From 2009-13 the median household income in Grand Rapids was $39,227, and 26.8 percent of residents had incomes below the official federal poverty level.

The Grand Rapids teachers union contract has a top-of-scale salary of $67,035 overall, and $56,434 for a teacher with a bachelor’s degree. The state average was $62,169 in 2013-14.

By comparison, neighboring East Grand Rapids is considered an affluent city. Its average teacher salary was $69,202 in 2013-14, and East Grand Rapids’ teachers at the top of the scale earned $86,116; those with a bachelor's degree top out at $72,172.

The Grand Rapids Public Schools said its teachers received the raises because the district didn’t have nearly as great a reduction in enrollment as anticipated.

“In following the GRPS Transformation Plan's guiding values about investing in our talent retention, recruitment, and development, we then used that to negotiate a new agreement that included step increases plus a percentage,” said Grand Rapids school district spokesman John Helmholdt in an email.

“The salary increases ranged from 2 percent up to 7.4 percent and also resulted in significantly more competitive wages compared to surrounding districts,” Helmholdt wrote. “We know that if we want to move student achievement, we must retain and attract the top teaching talent. This investment in our talent was very intentionally done to demonstrate the board and the administration’s commitment to implementing the GRPS Transformation Plan.”

Neal put part of the blame for the projected deficit on rising costs for retirement benefits. The district’s contributions to the state-run school employee pension system rose from $17.3 million in 2012 to $19.0 million in 2014. Much of those amounts goes toward “catching up” on past underfunding, which is responsible for $26.5 billion in unfunded liabilities statewide.

James Hohman, the assistant director of fiscal policy at the Mackinac Center for Public Policy, said retirement plans have been a problem for years.

“State-imposed retirement costs are unhelpful to districts struggling to balance their budgets,” Hohman said in an email. “But school officials should get on board with closing the retirement system or stop complaining about its costs.”

Hohman points to similar underfunding in government pension systems across Michigan and the nation as evidence that the school system should be closed to new employees, who should instead be given contributions to a 401(k)-type retirement plan.