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Taxpayers ask a lot, pay a lot putting a teacher in front of a classroom
A recent story on the MLive news site described an alleged Michigan teacher shortage, with a claim that inadequate compensation is one of the causes.
As a source, the story cited a report by Public Policy Associates, a Lansing political consultancy.
The story cited two teachers – Stefanie Sedlar, a third-year teacher working for Mount Pleasant Public Schools, and Heather Gauck, a special education teacher working for Grand Rapids Public Schools.
The pay history of these two individuals and some others featured in news stories illustrate many features of teachers’ pay in Michigan’s unionized public school districts. Here are some examples:
-- While the average teacher salary in Michigan was $61,908 in 2017-18, but an “average teacher salary” is a poor talking point for teacher wages because it can vary so much district-to-district.
Sedlar made $55,619 in total salary in 2017-18, her first year of teaching. Her gross salary at Mount Pleasant schools increased to $60,247 in 2018-19.
Under a different union contract in Grand Rapids, Gauck’s total salary increased from $68,793 in 2013-14 to $81,681 in 2018-19. At that level, she may be at or near the top of the union pay scale, although the amount could also include extra pay for performing optional duties.
An apples-to-apples comparison at three other school districts shows how much pay can vary. A teacher with a master’s degree and 12 years of experience makes $52,000 a year in Benton Harbor Area Schools, $67,977 in St. Joseph Public Schools (which borders Benton Harbor), and $72,291 in Saline Area Schools.
-- The teacher pay differences are not always easily explained. For example, widely varying levels of per-pupil funding in different districts do not appear to be a major driver of teacher salary differences. Of those three school districts, Benton Harbor received the highest total funding at $13,908 per pupil. St. Joseph received $9,272 per pupil and Saline Area Schools had $11,618 per pupil. These figures are for 2017-18 and the most recent available from the Michigan Department of Education.
-- Teacher salaries vary widely within districts. Under the vast majority of school district union contracts, seniority-based pay hikes come quickly to teachers who are within their first 10 years of service.
Again, look at the the two teachers cited in the MLive article. Sedlar’s pay rose $4,628 between her first and second years of teaching, in 2017-18 and 2018-19. Gauck’s total salary increased $12,888 in the five years, from 2013-14 to 2018-19. These amounts may also extra amounts teachers can get for taking on extra duties.
-- Pay rates stagnate for teachers with a lot of seniority. Liza Parkinson is a teacher for Utica Community Schools and president of that district's local teachers union. Parkinson has been vocal about teacher compensation and said in a 2017 post on the union’s Facebook page that she had to work a second job as a driver for Uber and Lyft. Parkinson collected $105,843 in total salary in 2013-14, and that amount decreased to $105,222 in 2018-19, the most recent year salary information is available.
Although a $100,000-plus salary is good pay for a teacher, it seems human nature to become frustrated when pay increases mostly stop even if the top rate is six figures.
Other aspects of compensation are often ignored in news stories that discuss teacher pay. The total compensation of a public school teacher includes the high costs of maintaining a pension system and the health care benefits of active teachers.
For example, the highest-paid teacher in 2018 at Utica Community Schools made $106,534. But that wasn’t the full cost to taxpayers for that employee.
The district had to pay $41,212 for on that employee’s behalf to the Michigan Public Schools Employees Retirement System, which administers teacher pensions. The district also had to pay $5,771 for health insurance for that employee.
And in some districts, teachers have no out-of-pocket expenses for health insurance. At Traverse City Area Public Schools, employees who choose a higher deductible on their health care can eliminate any co-pays or pay-period deductions. The school district also would contribute $3,180 a year into that teacher’s health savings account, which would cover any out-of-pocket costs for that employee.
Teacher salaries are public records and are available on a free database maintained by the Mackinac Center for Public Policy, with records from 2013-14 to 2018-19. It includes all forms of reported compensation that are used to determine teacher pensions. Pay for optional duties is included in an individual’s overall salary for a year.
Editor's note: The story was edited to clarify a statement on average teacher salaries.
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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Use Better Assumptions to Pay for Pensions
Lawmakers should pay close attention to state pension systems
Michigan Rep. Thomas Albert, R-Lowell, is imploring state administrators to use better assumptions when determining how much they are going to put into the school employee retirement system. The state owes the retirees and employees in the system a lot more than it has saved, and using better assumptions can help it pay down the debt faster.
Administrators are supposed to contribute money to the pension system during each employee’s career, so there is money available to fund retirement checks when the time comes. This ensures that the costs of employment are not deferred onto future taxpayers. It also means that the people who get the public service of government employees are the ones who bear the costs.
And it secures the retirements of the people who get pensions. A well-funded pension system has enough money to pay for the benefits that its members have earned. Retirees don’t have to worry about whether taxpayers are going to struggle to catch up on debt, because there’s enough money in the system to pay their pensions.
What employees earn for retirement is difficult to figure out, however. Their benefits are defined by how much they are paid, how many years they work and how long they will collect a pension. Likewise, how much the state pension fund earns on its investments matters a lot, too. If administrators overestimate investment growth or underestimate the pension payouts, then the pension system gets underfunded.
Lawmakers always seem to find better uses for dollars than to put them in the pension system, however. So it’s unsurprising that most government pension systems across the country are underfunded.
It’s good that there are lawmakers who buck this trend and want to catch up on pension debts. Making pension managers use more stringent assumptions means that taxpayers have to put more cash into these pension systems today. The demands on the government to spend cash are vast, however, so increases in pension contributions get weighed against other spending. Still, the government owes it to both pensioners and taxpayers to maintain a well-funded pension system, so pension funding ought to be a priority.
In Rep. Albert’s case, he wants the state to lower its assumption about quickly the state government payroll will grow. This assumption determines how fast the state ramps up its debt payments.
The state probably shouldn’t assume that payroll is growing, though. The value of paychecks covered by the system have fallen from $10.4 billion to $8.3 billion from 2004 to 2018. So it’s good that there is agreement to stop using an assumption that is unlikely to be true, even if there is not yet a consensus about when the change should take effect.
The administration’s delay costs taxpayers over the long term because it defers pension payments to the future. Doing so frees up cash in the short term and costs more over the long term. As with other debts, pension debt grows until it is paid off.
Lawmakers ought to pay close attention to state pension systems and try to pay off the state’s debts. It’s good for government employees and taxpayers alike.
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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