Examining How Much Money That Pension Debt Takes Away From Michigan’s Classrooms Each Year

Despite recent public pension reforms that are helping to contain rising pension costs, the Michigan Public School Employees Retirement System’s debt continues to pull significant funding away from classrooms across the state.

Bad assumptions, missed payments and underperforming investments have created over $40 billion worth of debt—unfunded liabilities—that cost students and school districts more and more money each year.

Use the tool below to select any K-12 public school district in Michigan that contributes to the Michigan Public School Employees Retirement System (MPSERS) and see how unfunded liabilities are taking millions from that school district’s K-12 classrooms on a yearly basis.

Using data for the 2017-18 fiscal year, you will see that each student in the state has a staggering amount of pension debt tied to them and that normal pension system costs (what school districts contribute each year to pay for current employees’ future retirement benefits) are dwarfed by high debt payments for yesterday’s workforce.

Find the full interactive dashboard here or simply use the tool below.

To see the data for your school district use the expandable sidebar on the left side of the tool below.

We recommend viewing this interactive dashboard on a desktop for the best user experience. Please note that the tool will automatically sleep after a certain idle time and can be restarted by simply refreshing the page.

Reason Foundation’s Pension Integrity Project finds that in 2018, Detroit Public Schools spent $2,202 per student on MPSERS debt, which equals nearly 27 percent of the district’s per-pupil foundation grant from the state. Detroit Public Schools’ total retirement costs ate up $111,047,484 of the over $700 million budget in 2018.

In stark contrast, the normal cost—the cost of actual retirement benefits earned that year—was only $252 per Detroit Public Schools student. This means that if the state would have made full pension contributions and maintained realistic investment return assumptions for the last two decades, there would be almost $1,800 in additional funding for each of Detroit Public School students during that year. Instead, more and more money is being taken out of classrooms each year to pay for over $40 billion in MPSERS debt.

Lansing Public Schools had similar contribution rates, spending $2,428 per pupil and $25,403,305 in total MPSERS costs in 2018. These contributions ate up 32 percent of the school district’s per pupil grant and over 15 percent of the school district’s total budget. If MPSERS was not in debt, Lansing Public Schools would only have needed to contribute $274 per student to fund retirement benefits.

If they are left unaddressed, historical problems and a lack of accountability within the retirement system will continue to threaten promised pension benefits and jeopardize school funding.

During the current coronavirus pandemic, decreased state revenues and increasingly volatile stock markets add to these concerns. It is crucial that going forward, even during times of fiscal crisis, that Michigan makes its full MPSERS payments and maintains responsible funding policies.