June 11, 2024

Members of the Michigan House

VIA Electronic Mail

Dear Representative,

As you know, the state has determined that public schools and their employees are overpaying the MPSERS OPEB fund by $670 million. Our public school employee retiree health care system is overfunded by 40%. Right now, we have a historic opportunity to fully fund MPSERS and bring substantial cost savings to our public school districts in the FY 24-25 School Aid Fund budget.

We write to you today urging your support on our proposal to reduce public school’s MPSERS contribution rate by 7% and eliminate the 3% health care contribution requirement for school employees. Additionally, we urge you to support keeping the entirety of these savings in K-12 public education, instead of diverting these MPSERS OPEB savings elsewhere. We respectfully ask that any discussion of programs that would reduce overall revenue to schools be tabled until an agreement on this important issue is reached.

Reducing the MPSERS payroll rate from 20.96% to 13.96% would not only ensure continued full funding of teacher retirement benefits, but also bring about substantial cost savings for Michigan’s public school districts – approximately $450 to $600 per student annually. Additionally, eliminating the 3% mandatory health care contribution being made by many public school employees would have an immediate positive impact for educators across the state.

For too long, it’s been a one-way street with the School Aid Fund being used to supplement the General Fund. Since 2012, nearly $11 billion in School Aid dollars have been diverted from our local schools to pay for priorities that are not at all related to K-12 education. Currently, about $1.2 billion of School Aid Funds are going to costs that should be paid for by the General Fund – equating to nearly $925 per pupil.

Unfortunately, the potential for this to continue is alarmingly high, as it’s been reported that bills to extend the SOAR fund will soon be up for a vote. This extension, according to an independent fiscal agency analysis, will come with an annual price tag of $600 million – a strikingly similar amount to the current MPSERS overpayment. Reenacting SOAR would be the continuation of failed economic policy straight from the Engler and Snyder playbook. While the new package contains some important reforms, it does not change the overall structure, diverting money from public classrooms to businesses.

Fortunately, the Governor’s Growing Michigan Together Council (GMTC) charted a new, citizen centered path, for economic development in sharp contrast to SOAR. The report was notable for centering infrastructure and education as economic development. The Council wrote that “to build a future with shared prosperity, [Michigan] must develop the talent needed to drive our economy.” Michigan’s economic viability is only as strong and robust as its public schools.

Education as economic development requires fully funding public schools. Today, SB 911 and HB 5803 were introduced by Senator Hertel and Representative Koleszar, which would take a step in the right direction by putting our proposal to reduce the MPSERS rate by 7% and eliminate the 3% health care cost for public school employees into state statute. We strongly support these bills and ask that you please consider the potential significant impact of this legislation on our schools and teachers as budget discussions move forward. Reducing public school’s MPSERS payroll costs and eliminating a burden on our hardworking educators should be the Legislature’s top priority this month.

This economic opportunity has only been achieved because of the sacrifices of Michigan’s public schools and their employees. Educators across the state, from management to labor, all agree that these dollars belong in K-12 education and any funds that are diverted is less than what public schools should rightly expect. We urge you, and your colleagues, to refrain from voting on any proposal until the historic opportunity to reinvest the entirety of MPSERS cost savings is resolved and this funding is used where it belongs: in Michigan’s public schools for our students, educators, and classrooms.

Chandra Madafferi, Michigan Education Association
Terrence Martin, AFT-MI
Peter Spadafore, Michigan Alliance for Student Opportunity
Dr. Tina Kerr, Michigan Association of Superintendents and Administrators
Don Wotruba, Michigan Association of School Boards
Wendy Zdeb, Michigan Association of Secondary School Principal
Robert Dwan, Michigan School Business Officials
Dr. John Severson, Michigan Association of Intermediate School Administrators
Paul Liabenow, Michigan Elementary and Middle School Principals Association
Abby Cypher, Michigan Association of Administrators of Special Education
Dirk Weeldreyer, School Equity Caucus
Dan Behm, Education Advocates of West Michigan
Robert McCann, K-12 Alliance of Michigan

CC: Gov. Gretchen Whitmer
Budget Director Flood
State Board of Education Members