Michigan teacher pension costs increase to nearly $1 Billion per year
What started out as a $155 million tab in 2012 for public school employee pension and retirement health care costs will increase to $945 million by 2015, according to the Senate Fiscal Agency.
The driver of the escalating costs is MPSERS’ unfunded liability. The pension system’s unfunded liability was $25.8 billion in 2013, up from $24.3 billion in 2012. The state’s payments also go to defray retiree health care costs.
The costs for the Michigan Public School Employees Retirement System includes the $882.7 million the state is projecting to spend on retirement contributions for K-12 education in 2015 plus the costs for community colleges, libraries and higher education.
One reason the costs are increasing is that school districts didn’t meet the annual required contributions for pension costs, said James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy. In 2013, the state determined the cost was $1.9 billion, but districts paid $1.36 billion, according to state’s 2013 annual audit.