Provisions in state Public Act 15 of 2007, which restated MPSERS asset values and lowered the permissible state contributions, served only to reduce current costs, while deferring other costs, presumably in the name of affordability.[*] Deferring contributions and liabilities should not be considered as savings just because school districts are able to pay less toward retirement benefits in the current year; rather, it should be considered unpaid amounts left for future taxpayers to finance.

Pension and retiree health care reform provisions contained in Public Acts 110 and 111 of 2007 did raise the threshholds for receiving MPSERS retiree health benefits and increase member contributions for MPSERS pension benefits.[11] While directionally correct, such provisions only applied to new hires and will prove to be of minor significance. New hires are a small percentage of MPSERS members, and the increase in what they pay is small given the enormity of the long-term costs facing the state.


[*] The bill revalued MPSERS assets at their market value, rather than the five-year rolling average of their market value (the method used previously). Though the five-year rolling average was retained moving forward, this restatement to market values had the effect of raising the stated asset value of the plan to a market peak. The bill also required the Legislature to pay a smaller amount to the pension fund than needed to stay on pace to prefund the earned pension benefits. For the year, the payment would be equal to “4.5% of the unfunded actuarial accrued liability.” Public Act 15 of 2007, http://www.legislature.mi.gov/documents/2007-2008/publicact/pdf/2007-PA-0015.pdf (accessed Aug. 31, 2010).