Gov. Rick Snyder has stated that “Michigan is not Wisconsin,” and that he doesn’t want to pick a fight with unions. Yet when it comes to the costs of school employee benefits, Michigan is eerily similar to Wisconsin, and in both states the root cause is also the same: government employee union collective bargaining privileges.
Both Michigan and Wisconsin plow a larger portion of instructional spending into employee benefits than almost all other states. In Michigan, 28 percent of all instruction-related expenditures (including textbooks, whiteboards, pencils, etc.) are consumed by teacher benefits, and in Wisconsin the figure is almost 30 percent. Only one state diverts more than Wisconsin to these benefits, and only five exceed Michigan by this measure.
Also, in both states, teachers unions run their own health insurance companies — the Michigan Education Special Services Association was created in 1960 and the Wisconsin Education Association Trust in 1970. An estimated 64 percent of Wisconsin school districts buy WEA Trust coverage, and about 80 percent of Michigan districts get the insurance with a union label. Both unions relentlessly pressure local school boards to buy insurance from their subsidiaries — MESSA actually brags about how many districts suffered teacher strikes over whether to purchase its costly coverage (such strikes are now illegal in Michigan).
Not surprisingly, taxpayers pay a heavy price for this union-dominated health insurance scheme. According to the Wisconsin Association of School Boards, schools there pay on average $20,168 for a family plan, about 72 percent more than the cost incurred by the average private-sector employer in 2009 for the same coverage. In the state’s largest school district, teachers contribute nothing toward the cost of the premium, according to University of Arkansas scholar Robert Castrell.
In Michigan, a 2009 Mackinac Center survey found that the average amount paid by school districts for a family insurance plan was 47 percent higher than the private-sector average, and teachers contributed just 4 percent to these premiums on average (the private-sector average was 21 percent). MESSA premiums jumped up by 13 percent on average last year, while national increases averaged just 3 percent.
School spending on health insurance has risen dramatically in both Wisconsin and Michigan. The WASB data show that the average family plan premium cost 38 percent more this year than in 2003 after adjusting for inflation. Likewise, Michigan now spends about $1,300 per pupil just on school employee health insurance, and this amount grew by an inflation-adjusted 56 percent from 2000 to 2009.