A West Michigan school district made headlines late last year
when it was featured on national news as an example of how escalating teacher
pension costs are hurting public schools.
Jenison Public Schools, in Ottawa County, was featured on the
Nov. 21, 2005 NBC Nightly News. During the telecast, Superintendent Tom TenBrink
said the district could very well run out of money and go bankrupt. TenBrink
told Michigan Education Report the condition of his district is not out of the
"We’re not the Lone Ranger, going through this by ourselves,"
he said. "Everyone is experiencing the same difficulties; it’s just that I’ve
decided to be more public about it."
Jenison, a district of about 4,700 students, has a $42
million budget. It gets $30 million of that from the state of Michigan, with the
rest coming from federal and local sources.
Pension problems in Michigan schools stem from state law that
gives teachers a defined benefit plan, whereby school districts put a certain
percentage of a teacher’s salary into the Michigan Public School Employees
Retirement System and guarantee future payments to retirees. House Bill 4947
would move teachers toward a 401(k)-style plan, also called a defined
"In the last three years, the pension contribution amount has
increased from 12.99 percent to 14.87 percent (of teacher salaries)," TenBrink
said. "Now they’re saying it’s going up to 16.34 percent. That eats up the
Public schools in Michigan this year received a $175 increase
in the per pupil state aid, also known as the foundation allowance. The minimum
guarantee now is $6,875 per student.
"The increase in pension is about $120 of that amount, right
out the back door," TenBrink said. "So you can’t really equate that $175 with
TenBrink also said pension costs are not the only culprit
leading to the financial problems in his district and many others. Health care
costs also have skyrocketed. Many place part, if not all, of the blame on the
Michigan Education Special Services Association, a third-party insurance
administrator affiliated with the Michigan Education Association. A package of
bills in the Michigan Legislature would attempt to reduce those costs, by as
much as $150 million the first year according to some estimates, by allowing
school districts to access claims data. MESSA frequently refuses to release that
information to districts, making it nearly impossible for boards of education to
compare prices against other insurance plans.
"It’s very frustrating," TenBrink said. "We can’t compare
apples to apples because we can’t get any data from MESSA. Our hands are very
much tied from looking anywhere else."
As for the various bills in both the Michigan House and
Senate, TenBrink is all for them.
"Anything would help at this point," he said. "We’re looking
at a $3 million deficit for next year."
TenBrink did point out that the teachers union in his
district did agree to a less-expensive version of insurance through MESSA,
reducing costs by about $400,000.
"To their credit, they went against the norm," he said. "It’s
Administrators and support personnel in the district,
however, are part of a pool of Ottawa and Kent county area school districts that
have joined together for insurance needs. They hope to reduce costs by looking
at competitive alternatives.
TenBrink said health care for retirees has also become a
budget problem. He pointed to a study done by the Citizens Research Council of
Michigan, which said retiree health care is draining resources from classrooms.
"Funding pension and health care benefits by the Michigan
Public School Employees Retirement System will constitute an increasing burden
on state finances in coming years," the Council said in a 2004 report. TenBrink
said part-time school employees, who are not eligible for health insurance while
working, become fully vested in MPSERS after 10 years of service and qualify for
full retiree health care.
In recent years, Jenison has reduced expenditures by $4.1
million, cut 33 teaching positions by attrition, cut three administrative
positions and another 30 support staff.
"We still had to use $2 million from our fund equity this
year to balance the budget," TenBrink said. "It’s down to about 6 percent,
whereas it should be at about 15 percent."
Not far from Jenison, the Bloomingdale Public School District
in Van Buren County recently voted to privatize its janitorial services, a move
expected to reduce costs by as much $80,000 in the first year. Coincidentally,
they hired a firm from Jenison to do the work.
"This is a widespread problem with a lot of different
situations," Bloomingdale Superintendent Dale Schreuder said. "Health care,
pensions, utility costs. It’s hitting schools, industry, everything."
Schreuder said privatizing janitorial services is just
another step in a series of moves to find dollars to pay for pension and health
"We’ve taken small steps along the way," he said. "We’ve laid
off administrators and paraprofessionals, reduced the number of field trips and
cut teaching materials and supplies."
TenBrink said he’s been in touch with legislators about the
financial problems, both before and since the NBC story.
"This is real," he said. "This is not just us saying ‘give us
more money’ again. If they want to talk about keeping and attracting new
business, we need good schools."