Pension plan too costly, administrators say

KALAMAZOO, Mich. - Padding teacher pensions as a way to entice them to retire might save money in the short run, but not over the long haul, school administrators told The Kalamazoo Gazette.

"It's a bad proposal. From an actuarial standpoint, it's not very sound," Brad Biladeau, a policy analyst for the Michigan Association of School Administrators, told The Gazette during a recent MASA conference.

As proposed by the Michigan Education Association and a bipartisan group of lawmakers, the one-year-only plan would increase pension benefits by about a third for eligible school employees who agree to retire this year, typically those with 30 years of service, according to The Gazette.  The MEA said the plan will save districts money by replacing highly paid teachers with beginners at lower wages, The Gazette reported.

Local officials and MASA conference participants told The Gazette that any savings would be more than offset by higher pension costs. School districts this year must contribute to the statewide pension fund an amount equivalent to about 16.5 percent of their payroll, The Gazette reported. That rate already is expected to increase because of lower investment returns and higher health care costs, according to The Gazette.

"It would transfer the problem from one pocket to another, from the School Aid Fund to the retirement system," Biladeau told The Gazette.

"I'd like to see an analysis of the entire impact," Tom Noverr, assistant superintendent for operations for Portage Public Schools, told The Gazette. "I don't want to dismiss this completely, but there has to be additional costs. There has to be."

The Kalamazoo Gazette, "Michigan school officials call MEA early retirement idea 'a bad proposal,'" Jan. 31, 2009

Michigan Education Report, "It's time to get serious about school employee pension reform," Feb. 23, 2007