Retirement costs headed up

ADRIAN, Mich. - Superintendents in Lenawee County are worried about the increasing cost of the state retirement system for school employees, according to The (Adrian) Daily Telegram, and question the benefits of proposed legislation that would give teachers an incentive to retire now with extra compensation.

Adrian Public Schools pays more than $2.5 million annually into the current retirement system, equal to about 16.54 percent of its annual payroll, The Daily Telegram reported. That percentage fluctuates depending on the performance of the pension fund's investments, but is expected to increase by 2 percentage points in 2010-2011, according to the Michigan School Business Officials, the article said.

The Michigan Education Association and some legislators are backing a plan that would pay eligible teachers an additional 33 percent in pension benefits if they retire by March 31, 2010, the Daily Telegram reported. Supporters say the plan would help schools by moving older, higher-paid teachers off the payroll and open up jobs for new teachers at the bottom of the pay scale.

Adrian Superintendent Chris Timmis told The Daily Telegram that if the Senate Fiscal Agency's analysis of the legislation is correct, districts would save money at first, but that higher pension costs would eventually overtake any savings.

Madison Superintendent Jim Hartley said the incentive raises a question of fairness among employees who retire at different times, The Daily Telegram reported.

Ed Sarpolus, the MEA's director of governmental affairs, told The Daily Telegram that the MEA disagrees with some of the Senate Fiscal Agency's assumptions about the number of retirees and the time period over which benefits would be paid.

The Daily Telegram, "Retirement costs cause headaches for schools," March 7, 2009

Michigan Education Digest, "Michigan residents want teacher benefit reform," Aug. 13, 2008