Saginaw Debates Effect of Privatization on Retirement Costs

SAGINAW, Mich. — While the president of the Saginaw City School District teachers union says that privatizing support services is not an effective way to address high retirement costs for school employees, an official with the Michigan Association of School Boards disagrees, according to The Saginaw News.

Michigan school districts are paying an amount equal to 20.66 percent of employees' salaries into the Michigan Public School Employees Retirement System this year to cover the cost of a monthly pension and health care for retired school employees, The News reported. That's up from 16.94 percent in 2009-2010.

Mary Ann Dupuis, president of the Saginaw Education Association, said at a recent school board meeting that privatizing support services decreases the number of people who contribute to the state retirement system and forces those remaining to pay even more, The News reported.

Tom White, assistant director of labor relations for the MASB, said that while privatization of some employees would increase retirement costs for those remaining, the savings on privatization would outweigh those higher costs, The News reported. 

White said it currently costs a “typical school district” about $1,000 per student for employee-retirement costs, The News reported, and questioned if districts should keep sustaining such benefits.

“The rate could easily go from 20.66 percent to 24.66 percent in the next school year ... and that’s a good-case scenario — it could be worse,” White said, according to The News.

The Saginaw News, "Teacher-union chief: If school districts want to cut retirement costs, don't privatize services," Jan. 28, 2011

Mackinac Center for Public Policy, "Michigan's Public-Employee Retirement Benefits: Benchmarking and Managing Benefits and Costs," October 25, 2010