The Michigan Supreme Court will soon decide whether the state of Michigan violated the state constitution when it seized $550 million from the paychecks of more than 200,000 public school employees between 2010 and 2012 to help pay for school employees’ retiree health care. If the high court upholds a 2016 Court of Appeals ruling that the money was unconstitutionally seized, these funds, now earning interest in an escrow account, would have to be paid back immediately with interest. If Gov. Rick Snyder wins his appeal, the funds would revert to the Michigan Public School Employees Retirement System.
This mandatory payroll reduction was passed in 2010 by a Democratic-controlled House and Republican-run Senate and signed by then-Gov. Jennifer Granholm as MPSERS costs for retiree health care benefits rose faster than state and local K-12 revenue and federal stimulus funding was coming to an end. But the Legislature apparently came to believe they were on thin constitutional ice with their “mandatory contribution” scheme when they passed an amended law in 2012 allowing school employees to opt out. The Michigan Supreme Court upheld the replacement law in 2012, but must now rule on the original, involuntary payroll tax.
The issue before our state’s highest court appears narrow, but raises larger issues about our state commitment to our public schools and classroom teachers. By mandating this contribution by teachers in order to maintain retiree health benefits they had been promised, the contested 2010 law amounted to a legislatively-imposed pay cut for all teachers in MPSERS — that is, all teachers working in traditional district schools and in charter schools authorized by local or intermediate school boards.
Public school employee retirement costs have been claiming a growing share of K-12 budgets in recent years. Indeed, while total state aid for public schools rose by more than $1 billion from 2011 to 2015, almost all of the increase was earmarked for retirement costs, including health care. At the same time, recent state tax cuts (primarily for business) and budget decisions (funding community colleges and public universities with School Aid Fund dollars) have reduced the level of resources for our K-12 schools.
These cost and budget pressures may have motivated the 2010 teacher pay cut, but the amount captured by this contested payroll tax covers just a small fraction of the pension system costs and unfunded liabilities. A real solution will require increased K-12 appropriations along with recent structural pension reforms, not targeting our classroom teachers and exacerbating our state’s teacher shortage. The Michigan Department of Education reported last year that the average teacher salary in our state had declined for five consecutive years. The problem is even worse in our large, urban districts like Detroit, where district teachers endured seven years without a raise and suffered a 10 percent pay cut in 2013.
Even though teacher pay in Michigan is not low when compared to overall personal income in the state, the falling teacher salaries have taken a toll on our public schools. A 2016 report by the Learning Policy Institute indicates that fully 10 percent of Michigan teachers left the profession in 2013, as compared with 3 percent in Massachusetts, widely considered our best state school system and where starting teacher salaries are 13 percent higher than Michigan’s. It is estimated that more than 100,000 Michiganians with a valid teaching certificate are no longer working in the profession. Certainly, individual decisions to enter or leave the teaching profession depend on more than salary. Working conditions, including competent and supportive leadership and a collegial environment, play a role. But compensation matters.
It is difficult to overstate the importance of skilled, experienced teachers in our public schools. Most of us can remember the teachers who have inspired us and left lasting imprints on our lives. And growing research literature confirms our intuition: The classroom teacher is the most important school-based determinant of student success. When we confront our pressing state fiscal pressures, including rising teacher retirement costs, we need to remember that our public schools are investments in our economy and society, and teachers are their most valuable asset.
Mike Addonizio is professor of education policy in the College of Education at Wayne State University.