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Lansing — Michigan teacher pay has stagnated as rising retirement costs cut into state spending increases on education, according to a new report released Wednesday as K-12 schools take center stage in budget negotiations.

The non-partisan Citizens Research Council found Michigan’s average teacher salary has remained at about $62,000 a year over the past five years even as average per-pupil state spending has increased 12%.Some of the recent stagnation can be attributed to workforce composition such as senior teachers leaving and younger, lower-paid ones entering, but the bulk of the squeeze is tied to paying down unfunded liabilities, the researchers said.

In 2013, retirement contributions amounted to 22.6% of districts’ payrolls. In 2018, the districts and the state collectively were contributing 32.3% of payrolls, according to the report. 

Michigan pay rates are still 13th highest in the nation, but teachers will likely “bear the burden with little to no increase in pay” if the state does not change its funding model, the researchers said. It marks a decline from the 1990s, when Michigan routinely was a top 5 state for teacher pay, according to annual National Education Association reports. 

Required pension obligation payments have taken on greater priority in education spending, despite recent retirement system reforms, said Eric Lupher, president of the Citizens Research Council.

“Educational reform may take many shapes,” Lupher said, “but it all revolves around having highly qualified, engaged teachers motivated to expand young minds. The ability to attract and retain people in the teaching profession will rely in part on them feeling appreciated on pay day.”

Pension reform in 2012 “somewhat” eased the financial burden on individual school districts, the report says, yet funding the promises made to Michigan’s former teachers is taking a large of current spending.

The rise in state retirement contributions of more than $1 billion since pension reform in 2012 accounts for the majority of the spending increase, the report says.

The money is returned to the state-run teachers’ retirement system to meet funding obligations related to paying down past debts. That debt is constitutionally protected and cannot be avoided, CRC officials say.

The report comes as Gov. Gretchen Whitmer and the Republican-led Legislature attempt to finalize a 2020 budget by the end of the month after postponing contentious negotiations over a long-term road funding deal.

Senate Majority Leader Mike Shirkey, R-Clarklake, had pushed to refinance the teacher retirement system debt as part of any road funding deal, warning that rising costs will eat up any future growth in the School Aid Fund that could be spent on K-12 schools.

But Whitmer opposes the refinancing option, which Michigan Education Association President Paula Herbart has blasted as a “pensions for potholes” scheme that amounts to an attack on teacher retirement. The debate has contributed to the roads stalemate.

Michigan lawmakers reformed the state's teacher pension system earlier this decade to slow debt growth and required school districts to pay a fixed rate to fund retirement costs. The state covers additional costs to pay down debt by 2038.

Whitmer this week backed off her pledge to veto any budget without a “real” long-term road funding plan to avert a possible state government shutdown. But she’s still pushing for increased K-12 education funding as part of the 2020 spending plan.

Speaking with reporters Wednesday morning, the governor noted her initial budget proposed to fund more literacy coaches, bring down class sizes and ensure “equity” by spending more on at-risk, career tech and special education students.

“All the science tells us that kids in higher poverty areas need more support to be successful,” Whitmer said. “And that’s what informed the budget that I wrote. Science, facts. And I think that’s key to our success in the future.”

Whitmer’s budget anticipated a big revenue boost from her proposed 45-cents-per- gallon fuel tax hike, which eventually would have generated $2.5 billion by 2021, including $1.9 billion for roads and $600 million for other priorities, including education.

“Obviously we’re dealing with less money, so it does make some priorities harder,” conceded Sen. Curtis Hertel Jr. of East Lansing, ranking Democrat on the Appropriations Committee.

With road funding negotiations postponed, Whitmer said she anticipates a budget that “prioritizes things like education and closing the skills gap.”

Her budget included $110 million to create a new Michigan Reconnect Grant Program to help residents seek training or certification in specialized careers.

“We’ve got to have the talent. We’ve got to have the infrastructure,” Whitmer said. “So making sure we’ve got that talent priority in this budget is something that I think is really important.”

As part of road funding talks, House Republicans had proposed eliminating the sales tax on fuel, which would have created a hole for K-12 schools. That’s a hole lawmakers no longer have to worry about filling.

Senate Appropriations Chairman Jim Stamas, R-Midland, said he expects education will be one of the key issues in the more narrowly focused budget negotiations.

“K-12 schools is one the governor had approached in a completely different way than the House and Senate,” Stamas said, noting the Legislature had rejected Whitmer’s move toward a weighted funding formula for different student types.

“I’ve always been a strong proponent of continuing to work on the per-pupil funding and reducing that gap” between districts, Stamas said.

House and Senate conference committees are scheduled to meet Thursday, but Whitmer is asking GOP leaders to delay those hearings and allow more time for budget negotiations.

“This budget process is a very fluid budget process,”  Shirkey said Wednesday. “We are talking. That’s a very good thing.”

joosting@detroitnews.com

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