June 11, 2024

Members of the Michigan House
Lansing
VIA Electronic Mail

Dear Representative,

As you know, the state has determined that public schools and their employees are overpaying the MPSERS OPEB fund by $670 million. Our public school employee retiree health care system is overfunded by 40%. Right now, we have a historic opportunity to fully fund MPSERS and bring substantial cost savings to our public school districts in the FY 24-25 School Aid Fund budget.

We write to you today urging your support on our proposal to reduce public school’s MPSERS contribution rate by 7% and eliminate the 3% health care contribution requirement for school employees. Additionally, we urge you to support keeping the entirety of these savings in K-12 public education, instead of diverting these MPSERS OPEB savings elsewhere. We respectfully ask that any discussion of programs that would reduce overall revenue to schools be tabled until an agreement on this important issue is reached.

Reducing the MPSERS payroll rate from 20.96% to 13.96% would not only ensure continued full funding of teacher retirement benefits, but also bring about substantial cost savings for Michigan’s public school districts – approximately $450 to $600 per student annually. Additionally, eliminating the 3% mandatory health care contribution being made by many public school employees would have an immediate positive impact for educators across the state.

For too long, it’s been a one-way street with the School Aid Fund being used to supplement the General Fund. Since 2012, nearly $11 billion in School Aid dollars have been diverted from our local schools to pay for priorities that are not at all related to K-12 education. Currently, about $1.2 billion of School Aid Funds are going to costs that should be paid for by the General Fund – equating to nearly $925 per pupil.

Unfortunately, the potential for this to continue is alarmingly high, as it’s been reported that bills to extend the SOAR fund will soon be up for a vote. This extension, according to an independent fiscal agency analysis, will come with an annual price tag of $600 million – a strikingly similar amount to the current MPSERS overpayment. Reenacting SOAR would be the continuation of failed economic policy straight from the Engler and Snyder playbook. While the new package contains some important reforms, it does not change the overall structure, diverting money from public classrooms to businesses.

Fortunately, the Governor’s Growing Michigan Together Council (GMTC) charted a new, citizen centered path, for economic development in sharp contrast to SOAR. The report was notable for centering infrastructure and education as economic development. The Council wrote that “to build a future with shared prosperity, [Michigan] must develop the talent needed to drive our economy.” Michigan’s economic viability is only as strong and robust as its public schools.