Why this is not headline news is a mystery. Regardless, MPSERS (Michigan Public School Employees' Retirement System) details a $9.2 BILLION loss in asset value on page 19 of the report (image below), it is in the second line of the third paragraph.
MPSERS - Michigan Teachers' Pension Fund Lost $9.2 Billion in 2008
The contribution rate schools will be forced to pay will be expanding SIGNIFICANTLY to pay for this loss, and to pay for the actuarial deficit the program has accumulated. That deficit, using the old asset value, exceeds $30 BILLION. Add the current loss to the amount and we approach a $40 billion deficit. Even amortized over 20 years that adds nearly $2 Billion in year in extra payments - or and added cost (and additional funding requirement) of $1,234/student. Together with the current per student pension contribution of $981 and you have a cost of $2,215 per student or 30% of the $7,316/student foundation allowance. That's simply not sustainable.
The deceptive "funded ratio" is seen on page 18 of the document:
MPSERS - Teacher's Pension Audit Hiding the Real Facts
The page which details the use of old asset values. The report simply ignores the current loss of $9.2 billion. How is this different that what Bernard Madoff did to his clients?
MPSERS - Michigan Teachers Pension Fund Deceptive on its Financial Performance
Thursday, January 29, 2009
Monday, February 11, 2008
Pension Deficit Now $31 Billion
The deficit in the State Teachers Pension Fund continues to grow, from an estimated $24 Billion to approximately $31 Billion today. That number represents over $18,780 PER STUDENT and growing. The number keeps getting worse and yet demands keep going up; at some point the damn will break and there'll be nobody home to clean up the mess. Please contact your state representatives in Lansing and demand action to clean up the pension mess they have created.
The page reproduced below is page 46 from the state audit (which you can find here).
Thursday, October 25, 2007
The Revaluation Letter
The letter which details the one time adjustment in the pension fund. Note, this is a one time adjustment and does not address the structural problems which will cause the state required school contribution to jump from 16.72% this year (2007/2008) to over 20% next year. For the Birmingham School District this will cost nearly $2.15 million or $266 per student - which state funding will not cover or support.
Tuesday, March 6, 2007
The $14 BILLION Unfunded Health BenefitLiability
Similar to the pure pension benefit, the teachers pension fund has disclosed (in a small footnote) the fact that it's promised health benefit is underfunded by $14 BILLION. Again, at what point does this become a problem. The audit indicates the fund is in good health, but that's qualified in a very narrow sense. Interestingly, this page is in a letter of transmittal that is not searched using Adobe's find function - it's hidden on page 8 of the full report (find it here for 2006) unless you know where to look.
Audit Pages - $10 BILLION Benefit Deficit
Here is a copy of the page from the current state audit of the pension system. Notice how the problem is GETTING WORSE even as schools have been required to contribute more to the system. My simple question is this: How can the audit report that the pension system is in good health? Maybe because it assumes an UNLIMITED ability to tax the local school districts to continue funding the growing deficit. The column to note is the fourth, it shows how the unfunded liability (shown as a positive number) is growing, now approaching $10 BILLION. This is from page 43 of the full report (find it here for 2006).
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