Monday, December 5, 2011

MEA 2011 Compensation Comparisons

Today marked the release of the annual LM2 report for the MEA. This report (required by the Department of Labor) details the compensation for all officers and employees of the Michigan Education Association; you can find the simple analysis of the report here, and the complete report here. As has been the case for years, compensation at the parent organization (the MEA is the state level organizing unit of the NEA) is consistently stronger than for the rank and file teachers. What sets this report apart from years past is the first time ever median reduction in median pay. The average increase continues to outpace the CPI but this is influenced by timing issues (some individuals may have come onto the payroll mid year, etc.) and other adjustments. Perhaps the MEA leadership recognized the difficult economy school districts have been dealing with for years, as they say "better late than never." What has not changed is that life is very good at the top of the MEA ladder, in fact all top ten MEA officers earn more than Governor Snyder. So where are the calls to limit MEA top compensation to no more than what the Governor makes? MEA Salaries 10-11 Here is the document which summarizes the top ten earners at the MEA. This data comes directly from the Department of Labors LM2 filings. MEA Top Ten Salaries 2011

Thursday, February 3, 2011

MPSERS - School Pension In Trouble (Part 1 of a Series)

Economic and demographic reality is colliding with the pension and healthcare promises made decades ago in Michigan’s Public School Employees Retirement System (MPSERS). As I’ve discussed, and now Governor Snyder has pointed out, the reality of a $36.9 billion unfunded pension liability (another way of saying the pension is short $36.9 billion) creates a crushing burden on all Michigan taxpayers; this includes the very people that participate in the pension fund. The chart above reveals a simple truth as to why the pension fund is struggling. It shows both the declining active (employed) membership in MPSERS, and the growing number of retired members. The two lines are going to converge and cross if trends continue. The chart below projects a continued fall off in Michigan's student population through 2020, it is a trend that started years ago. Source data here and here.

That measure (total students) is highly correlated to public school employment. Together the charts show how employment has responded to the decline in total students, and how that trend is likely to continue. The implication is simple: the future holds fewer students, fewer public school employees, accelerating payouts from pension funds, and higher percentages of school operating budgets directed to support the pension fund. In fact, the projected contribution rate for next year is expected to increase from 20.66% to nearly 28% That means for each dollar an employee earns, districts will have to divert an additional 28 cents on top of that dollar to support the pension fund. That additional contribution gets larger in future years (source data here). The state does not increase school funding to match this mandate -- it is the ultimate in unfunded mandates. The pension payments are made out of operating funds available for the classroom, for teacher salaries, for equipment and supplies, and for program support.

MPSERS has attempted to address the issue, but the current measures represent bandaids. Some initiatives designed to save the system have been met with legal challenges which, if successful, will have the ironic effect of further crippling the pension system.

Conversations about honest assessments and major reforms are happening, the key to crafting lasting solutions is clarity regarding the nature and scope of the problems -- topics to be explored in future posts.