The reforms proposed by SB 1227 are sensible and fair. The changes envisioned by SB 1227 address fundamental structural problems which, if left unchanged, threaten the viability of the Michigan Public School Employees Retirement System (MPSERS). The Senate Fiscal Agency shows that SB 1227 will save over $3.5 billion over the first 10 years. Longer term savings will continue to grow and will help to erode the $35 billion to $60 billion of unfunded liabilities currently embedded in the system. The MEA is fighting this reform with the statement SB 1277 will not solve Michigan's budget crisis. The MEA misses the point; SB 1277 is just one of MANY changes that MUST be made to ensure we address current and future budgetary problems. Encourage our state representatives to support SB 1277, it will be good for MPSERS, and good for our state. Without sensible reforms like SB 1227, MPSERS will drag Michigan’s economy down a fiscal black hole taking tax payers, school districts, and teachers along for the ride.
Showing posts with label MEA. Show all posts
Showing posts with label MEA. Show all posts
Saturday, April 17, 2010
Senate Bill 1227 (SB 1227) Is A Fix Worth Implementing
The reforms proposed by SB 1227 are sensible and fair. The changes envisioned by SB 1227 address fundamental structural problems which, if left unchanged, threaten the viability of the Michigan Public School Employees Retirement System (MPSERS). The Senate Fiscal Agency shows that SB 1227 will save over $3.5 billion over the first 10 years. Longer term savings will continue to grow and will help to erode the $35 billion to $60 billion of unfunded liabilities currently embedded in the system. The MEA is fighting this reform with the statement SB 1277 will not solve Michigan's budget crisis. The MEA misses the point; SB 1277 is just one of MANY changes that MUST be made to ensure we address current and future budgetary problems. Encourage our state representatives to support SB 1277, it will be good for MPSERS, and good for our state. Without sensible reforms like SB 1227, MPSERS will drag Michigan’s economy down a fiscal black hole taking tax payers, school districts, and teachers along for the ride.
Thursday, January 29, 2009
Michigan Teachers Pension Fund Lost $9.2 Billion in 2008
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
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
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