Scrutiny of public sector benefits costs in Michigan has increased over the past several years. Key examples:
- Former State Schools Superintendent Tom Watkins (2004): “Two-thirds of every new (tax) dollar provided (for education) is consumed by health care and pension costs… Combining increased pension contributions and health benefit costs for working employees leaves little room for increased spending directed to teaching and learning even if the economy improves.”
- The Citizens Research Council of Michigan (2004) who projected that the percentage of Michigan school payroll required to cover retiree health care coverage would jump from 3 percent in 1991 to 32 percent by 2020.
- Standard & Poors (2004) proclaimed that 24 percent of school districts’ core operating budgets went toward benefits, including health insurance.
- The Center for Michigan and Citizen’s Research Council (2007) estimated that the average state government employee received 35 cents in benefits (health care and pension) for every dollar in salary, compared to 29.3 percent for private sector workers.
- Governor Jennifer Granholm’s Emergency Financial Advisory Panel (2007), a bipartisan team of veteran state budget experts, concluded that “spiraling” health care and pension costs “are particularly acute for
local government and school districts.” Those experts called for
benchmarking public employee benefits costs to those in the private
sector. Dillon is the first public official, to our knowledge, to answer
that call.
- Michigan State University Institute for Social Research & Public Policy
(2007) estimated Michigan’s unfunded liability for retired school and
state employee health care was $22.3 billion.
- Detroit Renaissance (2008) estimated savings of $270 million if
state employee health care benefits were reduced to levels received by
private sector workers.
In response to cost pressures, public employers and their insurance plans have made many internal changes. MESSA offers the benefits of pooling for more than half of all public school and community college employees in Michigan. MESSA points to more than $500 million in cost savings in the past five years through new benefit plan options.
3 Comments
OK, as a retiree I’ll admit my pension and health benefits are part of the problem, and that in the larger scheme of things, it would be fair to reduce my income and/or benefits to help Michigan out of this economic crisis.
What I would ask in return, since I and many others will have to go back to work, is to stiffen laws and penalities about age discrimination. Give us a fair chance to do work that we can do quite ably, and to earn a decent living. This seems only fair in light of the fact that the state would be breaking its contract to provide pension and health benefits if we would retire.
Speaker Dillon’s health care proposal for teachers and school employees is disingenuous. The promised savings due to an economy of scale are largely already realized by MESSA, which insures 45% of educational personnel in the state. The real “savings” that Dillon seeks is to cut educator’s health care benefits and to make them pay more of their premiums, while denying them the right to bargain. There is only one way to view this, Dillon is calling for pay cuts for all teachers and educational employees in the State of Michigan. How does this support our long-term need to improve Michigan’s educational system?
The last comment is correct, we need to reduce the unaffordable “gold level” health care benefits and each member MUST pay more than the current mininal amount most pay. Welcome to the real world in which all of the parents of all of the students teach have to live. Do you understand what helped cause the eventual bankruptcy of GM, Chrysler, and many of their large suppliers? It was an agreement to provide health care services and pensions at levels that any sane high school graduate with a basic understanding of math could determine it was not sustainable. People are living 20-30 years longer in retirement. It is the arithmetic STUPID. Stop tying the relationship that more money produces better educated students. The data does not support your claims. In the last 40 years we have provided more and more money every year with disappointing results. Maybe the model for delivering education is no longer workable and needs to be redesigned with incentives, year around education, industry and education co-developing the contents of the education, internships, and many other ideas. Finally, maybe we need to consider a union free environment, why do highly educated people need someone to represent them? Can’t they do it themselves based on performance?