Michigan is Spending As Much on State Police Pensions as Salaries

Past underfunding means nearly $1 in retirement costs for every $1 in pay

The cost of providing retirement benefits for Michigan State Police employees nearly matched their gross pay last year, with most of the money going toward paying down debts incurred by decades of pension underfunding.

One out of every five dollars spent by the state police last year went for retirement benefits, according to the Senate Fiscal Agency. Total state police spending in the 2015-16 fiscal year was $640.1 million, with $115.7 million of this going toward the retirement system. That compares to $118.1 million paid in gross wages to employees.

More than 75 cents out of every dollar in retirement spending went toward paying down unfunded pension liabilities. Only 19 to 23 cents out of every dollar of the benefit expenses were for pension credits earned by current employees during the year.

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According to Senate Fiscal Agency figures, the state police retirement system is $1.2 billion short of the amount its managers project is needed to meet pensions and post-retirement health benefits.

James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy, said that underfunding is causing the state police to vastly overpay for benefits.

“State troopers are offered generous retirement benefits and that’s fine,” Hohman said. “But the underfunding in the system means that they are getting Cadillac benefits at Ferrari prices.”

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