School Pension Iceberg: Beware What’s Under Budget Surface

Above or below the line, pension costs come out of education budgets

Gov. Rick Snyder presented the details of his 2017-18 executive budget recommendation on Wednesday. They cover the fiscal year that begins Oct. 1.

Snyder proposes that the state directly deposit $1.1 billion to the school employees pension program known as MPSERS. That’s 7.7 percent of the $14.3 billion K-12 education budget. It’s also more than the amount proposed for special education ($954 million).

ForTheRecord Says: That budget line-item is only part of the story. The $1.1 billion does not include additional contributions that come out of school district budgets. In the 2015-16 fiscal year, districts, community colleges, state universities and individual employees will have contributed a total of $3.97 billion. Most of the annual contributions go toward catching up on the system’s $26.7 billion unfunded liability, accumulated from failing to adequately fund the system over many years.

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The Republican Party fully controls most states and at the national level has captured the House, Senate and presidency. By many measures, the party has more power than it has had in many decades. But will that control last? And, more importantly, what policy priorities are coming about from these political victories?

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