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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