Benefits or Jobs: Schools, Legislature Must Choose

The public school establishment is united in decrying as “devastating” Gov. Rick Synder’s call to trim less than 5 percent from school spending, or $300 per pupil from this year’s level. Some pose as being “offended,” and others nod at hysterical claims that “this has the potential to destroy K-12 public education.” While the Chicken Littles will get their headlines and may even frighten a few of their more credulous neighbors, the reality is that schools don’t have to cut a single program or employee if they don’t want to.

All they have to do is right-size employee benefits.

Health insurance is a good place to start. A 2009 Mackinac Center survey showed that the average teacher paid just four percent toward the cost of a family plan. The average private-sector employee pays 21 percent, and federal employees in Michigan pay 27 percent. If all school employees contributed the same as federal workers, it would save over $500 million, or $200 million more than Gov. Snyder’s proposed cut. Requiring employees to pay more would also give them an incentive to seek reductions in gold-plated school health plans that on average are 47 percent richer than private-sector levels.

Similarly, relative to the average income of the population that supports them, Michigan’s teachers received higher average salaries higher than those in any other state from 2003 to 2009 (the most recent year for which data is available). “Shared sacrifice” is a concept that appears to have eluded the school establishment during Michigan’s lost decade: According to the Michigan Association of School Boards, the average across-the-board salary increase for teachers was 1.8 percent annually from 2003 to 2010.

Right-sizing school employee compensation won’t be easy, because their unions are perhaps the most politically powerful special interest in the state. History shows the union is more likely to accept layoffs rather than give up pay and benefits. Making things worse, Lansing has tilted the playing field against school managers and taxpayers by failing to reform or repeal the Public Employement Relations Act and Teacher Tenure Act, which give unions special privileges at the negotiating table.

Eliminating or reforming both PERA and tenure should be just the beginning, though. Other reforms like cutting the cost of the state-run school pension program are also needed.

School districts and the Legislature have a choice: Protect bloated benefits, cut staff and eliminate programs, or enact reforms that make it possible to put benefits in balance while preserving educational services.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.