Bloated Teacher Contracts Much To Blame For Issues In Highland Park, Muskegon

Unsustainable union contract benefits included 100 percent insurance coverage, up to 95 paid sick days and more

The virtually bankrupt Muskegon Heights and Highland Park school districts are in the news for extreme financial mismanagement, which has occurred in good part because of provisions in their most recent collective bargaining agreements for teachers.

Typically, labor costs dictated by teacher union contracts consume about 70 percent of school district revenue, so what they require can be a key determinant of fiscal viability. Given what’s in these, it’s not surprising that Muskegon Heights and Highland Park got in trouble. However, similar provisions can be found in most school union contracts around the state.

Highland Park’s most recent teacher contract begins by granting special privileges to the local union, including:

  • Using the district’s payroll system to automatically deduct and deliver union dues from employee paychecks;
  • Carrying the union president as something not far from a part-time “ghost employee” who gets paid to conduct union business for half the day;
  • Handing over to the union all the details of district’s finances; and 
  • Agreeing to fire any teacher who evades paying union dues.

The contract then guarantees a “single salary schedule,” which pays teachers in the same manner as industrial assembly line workers, with no regard for individual performance or merit.

This pay schedule mandated that most teachers got annual raises of 5 percent to 9 percent, simply for keeping their jobs for another year. More such rewards were guaranteed by permanent pay bumps when an employee reached 15, 20 and 25 years on the payroll.

The district also paid out extra money for various functions such as “teacher coordinator,” “curriculum council member,” “psychological diagnostician” and high school “senior sponsor.”

Highland Park also paid 100 percent of the premiums for medical, dental, vision, life and liability insurance for teachers. In certain circumstances, the district even provided free coverage when a teacher took extended leave.

Every year the district allotted five paid days off for “personal business,” five days for family illness and 15 days for personal illness. An unlimited number of these could be saved up, and the district would pay teachers about $100 a piece for them upon retirement.

The district also granted each teacher between 40 and 75 long-term paid sick leave days (depending on seniority). These could be used for any illness that lasted more than 10 days.

The last Muskegon Heights teacher contract was a five-year deal signed in 2006, in the midst of Michigan’s “single-state recession.” In addition to automatic 4 percent to 5 percent pay bumps built into the single salary schedule, the contract granted annual, across-the-board pay increases ranging from 0.5 percent to 1.75 percent. To illustrate, a new teacher hired in 2006 would cost the district 25 percent more in salary by 2011 (and 36 percent more if he or she chose to get a master’s degree).

Muskegon Heights also gave “longevity” pay hikes: After 12 years, teachers got a permanent 1 percent pay hike; after 14 years, 2 percent, and after 20 years, a 4 percent pay boost. The school board also signed on to giving teachers extra premiums ranging from $1,070 to $3,200 for duties like being the cheerleading adviser, “faculty manager,” school dance adviser or director of intramural sports.

Like Highland Park, Muskegon Heights also paid the full health insurance premiums with no contribution required from teachers. In 2011, this insurance plan — provided by a lucrative affiliate of the teachers union (MESSA) — cost the district more than $21,000 per teacher for an annual family plan. That’s more than twice the amount private sector Michigan employers pay for family insurance plans on average, according to the Kaiser Family Foundation. The district also paid teachers choosing not to enroll in this health plan a stipend.

The contract provided 10 paid sick leave days, five paid leave days for funeral attendance, and two personal leave days per year. Up to 200 unused sick days could be accumulated and a portion of these cashed in at retirement.

The district also granted one-year unpaid leave to travel and two years for “professional study,” guaranteeing a job upon return from leave. The contract did not specify where the funds would come from to pay for the required temporary replacements.

In should be noted that over the course of the last decade, the Michigan Legislature also contributed to rising labor costs by imposing a mostly unreformed and unsustainable “defined benefit” pension system that now consumes a full 25 percent of school payrolls. In addition to the built-in rising costs of these teacher contracts, the failure of the Legislature to enact needed pension reform is contributing to collapses like the ones we see in Highland Park and Muskegon Heights.

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.