News Story

'If It's Not Illegal, It Should Be'

Reaction to MEA president’s ‘sweetheart deal’ with Lansing schools goes from shock to outrage

State Sen. Rick Jones, R-Grand Ledge, was on the Senate floor Thursday when he learned of a “sweetheart” deal between the Lansing School District and the president of the state’s largest teachers union.

The district has for several years allowed Michigan Education Association President Steve Cook to be considered a “school employee.” This lets Cook remain a member of the public school pension system, despite the fact that he actually works full time for a private organization. Moreover, Cook is accruing pension benefits based on his $201,613 union salary, setting him up for a much higher post-retirement payout from the underfunded system. This is commonly known as “pension spiking.”

“It’s absolutely inappropriate,” said Jones. “It should not be happening.”

Jones said the public school employee retirement system is supposed to be “for actual school employees and not people listed as school employees who are actually MEA employees. It makes absolutely no sense at all. It’s just plain wrong. And it needs to be stopped.”

Michigan Capitol Confidential reported Cook's apparent pension spiking deal with the Lansing School District on Thursday.

The complete ramifications of the deal are not clear because the MEA has not responded to questions, and the Lansing School District has refused to provide details, after first answering some basic questions.

The public school district says the private union reimburses it for Cook’s annual salary and pension fund contributions. However, given the ongoing underfunding of the system, the deal still means taxpayers would be on the hook for a good portion of Cook's enhanced benefits.

A retiree's annual payout from the school pension system is based on a formula that includes his or her salary in the last three or five years before retirement, depending upon the plan. Plugging Cook's six-figure union salary into the formula – rather than his much lower salary earned during his former work as a paraprofessional – means he stands to collect a substantially higher annual payout from the underfunded system than he would have otherwise enjoyed. This appears to be what is happening, given the level of pension fund contributions the district is making on Cook's behalf.

Details of the deal are still unclear, because after answering some basic questions, Lansing School District spokesman Robert Kolt asked Michigan Capitol Confidential to stop emailing. The district did say that Cook is considered an “educator on loan” to the union.

The district did not answer how Cook's deal worked or how long it has been in place. A Freedom of Information Act request revealed that in 2014, the district paid $51,976 into the pension system on Cook's behalf, and that it has been making payments since at least 2010.

Charles Owens, state director of the National Federation of Independent Business, said the Lansing School District allowed the deal to happen.

“If it’s not illegal, it should be,” Owens said.

Wendy Day, president of the tea party group Common Sense in Government and former board member of the Howell Public School District, said the Lansing School District should not be making payments in any form for MEA employees.

“If folks want to work for the MEA, they should go work for the MEA. The school should not be paying in any shape or form for members of the MEA on behalf of the MEA,” Day said. “The MEA, if nothing else, is very crafty. They know the system well and they know how to work the system.”

Tom McMillin, a former Republican state representative who served on the House Education Committee for six years, said the arrangement sounded like “it was bordering on fraud.”

“Why would they do that?” McMillin asked of the Lansing district.

Jim Perialas, a teacher in Roscommon, had his union local drop the MEA in 2013 and form the independent Roscommon Teachers Association.

Perialas said Cook received a “sweetheart” deal.

“I think it is absolutely absurd he is able to do that,” Perialas said. “Why would the Lansing School District be complicit in something like that? Who on earth would allow their school district to participate in such a scheme? He is a union president that has nothing to do with the school. How could this possibly be true? I just don’t get it. It’s mind boggling.”

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.