News Story

Michigan Education Association Retirement Costs Skyrocket in 2015

Overall liabilities for teachers union increased by nearly $100 million

A retirement system created by the state’s largest teachers union for its own employees has become a huge financial drain on its finances. Skyrocketing pension and retiree health benefits were the largest contributors to a $100 million increase in liabilities on the books of the Michigan Education Association in 2015, up almost 50 percent from the previous year.

The MEA’s overall liabilities jumped to $304.1 million in 2015, up from $206.2 million in 2014 and $181.5 million in 2013. The increases were disclosed in annual financial documents the union must file with the U.S. Department of Labor.

The MEA’s cost of providing pension benefits to its own employees rose from $77.1 million in 2014 to $137.2 million in 2015. Its expenses for retiree health benefits increased from $112.2 million to $149.8 million during the same period.

While this was happening, it was revealed that the MEA and some local school districts have engaged in major pension spiking schemes benefiting the current and past union presidents.

The schemes allowed these MEA presidents to work for the union — for decades in some cases — while still being carried on school payrolls for purposes of boosting their eventual payouts from the state-run school employee pension system.

Steve Cook, the current MEA president, was last employed by a public school district in 1993, working 25 hours a week as a paraprofessional in the Lansing district. That year, he struck a deal with the district that let him work full time for the union but still accrue annual service credits toward his school pension.

This allowed Cook to parlay his six-figure MEA salary into much higher pension payouts from the government system. Cook was paid $211,390 by the MEA in 2015. The scheme will allow him to collect an annual pension of about $105,000 a year from the state, despite working just 15 years in a part-time position with the Lansing School District.

The MEA has paid the pension contributions to the school districts for deals with its past presidents.

MEA officials have not responded to emails seeking comment. It’s unclear if past MEA presidents also received a pension from the union as well as from the state-sponsored school system retirement plan.

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.