Detroit Schools 'Misplace' $30 Million from Feds for Pensions

Retirement costs have skyrocketed while the number of employees was halved

The Detroit News reported this week that the U.S. Department of Education allegedly gave Detroit Public Schools $30 million to help it pay required contributions to an employee pension fund, but the school district never sent the money into the state-run system. The $30 million was supposed to cover pension contributions for DPS employees whose pay came from federal grants.

ForTheRecord says: For a clear example of how the rising cost of maintaining a defined benefit pension system is strangling school budgets, one need look no further than the Detroit school district. Employment has been cut in half, from 15,465 full-time employees (FTEs) in 2007-08 to 7,280 in 2014-15. (Enrollment fell an equivalent amount.)

Despite the decline, the district paid 65 percent more per employee for required pension contributions in 2014-15, or $13,527 per full-time employee. In 2007-08, the total cost for half as many employees was $126.5 million, or $8,181 per FTE.

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.