News Story

Another School District-Teachers Union Pension Spiking Deal

Union leaders benefit from special deals with their members’ employers

Another Michigan school district and a high-level executive from the state’s largest teachers union have entered into a pension spiking arrangement that benefits the union official financially. The deal will let Nancy Strachan, the vice president of the Michigan Education Association, use her six-figure union salary to draw larger benefits from the state-run school pension system.

The deal between Strachan and Wayne-Westland Community Schools mirrors those benefiting several other union officials, and will allow her to collect approximately $16,200 extra per year from the underfunded system.

The amount of a school employee's pension benefit is based on the person's years of service and final salary. According to the MEA, Strachan began teaching at Wayne-Westland in 1975. In 2011, she left the district to become the vice president of the union.

Nevertheless, Wayne-Westland still carries her on its payroll, for which it is reimbursed by the MEA. This is how Strachan is allowed to accumulate government pension credits even though she has not actually worked in a school for five years.

Under Wayne-Westland’s union contract, teachers at the top of the pay scale earn a base salary of $76,839. But under Strachan’s deal, her pension will be based on a $103,224 salary, which is a portion of her total MEA salary of $149,433. A database of state teacher salaries describes Strachan as being on "employee professional services leave."

In an email, a Wayne-Westland official said the MEA reimburses the district for Strachan’s salary. The provisions of the arrangement were included in the district’s contract with the teachers union.

James Hohman, the assistant director of fiscal policy for the Mackinac Center for Public Policy, says that because the pension system carries $26.7 billion in unfunded liabilities, the state is having to pay some catch-up costs that are probably not covered by the union’s reimbursements to Wayne-Westland for Strachan’s salary and pension contributions.

Strachan and the MEA’s media relations team didn’t respond to emails seeking comment.

Strachan worked for 36 years in the Wayne-Westland school district, and five more at the MEA. By including her time with the union and her $100,000-plus salary there in the formula for her school pension, Strachan will collect an estimated annual pension benefit of $63,482 if she retires this year. Had she remained at the school district, her annual pension would be an estimated $47,255.

Michigan Capitol Confidential has reported several similar union-district pension spiking deals. So far, current MEA President Steve Cook appears to have the largest one. Cook was a part-time paraprofessional with the Lansing School District, working for 15 years before leaving for the MEA in 1993.

Under the current contract, a paraprofessional in Lansing earns between $7.69 and $16.52 an hour. But Cook is allowed to use his $200,000-plus private sector salary with the MEA to calculate his public sector pension. It’s estimated his government pension would be $105,000 a year if he were to retire this year.

Senate Bill 279 would end these arrangements. It has passed the Senate and is sitting in the House.

Editor's note: The MEA salary of Nancy Strachan was corrected.