News Bite

Few Outside Government Get This Michigan School Retiree Benefit

Pension checks with 3% COLAs, which are mostly ancient history in the private sector

Retired Michigan public school employees who were hired before 2011 get a 3% increase in their pension payouts every year. This represents a huge hit to taxpayers.

Here’s an example that illustrates the risk: In 2011, The Detroit News reported that Mike Washburn, former Forest Hills public school district superintendent, collected an annual pension of $136,027.

In 2020-21, Washburn’s annual pension had increased to $175,992.

The 3% annual pension increase is a lucrative benefit for retirees. Given the retirement system’s unfunded liabilities, however, it creates a burden on taxpayers.

The school retirement pension fund is $33.8 billion short of the amount it should have to meet the constitutionally protected benefit promises it has made to employees. Those promises are guaranteed by the state constitution, so any shortfalls will fall on residents in the form of higher taxes or fewer government services.

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.