News Story

Legislature Tries To End Public Pension Spiking By Union Officials

An earlier reform ended six-figure payouts, but union officials still accrue regular school pensions

A bill that has passed the state Senate would end a practice that, among other things, has allowed recent presidents of the state’s largest teachers union to inflate, or spike, their taxpayer-backed school pensions. Senate Bill 795, which was sponsored by Sen. Marty Knollenberg, R-Troy, passed 25-12, with all Democrats voting “no.” They were joined by two Republicans, Tory Rocca of Sterling Heights and Wayne Schmidt of Traverse City.

Under current law, government employees who are also union officials can take various types of leave in which they are carried on the public payroll while doing union work. One form of this, called professional services leave, allowed some local union officials to become full-time, high-ranking officials who earn six-figure union salaries — with government pensions based on those amounts.

An earlier reform limited these officials’ government pension credits to the amount they would have earned on their salary as school employees, not on their higher union salary. The bill that passed the Senate this week would end all of this by prohibiting arrangements by which school and government employees earn state pension credits for performing union work.

Former Michigan Education Association President Steve Cook benefitted from this pension-spiking scheme when he retired. Information provided by the state Office of Retirement Services indicates that he was able to turn what would have been annual retirement benefits of $10,784 into a state pension of $103,227.

Cook was able to boost his pension because the state law allowed him to base his school pension payout on the high salaries he earned over 25 years working full time for the MEA as an “educator on leave” from the Lansing School District. Cook had previously been employed by the district for 15 years as a paraprofessional.

When he retired, Cook was allowed to use his $235,771 annual salary as the MEA president in the formula used to determine his state pension benefits rather than his district pay, which was lower. While the MEA reimbursed the Lansing School District for the basic cost of Cook’s pension, taxpayers remain on the hook for the increased cost of Cook's pension due to the chronic underfunding of the Michigan Public Schools Employees Retirement System..

Senate Bill 785 is opposed by unions, whose officials have labeled it an attack on public employees.

“Right now Lansing Republicans are pushing two bills that represent a direct attack on public employees like teachers, social workers, bridge inspectors, janitors, and snow plow drivers,” the Michigan AFL-CIO said in a message requesting its members to oppose Knollenberg’s pension reform bills.

“[The bills] would ban public employee union officials from representing their members and collaborating with school, state, and local government administrators during normal business hours,” AFL-CIO said.

The Michigan AFL-CIO did not respond to a request for comment.

In the House, the bill has been referred to the Committee on Education Reform. A similar bill was passed the Republican Senate in 2015, but it was never taken up by the Republican House. This year, the House Financial Liability Reform Committee advanced House Bill 5368, sponsored by Rep. Pamela Hornberger of Chesterfield Township. That bill, which is now pending before the full House, is similar to Knollenberg’s bill.

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.