News Story

Teachers Union Opposed State Pension Reforms, Now Doing Same

Retired employees call union's changes ‘disaster,’ ‘radical,’ ‘extreme’

Membership is down for the Michigan Education Association, but that hasn’t prevented sharp cost increases for the state’s largest teachers union. The MEA’s costs for providing health insurance benefits to its own retirees have gone up, and a group that represents them is pushing back against the union’s attempts to bring those costs under control.

The number of school employees paying dues to the MEA has steadily declined since 2011, when the number was 120,616. By 2018 the number of dues-paying members had fallen to 84,872, a 29.6% drop. The figures come from a report, called the LM-2, that the MEA files with the U.S. Department of Labor each year.

Annual revenue from dues and fees paid by unionized workers has fallen apace with these declines, dropping from $145.4 million in 2011 to $113.3 million in 2018.

On the positive side, the union’s unfunded pension liabilities have declined. In 2011 the union’s pension plan had $109.0 million in unfunded liabilities. By 2018 this unfunded liability had fallen to $81.6 million.

But the MEA has also promised to give its employees health insurance after they retire, and the liabilities in this account are increasing. In 2011 the union projected it had $54.9 million less than the amount it should have to cover these benefits going forward. By 2018 this unfunded liability had grown to $134.5 million.

This summer the MEA management decided it had to make changes. It proposed higher copays and reduced benefits for retirees, according to MIRS News. This is reportedly getting push back from the union’s Retired Staff Association.

Retired members were “shocked, disappointed, and angry” at MEA Executive Director Mike Shoudy’s recommendations, according to an internal memo reported by MIRS. It is said to describe the proposal as a “disaster, radical changes that the Employer’s plan to unilaterally implement within months . . . more extreme than most of us even imagined.”

MEA spokesman Doug Pratt defended the proposal and said there was an “urgent need for action” caused by rising medical and prescriptions costs for retirees.

“These updates to retiree health insurance will ensure benefits are available for current and future retirees when they need them most,” Pratt said.

The union’s position stands in stark contrast to its reaction when similar cost pressures forced the Michigan Legislature to increase employee cost-sharing in the taxpayer-funded health insurance benefits given to public school retirees.

The MEA fought hard against the change, saying that public employees were under attack by a Republican governor and Legislature.

The retirees group has hired an attorney to take on the MEA, according to MIRS.

“We were shocked by the lack of understanding of the trauma this letter and the imposed charges will cause (and) they are forcing us into an advisories position,” the retirees’ internal memo said.

The MEA didn't respond to emails seeking comment.

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.