News Story

MEA Charging Members Extra To Cover Retirement Liabilities For Union's Employees

While MEA fights changing state pension system, union has trouble with its own underfunding

Faced with $208 million in retirement liabilities for its own employees, the Michigan Education Association is charging its members an extra $50 a year for three years to help cover those costs, according to teachers who are familiar with the fees.

The MEA is in the red for $159.3 million as of Aug. 31, 2012, due to $224 million in liabilities with a big chunk of that from its projected retirement costs. It has a defined benefit pension plan for its employees.

The MEA didn't immediately respond to a request for comment.

The MEA has 117,000 active members and if they are all being charged the $50 a year for three years, it would generate a total of about $17.5 million.

The MEA's retirement liabilities for its employees increased by nearly $45 million from $163.8 million in 2011 to $208 million in 2012, according to the LM-2 reports the union filed with the U.S. Department of Labor. The retirement pension liability was $129 million and the retirement health liabilities were $79.4 million in 2012.

Michigan's pension system for teachers is $22.4 billion underfunded. State employees and most private sector workers have been shifted to defined contribution, 401(k)-type accounts. The MEA has long fought against closing the state's defined benefit plan for employees; first defeating an attempt in the late 1990s (when new state employees were shifted) and again last year.

Teachers who commented for this story are not being identified because they are worried the union might retaliate against them. One MEA local has printed in a newsletter the names of employees who opted out of the union. And MEA President Steve Cook has referred to people who exercise their right to leave the union as "free loaders."

One teacher said some teachers may think the $50 charge is new because changes in recent state laws allow teachers to see a breakdown of their dues. Teachers may just be noticing the "temporary dues" charge of $50 now that it is specifically identified. It is unclear if the $50 payment is in its first or second year. The "temporary dues" could be extended if there was a vote to continue it, according to one of the teachers.

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.