| 2 min read | from Citizen’s Research Council of Michigan |
Student test scores are unacceptably low, schools are underachieving, and teachers are leaving the field. Funding is up, but stagnant salaries are making it difficult to attract new teachers and retain the ones we have. Why? In a word: Pensions.
What we found:
Even as the average amount of per-pupil spending has increased 12 percent over the past five years, the new dollars are not finding their way into teachers’ paychecks. Michigan’s average teacher salary has remained at about $62,000.
Required pension obligation payments have taken on greater priority in education spending. Despite recent retirement system reforms, more and more school spending is going to meet unfunded retirement liabilities.
Unless changes can be made to ensure retirement obligations are met while providing adequate funding for other educational services, the outlook for Michigan’s teacher salaries remains gloomy.
Michigan’s waning levels of educational achievement is a policy issue that has garnered the attention of politicians, business groups, civic organizations, and everyday citizens. The state Department of Education has a goal of student achievement reaching the top 10 among the 50 states by 2026, but achievement remains mired in the bottom third. While the reasons for this are complicated, it is clear that without effective teaching, that lofty goal will remain out of reach.
Even as per-pupil funding for education has risen significantly – by 12 percent in five years, new research from the Citizens Research Council shows teacher salaries have been stagnant. The increased education spending is going to post-retirement obligations – pensions and health care – leaving very little for teachers’ paychecks.
“Educational reform may take many shapes,” says Eric Lupher, President of the Citizens Research Council, “but it all revolves around having highly qualified, engaged teachers motivated to expand young minds. The ability to attract and retain people in the teaching profession will rely in part on them feeling appreciated on pay day.”
While pension reform in 2012 eased the financial burden on individual school districts somewhat, funding the promises made to Michigan’s former teachers is taking a painful share of current spending. Lansing’s past failures to adequately manage and fund the state teacher retirement system resulted in a grossly underfunded system that must be funded now.
Our report notes that the rise in state retirement contributions of over $1 billion since that reform to meet unfunded liabilities directly accounts for the majority of the spending increase. This money is returned to the state-run teachers’ retirement system to meet funding obligations related to paying down past debts. These debts are constitutionally protected and cannot be avoided.
Perhaps the starkest contrast comes from showing the disconnect between the increase in spending on education and that in teaching salaries. Per-pupil education expenditures increased 12 percent from 2013 to 2018, but the statewide average teacher salary remained flat. Some of this can be attributed to workforce composition (senior teachers leaving and younger, lower paid entering), but the bulk of the squeeze is tied to paying down unfunded liabilities. In 2013, retirement contributions amounted to 22.6 percent of districts’ payrolls. In 2018, the districts and the state collectively were contributing 32.3 percent of payrolls.
“The solution to this issue is straightforward, but not easy,” Lupher continued. “We need to make changes to ensure the funding of retirement costs while providing adequate funding for other educational services. Until then, teachers will likely bear the burden with little to no increase in pay.”
Founded in 1916, the Citizens Research Council of Michigan works to improve government in Michigan. The organization provides factual, unbiased, independent information concerning significant issues of state and local government organization, policy, and finance. By delivery of this information to policymakers and citizens, the Citizens Research Council aims to ensure sound and rational public policy formation in Michigan. For more information, visit www.crcmich.org.