Stagnant Teacher Salaries in Michigan: Recent Impact of Unfunded Retirement Obligations

Home , 2010s

September 2019 | Memorandum 1159

Key Takeaways

• 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. The statewide 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.

Introduction

Michigan’s state government plays as large a role in other states. In the past year, teachers in Arizona, funding local schools as any state in the nation. The California, Colorado, Kentucky, Oklahoma, and state assumed this lead role in 1994 with the major West Virginia walked out of their classrooms and school finance reforms of Proposal A. During Mich- rallied in state capitols in protest to have their voices igan’s “lost decade,”a state appropriations for higher heard. These teachers were pressuring for smaller education, revenue sharing to local governments, classroom sizes, increased support staff, and more and general state administrative functions suffered financial resources. At the heart many of these pro- from restrained revenue growth; however, spending tests is a call for increased teacher pay and benefits. on public K-12 education remained a relatively high priority within the state budget. Many in the teaching Few would dispute that quality teaching is the most profession and other supporters of public education important in-school component in a child’s educa- nonetheless suggest that teacher pay has not kept tion. Teacher pay and benefits comprise the largest pace with those funding priorities in the last decade, shares of school budgets, but education dollars must thus contributing to the difficulties of attracting and also provide for support staff, student transportation, retaining high quality teachers. classroom supplies, and retirement costs. While the state has increased spending on education, the large The plight of teacher pay in Michigan has not at- amounts necessary to finance unfunded retirement tracted the same levels of public attention as in liabilities have left little for increased spending inside Michigan classrooms, as would be reflected in rising a A reference to the fiscal disruptions to state and local teacher salaries. government finances arising from Michigan’s single-state recession (2001-2007) and the Great Recession (2007-2009).

National Rankings

From a national perspective, Michigan teacher Chart 1 salaries are doing well. Michigan ranks 13th Average$90,000 Teacher Salary by State, 2018 highest in the nation with an average teacher salary of $62,702 in 2018, four percent above $80,000 the national average salary ($60,483) (Chart 1).b

Washington ($55,175) has the median aver- $70,000 Michigan age teacher salary. The highest salaries are $62,702 st United States predominantly in the Northeast; New York (1 ), $60,483 Massachusetts (3rd), and Connecticut (5th). Oth- $60,000 er states with averages greater than Michigan nd th include California (2 ), Maryland (7 ), Pennsyl- $50,000 vania (9th) and Illinois (11th). Data reported by

the National Education Association (NEA), the $40,000 largest teacher union in the country, also places Michigan at 13th nationally. $30,000 IL IA RI HI ID IN MI FL NJ WI LA VT TX AZ CT AK PA TN VA KS KY UT DE NY CA NV SC SD DC NH NC MT GA ND OK MA OR OH ME AL MS MD MN NM WY WA WV AR NE CO MO The National Education Association also reports USA Source: National Center for Education Statistics, Digest of the average starting salary in each state. In Education Statistics 2018, Michigan ranked 34th in the nation for starting salary at $36,599 and below the national Chart$60,000 2 average of $39,249 (see Chart 2). Average Starting Teacher Salary by State, 2018 The difference between Michigan’s rankings on $55,000

these two measures of salaries is noteworthy. In spite of having a mean salary that falls above the $50,000 U.S. average, Michigan teachers start out mak-

ing less money than teachers in other states. A $45,000 couple possible explanations for the ranking dis- United States crepancies are that Michigan’s teachers either $39,249 receive larger annual salary bumps (referred to $40,000 Michigan as “steps”) or receive salary increases sooner in $36,599 their careers. Collective bargaining agreements $35,000 in various districts around the state outline step

increases with pay jumping about $2,000 per $30,000 IL IA HI RI IN ID MI FL NJ WI LA TX VT AZ CT UT TN AK PA VA KY KS CA NY DE NV SD SC DC ND NC NH MT GA OK MA OR OH ME MS AL MD MN NM WY WA WV NE AR CO MO step at the beginning of a schedule. Compared USA Source: National Education Association b The National Center for Education Statistics (NCES) annually publishes rankings of the states based on a variety of school finance metrics. The NCES rankings are based on information provided by state departments of education, local school districts, and other regional bodies.

Citizens Research Council of Michigan Board of Directors ALEKSANDRA A. MIZIOLEK, Chair CHASE CANTRELL ANN D. FILLINGHAM EARLE “WIN” IRWIN PAUL R. OBERMEYER MICHAEL P. MCGEE, Vice Chair STEPHAN W. CURRIE RON FOURNIER WENDY LEWIS JACKSON JAMES M. POLEHNA LAURA APPEL , Treasurer DANIEL DOMENICUCCI JUNE SUMMERS HAAS HARRY KEMP KIRK PROFIT TODD ANDERSON TERENCE M. DONNELLY JASON HEADEN NICK KHOURI CAROLEE K. SMITH SANDY K. BARUAH RANDALL W. EBERTS RENZE L. HOEKSEMA THOMAS G. KYROS CHRISTINE MASON SONERAL BETH BIALY TYLER ERNST MARYBETH S. HOWE ANNE MERVENNE KATHLEEN WILBUR LAWRENCE N. BLUTH RICHARD A. FAVOR, JR.

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115 West Allegan Suite 480 | Lansing, MI 48933 | crcmich.org pg. 1 Stagnant Teacher Salaries in Michigan to states that have instituted statewide minimum distribution of districts (those with at least 500 stu- salary schedules, many beginning step increases dents),c, the lowest average teacher salary in fiscal are about $1,000.1 year (FY) 2018 was Webberville Community Schools in Ingham County ($38,033) while Walled Lake Michigan’s statewide average hides considerable Schools (Oakland County) had the highest average district-level variation. At the extreme ends of the salary at $81,168.

Perspectives on Teacher Pay

Research on teacher salaries provides a wide range of perspectives on how salaries should be set, evaluated, and potentially changed. From policy institutes to national labor organizations, there is no general consen- sus on how teacher pay should be addressed. While hardly exhaustive in its scope and depth, the following paragraphs highlight a few different perspectives on teacher compensation.a

The gap between teacher pay and other college-educated workers is at a record high. In 2018, the weekly wage gap — difference between teacher pay and other college-educated workers — was 21.4 percent. Average weekly wages for teachers, adjusted for inflation, has decreased by $20 since 1996 while the average weekly wages for other college graduates has risen by nearly $300. Further, any improvements to benefits teachers receive compared to other professionals have not been enough to offset the weekly wage gap teachers face.b

The Center on Budget and Policy Priorities (CBPP) writes that state funding for education across the country has fallen dramatically in the past decade, often in response to the recession. This created a gap in public school funding that local sources could not make up. Teacher salaries make up a large portion of public education spending; therefore, cuts to districts’ budgets restrict their ability to increase the size of the teaching staff or boost wages.c

The Heritage Foundation found that when teachers and non-teachers are matched based on an objective measure of cognitive ability rather than level of education, teacher salaries are more in line with other professions. They also found that when teachers leave the profession for a non-teaching job, they face an average wage decrease of three percent. Additionally, the fringe benefits for public school teachers are often unrecognized and when factored into overall compensation can result in teachers earning more than similarly-skilled private sector workers.d

The American Enterprise Institute (AEI) says that teacher pay does not need to be increased or decreased, rather it should be reformed with a different system. They assert that current teacher pay systems are in- credibly rigid and backloaded, citing strict salary schedules and above-average retirement benefits. Instead, AEI offers reform cost-neutral suggestions where teachers could exchange a more modest retirement plan for higher salaries.e

a Differences between these perspectives may be explained in part by differing methods used when calculating teacher salaries. For example, some choose to include benefits such as healthcare and deferred compensation in their assessments. Others factor in a shorter work year for teachers with few school districts in session during the summer. These differences hinder the ability to draw comparative conclusions across all available estimates. b Allegretto, Sylvia, and Lawrence Mishel. 2019. The Teacher Weekly Wage Penalty Hit 21.4 Percent in 2018, A Record High. Economic Policy Institute, Center on Wage & Employment Dynamics. c Leachman, Michael, Kathleen Masterson, and Eric Figueroa. A Punishing Decade for School Funding. Report. November 29, 2017. https://www.cbpp.org/research/state-budget-and-tax/a-punishing-decade-for-school-funding#_ftn1. d Richwine, Jason, and Andrew Biggs. Assessing the Compensation of Public-School Teachers. Report. November 1, 2011. https://www.heritage.org/education/report/assessing-the-compensation-public-school-teachers. e Biggs, Andrew, and Jason Richwine. "Don't Raise Teacher Pay, Reform It." American Enterprise Institute. June 5, 2018. http://www.aei.org/publication/dont-raise-teacher-pay-reform-it/.

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Teacher Pay and Education Funding in Michigan

While Michigan teacher salaries are doing well in the classroom.e Over the entire 10-year period, the the national context, they have stagnated in recent average salary rose just two percent. years.c To understand how teacher pay has fared over the years, it is best to start with trends in the However, after adjusting the average salaries for statewide average teacher salary and the experienc- inflation, the long-term trend changes dramatical- es of school districts across the state.d ly. Overall, the inflation-adjusted average teacher salary declined 10 percent over the 10-year period. Average Teacher Salary Trends Teachers are being paid less for the same work. Some may even argue that teachers are expected The Michigan average teacher salary (in nominal to work more for the same pay, given the increased terms) has inched up slightly over the past 10 years, demand to improve student academic performance but has remained fairly constant in recent years (e.g., as measured by standardized testing) and the (see Chart 3). It increased slightly from FY2008 to heavy emphasis placed on student performance in FY2010, before dipping a bit in FY2011. This dip teacher evaluations. likely is the result of the early out program offered to school personnel in 2010 which caused some older, Chart 3 more experienced (i.e., higher paid) teachers to leave Michigan Average Teacher Salary, FY2008 to FY2018

$74,000

$72,000 FY2010 c This analysis includes only traditional public school districts $71,382

with enrollments of at least 500 students. It excludes $70,000 charter schools and intermediate school districts. Charter $68,000 schools (or public school academies) may not report their FY2008 FY2013 $68,578 average teacher salaries because teaching staff and others $66,176 $66,000 are often hired through contracts with private management

companies. Also, those traditional districts that did not have $64,000 FY 2018 data for each year were excluded from the analysis. In the $61,908 $62,000 FY2013 end, data from 443 districts was analyzed. $62,530

d The average teacher salary is calculated using the base $60,000 FY2008 salary reported by each school district to the Michigan $60,430 Department of Education. Base salary is the total salaries $58,000 of certified teaching staff under Basic Programs divided $56,000 by the corresponding number of full-time equivalent (FTE) teachers. This analysis includes only traditional public $54,000 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018

school districts with enrollments of at least 500 students. It Real Average Teacher Salary-2018 Dollars Nominal Average Teacher Salary excludes charter schools and intermediate school districts. Charter schools (or public school academies) may not Source: Michigan Department of Education Bulletin 1014 report their average teacher salaries because teaching staff and others are often hired through contracts with private e Under Public Act 75 of 2010, teachers who met the management companies. Also, those traditional districts requirements to retire were offered an increase in their that did not have data for each year were excluded from pension multiplier as an incentive to leave the active the analysis. workforce. Following this change, many teachers at the high end of the pay scale with considerable experience left the workforce and their positions were filled with younger, lower paid teachers. See https://crcmich.org/ PUBLICAT/2010s/2019/rpt404-teacher_pipeline.pdf.

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Teacher Salary Schedules

Generally, teacher salaries in most public schools are set through a format often referred to as “step and lane” salary schedules. In Michigan, each school district sets its own schedule, there is no state mandated minimum. These schedules are typically determined through collective bargaining agreements between school officials and teacher unions. The step and lane that an individual teacher is in determines her/ his base salary.

A step is based on the number of years worked by the teacher. School districts vary in how many years a teacher must work for a step increase; a step increase may occur each year or take more than a year to earn. A teacher earns a step increase when he/she has worked the number of years required. A step increase is most often accompanied by an increase in base salary.

A lane is based on the level of education or professional development a teacher has earned. Classification of lanes vary based on the school district, some focusing only on the degree a teacher has, while others count the number of higher education credits or amount of professional development completed. A lane change for a teacher is most often accompanied by an increase in their base salary.

Figure 1 Example Salary Schedule: Williamston Community Schools 2018-19 (Selected Steps)

Step Bachelor’s Bachelor’s-Plus Masters Masters-Plus 0 $35,288 $36,861 $38,382 $40,171 1 37,053 38,704 40,303 42,178 5 45,039 47,046 48,986 51,271 8 52,137 54,460 56,708 59,351 11 61,564 64,311 66,965 70,092

Source: Williamston Education Association Agreement 2018-2020 For example, a new teacher in the Williamston Community Schools with no experience and a bachelor’s degree would start in the upper left corner of the salary schedule with a salary of $35,288. For each subsequent year of experience, they would earn a step increase and move further down the schedule, earning a base salary increase as well. If that teacher continued their education beyond a bachelor’s, they would then move to the next lane and possibly earn a base increase (see Figure 1).

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A total of 376 of 443 school districts, 85 percent, FY2018, real spending is up three percent, but all analyzed from FY2008 to FY2018 faced a decline in of this growth came in the early part of this period inflation-adjusted average teacher salary (seeChart as spending has more or less remained constant 4). The median district salary fell 9 percent, whereas with the rise in inflation since FY2016 (see Chart 5). the statewide average salary dropped 10 percent. The gains since FY2014, however, have not been sufficient to reclaim the lost ground from the Chart 4 earlier period. As a result, real spending in Distribution of Change in School Districts’ Inflation-Adjusted FY2018 ($10,548) is nearly seven percent Teacher Salaries, FY2008 to FY2018 below FY2008 level ($11,362)

120 Median: -9% Salary-to-Spending Ratio State Average: -10% 100 The ratio of average teacher salary to per-pupil expenditures provides an understanding of 80 teacher salaries in the context of the larger fiscal situation facing schools. More specifi-

60 cally, it provides insight into the priority given to teacher salaries relative to other education

Number of School School NumberDistrictsof 40 spending. Michael J. Petrilli of the Thomas B. Fordham Institute, an education policy

20 think tank, introduced this ratio in a recent blog post looking at salaries across states.3 Petrilli observed that K-12 spending has dramatically 0 increased between 1990 and 2016, yet teachers’ salaries did not increase at the same rate, Percentage Change resulting in a noticeable ratio decline.

Source: Michigan Department of Education Bulletin 1014

Per-Pupil Expenditure Trends Chart 5 Michigan Per-Pupil Education Expenditures, Statewide general fund per-pupil expenditures from FY2008 to FY2018

FY2008 to FY2018 depict a somewhat different sto- $12,000 FY2009 ry than the average teacher salary trend. Nominal $11,694

per-pupil spending increased through FY2010, then $11,500

fell slightly in response to the financial strains on FY2008 $11,362 school budgets arising from the Great Recession $11,000 and a general downturn in state-level tax effort (see 2 $10,500 Chart 5). Following this period of decline, the aver- FY2018 age per-pupil expenditure increased nearly $1,100 $10,548 FY2014 (12 percent) from FY2013 to FY2018. $10,000 $10,213

Adjusting general fund per-pupil expenditures for $9,500 FY2013 inflation shows a few distinct trends over the 10-year FY2008 $9,455 f $9,325 period. From FY2008 to FY2014, real spending $9,000 fell sharply by 10 percent. Between FY2014 and $8,500 f Real per-pupil expenditures are calculated using the State FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 and Local Government Price Deflator. This price index Nominal Per Pupil Expenditures Real Per Pupil Expenditures-2018 Dollars is generated by the U.S. Bureau of Economic Analysis Source: Michigan Department of Education Bulletin 1014; Sen- to measure the value of goods and services typically ate Fiscal Agency; U.S. Bureau of Economic Analysis; purchased by government. Citizens Research Ccouncil calculations

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Using this ratio concept, Chart 6 examines what Chart 6 has happened in Michigan between FY2008 and Michigan’s Teacher Salary-to-Education Spending FY2018. The ratio is calculated for the state as a Ratio, FY2008 to FY2018 whole, based on the statewide averages, as well as 6.70 for each individual district. A constant ratio suggests 6.60 FY2013 that teacher salaries are keeping up with changes 6.61 6.50 (increase or decrease) in per-pupil expenditures, FY2008 6.48 maintaining their relative importance in the larger 6.40 fiscal picture of schools. An increase in the ratio 6.30 suggests that either more school funding is going to 6.20 Spending Ratio Spending - to teacher salaries while per-pupil expenditures remain - 6.10 constant, or that per-pupil expenditures are trending Salary downward while the average teacher salary remains 6.00 constant. On the other hand, a decline in the ratio 5.90 could be caused by per-pupil expenditures increasing FY2018 while the average teacher salary remains constant 5.80 5.87 or a drop in average teacher salary while per-pupil 5.70 expenditures remain constant. FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Source: Michigan Department of Education Bulletin 1014; Citizens Research Ccouncil calculations Michigan’s statewide ratio increased slightly from FY2008 to FY2013, with a minor dip in FY2011 that is largely attributable to the 2010 early retire- Chart 7 ment incentive offered to school personnel and Distribution of School Districts by Salary-to-Spending Ratio the slight dip in average teacher salary discussed Percentage Change, FY2008 to FY2018 earlier. Following this clear rising trend early in 100 the 10-year period, the ratio reversed course and 90 has declined sharply, from 6.6 in FY2013 to 5.9 in FY2018. 80 70

The stark change in trend following FY2013 60 clearly reflects a substantial change in resource allocations of Michigan school districts as a 50 whole. Teacher salaries have not changed 40 Number of School School NumberDistrictsof in concert with the rise in per-pupil spending 30 documented earlier. Had the FY2008 ratio re- 20 mained unchanged through FY2018, the average teacher salary would be $68,356, almost $7,000 10 higher in FY2018. Using the peak FY2013 sala- 0 ry-to-spending ratio, the average teacher salary would be $69,758 today, nearly $8,000 more. Percentage Change From FY2008 to FY2018, 376 of the 443 school Source: Michigan Department of Education Bulletin 1014; districts analyzed, 85 percent, had a decreased Citizens Research Ccouncil calculations salary-to-spending ratio (see Chart 7).

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What’s more, nearly 90 percent of school Chart 8 districts had a decreasing salary-to-spend- Distribution of School Districts by Salary-to-Spending Ratio ing ratio when looking only at the most recent Percentage Change, FY2013 to FY2018 period, when the statewide ratio sharply 120 declines (see Chart 8). Impact of Retirement Obligations on 100 Teacher Pay 80 In recent years, inflation-adjusted per-pupil expenditures have increased, yet the added 60 spending is not reflected in higher average

teacher salaries. One possible explana- School NumberDistrictsof 40 tion for stagnant salaries - the addition of support and non-instructional staff – is not 20 supported by the data. Statewide staffing numbers show that non-teaching staff has not increased, at least relative to the number 0 of full-time teachers, over the past 10 years.4

Similarly, a flat average salary might be ex- Percentage Change plained by changes in teacher composition. Source: Michigan Department of Education Bulletin 1014; We would expect average salaries to drop Citizens Research Ccouncil Calculations or remain constant if the workforce becomes younger over time. Again, the composition of the teaching force, at least the oldest and youngest from pension funding, warning that the combined in- cohorts, has not changed much since 2013.5 creasing costs for retirement contributions and health benefits for working employees leaves little room for Another possible reason for the observed ratio trends increased spending elsewhere in school budgets, would be other spending demands facing schools, even with an improving economy and rising tax re- including other personnel related categories such ceipts.6 The same sentiments were expressed again as employee benefits and/or retirement obligations. in a 2013 update shortly after the impacts of 2012 This is evident in the increased contributions for MPSERS reforms began to take root. It was noted teacher pensions and other post-employment ben- that increased MPSERS employer contributions have efits provided through the Michigan Public School had a substantial financial impact on public schools Employee Retirement System (MPSERS). with an increasing proportion of available resources being needed to meet these costs.7 Ultimately, the In 2004, the Citizens Research Council explored the increasing MPSERS costs have crowded out spend- potential for public school finance disruptions arising ing in other areas of schools’ budgets.

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Michigan Public School Employee Retirement System

The Michigan Public School Employee Retirement System (MPSERS) is a state-run retirement system that provides pension and retiree health care benefits to employees of public school districts and intermediate school districts, some public school academies, as well as certain community colleges, district libraries, and state universities.

MPSERS has had, and continues to have, large unfunded actuarial liabilities (UAL) related to poor market performance, the failure of the system to meet other actuarial assumptions, and short-term budgeting decisions.

The system’s UAL has increased drastically over the past two decades (see Chart 9). MPSERS costs will continue to increase as the actuarial assumptions made in the system are revised over time. Cur- rently, the UAL is scheduled to be paid off by 2038 with the system fully funded. In FY2014, the number of retirees surpassed the number of active employees, also placing strain on the system.

Chart 9 MPSERS Pension Unfunded Actuarial Liabilities, FY2000 to FY2018

$35,000 $32,759

$29,444 $30,000 $29,107 $26,721 $26,479 $25,796

$25,000 $24,266

$22,389

$20,000

$17,633 Millions

$15,000

$11,982

$9,995 $10,000 $8,931 $7,533 $6,141 $6,043 $5,771 $5,000 $3,575

$1,375 $246 $- FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Source: Senate Fiscal Agency Various state level reforms have been enacted to address and mitigate the rising legacy costs and ensure that retirees receive the benefits they paid into and are constitutionally guaranteed. Cost offset grants were first appropriated to help school districts cover their growing retirement costs but did nothing to address the underlying UAL cost pressures. Notably for employers, a rate cap for employer UAL contributions (pension and retiree health) was established to help stabilize their contribution rates and make fiscal planning a bit more predictable (the employer UAL rate (as a percent of payroll) is frozen at the FY2012 level). Because the total UAL rate is higher than the employer cap, the state makes up the difference through a separate allocation coming from the School Aid Fund, the same funding source from which districts receive their operating funding to spend on teacher salaries.

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Employer liabilities to the retirement system have Chart 11 grown largely in response to the escalating UAL UAL Contribution Rates as a Percent of Payroll, obligation. Large increases in employer UAL costs FY2008 to FY2018

occurred just prior to the MPSERS rate cap. How- 35% ever, employer contributions stabilized in FY2013 as the state began to cover a share of these costs 30%

11.70% and the impact of the rate cap for employers became 10.53% 11.32% 25% 8.76% effective (seeChart 10). While the employer share 4.56% 1.60% has stabilized, the state share continues to grow 20% (see Chart 11). In FY2018, the state appropriated

15%

over $1.3 billion for retirement costs outside of the ofPayroll Percent capped employer share; just over $1 billion of this is 20.96% 20.96% 20.96% 20.96% 20.96% 20.96% tied to UAL payments. 10%

5% Chart 10 0% Employer and State of Michigan Contributions to FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Retirement Fund, FY2005 to FY2018 Total Employer Rate State Stabilization Rate

$3,500 Source: State of Michigan, Office of Retirement Services

$3,000 State appropriations for MPSERS, including those to

$2,500 cover the UAL obligations above the employer rate cap flow through the School Aid Fund to local school $2,000 districts and other units, before being returned to the Office of Retirement Services for final payment to the Millions $1,500 retirement system. Through this fiscal arrangement, a portion of the funding to meet the annual UAL $1,000 obligations is provided to school districts where it

$500 is counted in per-pupil funding (and reflected in the per-pupil spending) before being paid to the retire-

$- ment system. The rise in retirement contributions FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 School Districts State Government of approximately $1 billion since FY2012 to meet unfunded liabilities directly accounts for the majority Source: State of Michigan, Office of Retirement Services; Senate Fiscal Agency of the increase in per-pupil expenditures noted in this report. These dollars, while showing up in annual school spending figures, are returned to the state-run teachers’ retirement system to meet funding obligations related to paying down past debts. These debts cannot be skirted; the promised benefits to current and former teachers are constitutionally protected.

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Conclusion

The outlook for Michigan’s teacher salaries is the past funding decisions at the state level. School gloomy. They have fallen victim to a crowding-out districts have little option but to pay these pension effect arising from the requirements to meet pen- requirements, whether the funding comes from a sion obligations. As a result, school budgets have portion of the discretionary state aid they receive continued to be tight, preventing teacher salary (per-pupil foundation grant) or via a designated increases and reflected in a noticeable decline in state appropriation for retirement obligations. Un- the salary-to-spending ratio. The bottom line is that less changes can be made to ensure the funding of pension obligations have taken on greater priority in MPSERS while providing adequate funding for other the overall education spending picture, not because educational services, teachers will likely bear the of decisions made at the local level but because of burden with little to no increase in pay.

Endnotes

1 Griffith, Michael. State Teacher Salary Schedules. line Examining Trends in Teacher Demand and Report. March 2016. https://www.ecs.org/wp-con- Supply. Report 404. https://crcmich.org/PUB- tent/uploads/State-Teacher-Salary-Schedules-1.pdf. LICAT/2010s/2019/rpt404-teacher_pipeline.pdf 2 Arsen, David, Tanner Delpier, and Jesse Nagal. 5 Ibid. Michigan School Finance at the Crossroads. Re- 6 Citizens Research Council of Michigan. September port. January 2019. https://education.msu.edu/ 2004 Financing Michigan Retired Teacher Pension ed-policy-phd/pdf/Michigan-School-Finance-at-the- and Health Care Benefits. Report 337. https:// Crossroads-A-Quarter-Center-of-State-Control.pdf. crcmich.org/PUBLICAT/2000s/2004/rpt337.pdf. 3 Petrilli, Michael J. "You Might Be Surprised Which 7 Citizens Research Council of Michigan. May States Prioritize Higher Teacher Salaries." The Thomas 2013. Funding for Public Education: The Re- B. Fordham Institute. April 24, 2019. https://fordhamin- cent Impact of Increased MPSERS Contribu- stitute.org/national/commentary/you-might-be-sur- tions. State Budget Note 2013-01. http://crc- prised-which-states-prioritize-higher-teacher-salaries. mich.org/PUBLICAT/2010s/2013/funding_pub- 4 Citizens Research Council of Michigan. Feb- lic_education_drivers_policy_options-2013.pdf. ruary 2019. Michigan’s Leaky Teacher Pipe-

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