Three past presidents of Michigan’s largest teachers union inflated their public school pensions by exploiting a legal loophole that allows them to count their six-figure, private sector positions working for the Michigan Education Association (MEA) as if they were employed by the public school system.
The union officials’ pension-spiking arrangements go all the way back to the early 1990s, when the school districts in which they worked counted them as “educators on loan” to the state’s teachers union. Michigan state law allowed the deals, but very few people knew of their existence.
Big Pension Differences
Current MEA President Steve Cook was a part-time, para-professional in the Lansing School District, where he worked 25 hours a week prior to becoming a full-time union official with the MEA in 1993. Cook earned a salary of $201,613 in 2014 working for MEA, and he is eligible to use his union salary and his 22 years as a full-time union official in his calculations to determine his public school pension. When Cook retires, his pension will be an estimated $105,000 a year.
Pensions in 2014 for former MEA Presidents Iris Salters and Luigi Battaglieri totaled $140,000 and $85,903, respectively.
Battaglieri’s public school pension would be an estimated $9,358 if it were based on his years of service as a teacher and his teacher’s salary of $34,659 in 1992, when he left for the MEA.
For years, the state of Michigan didn’t pay the full cost of offering a lifetime annual pension to its public school employees. As of 2014, the Michigan Public School Employees’ Retirement System had $26.5 billion in unfunded liabilities, according to the annual actuarial valuation report from the accounting firm Gabriel Roeder Smith & Company.
Now, the school districts are having to not only pay the current pension costs of its employees, but also has to pay the additional costs to make up for years of underfunding its pension plan.
Public-Private Taxpayer Exploitation
James Hohman, assistant director of fiscal policy for the Mackinac Center for Public Policy, says it’s wrong to make taxpayers pay for private sector employees.
“This is inappropriate for any private employee,” Hohman said. “That private employee’s public pension is going to cost taxpayers.”
A similar problem was revealed in Illinois in 2011. The Chicago Tribune reported Reg Weaver was able to qualify for a $242,000 annual pension from the state’s Illinois Teachers Retirement System based on the $300,000 salary he made as president of the National Education Association (NEA). When Weaver was a public school teacher in Illinois, prior to working for NEA, Weaver’s salary was $60,000 a year, the newspaper reported.
Tom Gantert ([email protected]) is senior capitol correspondent for Michigan Capitol Confidential, a daily news site of the Mackinac Center for Public Policy.
Image by Dave Dugdale.
Internet Info
Ray Long, “Ex-teachers union boss gets $242,000 state pension, Underfunded state system supports more than 100 teachers union officials,” Chicago Tribune, October 23, 2011:
http://articles.chicagotribune.com/2011-10-23/news/ct-met-pensions-teacher-side-20111023_1_state-pension-pension-law-state-teachers
Tom Gantert is senior capitol correspondent for Michigan Capitol Confidential, a daily news site of the Mackinac Center for Public Policy.
