April 30, 2024

TO: Michigan Senate and House Members

As you know, Governor Gretchen Whitmer has announced a plan to divert hundreds of millions of dollars from public school retirement funding to expand government programs. We think this raid on teachers’ pension funds is a risky gamble for both teachers and our kids.

While it may be tempting to add new programs, and you might find some new spending you like when it comes to this money, the reality is that our MPSERS pension fund is still $35 billion in debt. We owe it to our teachers to keep their retirement promises and owe it to our kids to solve these problems now, not create bigger burdens for them to carry later. It would be folly to launch permanent new spending before tackling the K12 system’s biggest financial hole.

This misguided proposal to take close to $700 million from teacher pension funding to funnel to new spending adds great risk to unfunded liabilities for schools and, most importantly, represents a broken promise to Michigan’s public school teachers. As budget discussions get underway in Lansing, we ask that you reject this proposal and approve a fiscally responsible state budget that supports teachers while paying down our debts and helping Michigan’s economy and credit rating improve.

If you want to add spending, please look to other existing sources. Redirecting corporate incentives, for example, might offer similar amounts for the governor’s policy goals.

When discussing the reasoning behind the idea, the governor has hinted the state is able to redirect the money because it has fully paid off this massive debt. To be clear, that is not true. Michigan has made one promise, retirement, which has two parts, pension and retiree healthcare, to the hardworking teachers throughout our state. And everyone knows that the base, or floor, funding established by the legislature was implemented to fully fund the entire promise, not just part of it.

You deserve kudos for ensuring retiree healthcare is now fully funded. However, Michigan still has a massive issue with its teacher pension debt, and sadly, this debt is still growing, from about $33.75 billion in 2020 to nearly $35 billion in 2022, according to the most recent numbers available from the Senate Fiscal Agency. With increasing debt in the pension fund, now is no time to divert investments from these promises to new spending. Any savings from ending the retiree healthcare portion of the debt should go toward paying off this pension debt, as it was originally intended by the Legislature, to ensure teachers get the fully funded retirement they deserve.

Keeping the promise to retired and retiring teachers and honoring the commitment to keep the base funding by investing the full amount into the teacher pension fund is the right thing to do. Under this raid on teacher retirement funding, Gov. Whitmer is taking a risky gamble with the retirement promises made to teachers. In fact, even her own administration has shown that if they short the pension fund these deposits, there’s a 50% chance the teacher pension underperforms and is therefore at risk of even worse underfunding. At home you wouldn’t remodel your kitchen when there’s a hole in your roof; please fix the threat facing our kids and teachers now before shifting that money elsewhere.

As policymakers, we urge you to protect our children and grandchildren’s future. Don’t saddle our future generations with this debt in order to finance an expansion of government services.

Concentrating your efforts on improving our overall educational K-12 system will help Michigan attract more job creators, more jobs, and grow and improve the lives of people who live here.

Members of the West Michigan Policy Forum

Full Board of Directors