Posted on 05/16/2016 5:07:18 AM PDT by MichCapCon
For the sixth year in a row, Michigan officials failed to pay the full amount the state's own experts say is required to adequately fund the school employee pension system. In addition to the risks associated with adding to the billions in unfunded liabilities the system has already accumulated, this is also imposing more stress on local school budgets.
According to rules of a defined benefit pension system, the state is supposed to contribute an amount called the “annual requirement contribution,” or ARC, into the Michigan Public School Employees Retirement System (MPSERS) every year. For 2015, actuarial accountants say that comes to $2.18 billion.
But the state of Michigan paid just $1.97 billion, a $210 million shortfall. The last year the state fully paid the recommended amount was 2009, and since then, the cumulative underfunding has totaled $2.03 billion.
“Underfunding pensions kicks the costs for current service into the future and is unfair to teachers, administrators and taxpayers alike,” said James Hohman, the assistant director of fiscal policy for the Mackinac Center for Public Policy.
Dexter Community Schools Superintendent Chris Timmis said if a school district had demonstrated the same pattern of underpayment, “We’d be taken over (by the state).”
Dexter has seen its required pension contributions increase from $3.6 million in 2009 to $5.37 million in 2015, in part to make up for past underfunding of the system as a whole. The total unfunded liability accumulated by the state-run school pension system is currently $26.5 billion.
Every year, school districts are having to dedicate larger sums to cover the escalating costs of the defined-benefit pension system.
“MPSERS is wiping out our budgets already,” Timmis said. “It’s huge. You can’t keep up with it.”
Bills have been submitted in the state House and Senate that would shift new school employees to a 401(k)-type plan, which would cap the state's retiree liabilities. All new state employees hired since 1997 are in this type of defined contribution system, while new school employees are still being enrolled in the defined benefit pension system.
Are the teachers that are eligible for their retirements right now, taking the $ and running?
Ain’t Socialism Wonderful? It’s For The Children, don’t ‘cha know? ;)
Liquidate the fund and put all public employees into a private 401K, individual accounts
Keep government and their roaches out of pensions. These pensions become piggy banks for these crooks.
I’ve been predicting for a while that this issue is going to become larger and larger in the coming 10-15 years. Unfounded liabilities at the state level (teacher’s pensions, state employee pensions etc..) I can see a scenario where states declare bankruptcy and in bankruptcy court there will be judges slashing these pensions. I can also see huge fights as more and more states try to force government employees and teachers into the same type of 401k (403 k for most government workers) that most of us non government employees have (contribute and your work matches). It’s already happened in the military with the bill passed last year. It will start in FY 2018 with all new recruits coming in being covered by it and those young military personnel having the option to transfer to it.
All this will be of little consequence in the near future.
At the appointed time the stock and bond markets will be allowed to collapse, and the compliant media will interview ‘experts’ who advise that the only way now to ever retire at all is put all monies into the safety of US Gov’t bonds.
Add single-payer health ‘care’ to the mix and viola! - Hello fundamental transformation.
This was already an issue for the federal government several decades ago and they addressed it. The defined benefit retirement program (CSRS) was replaced with a new retirement plan called FERS back in 1987. CSRS continues to exist for older employees, most of whom were in the system before the cutover to the new system. The new plan consists of a 401k like component and a much smaller defined benefit feature.
At the appointed time the stock and bond markets will be allowed to collapse
**************
It could be in 2017 if Trump is elected. The powers that be want to pin the blame on a Republican.
Looks like they’re about to find out someone’s been dipping out of the fund. I wouldn’t want to be “that” guy...
First things first, Every last legislator should have their DRIVER LICENSE immediately SUSPENDED for this Gross Failure to Pay this Bill. Just like if you don’t pay Child Support or a Ticket. Second, ALL of thier Names should be turned over to the ATF and they need to be BANNED FROM OWNING or POSSESSING ANY FIREARMS OR AMMUNITION for their Blatant Failure to Control thier own Finances and that of the State.
Precedent has ALREADY BEEN SET by the Obama Administration, they are doing this to SS Recipients and Vets , not to mention the Millions of Citizens that get caught up in this License Suspension fraud.
Teachers always, in every state, get left behind. I suspect it’s because most teachers are women so the men in government think they can dismiss them without consequence. Women, for the most part, even in the US, are treated like second class citizens.
Bring on the flames.
Um....how do you pay bills with money you don’t have?
Does the STATE ever ask if you can afford that fine??
if you can’t they SUSPEND YOUR LICENSE
Does the ATF ask why you can not manage your affairs??
They don’t care and TAKE AWAY YOUR RIGHT TO OWN A FIREARM.
You didn’t answer the question....when there’s NO MONEY, how do you pay all your bills?
You Don’t, then you suffer the consequences, just like everybody else, IMMEDIATE SUSPENSION of Driver License and Total and Permanent DISARMAMENT, JUST LIKE EVERYONE ELSE!!
And when the bills still don’t get paid? What have you accomplished?
People involved in these underfunded pensions are simply going to have to do with less. The money to cover all the liabilities does not exist. And the fact that those of us who actually think and can do simple math have been saying this for DECADES. AFAIC, those pensioners who have fought to keep the status quo in the face of certain insolvency, can lie in the beds they’ve made.
And again, all defined benefit pension plans need to be outlawed and phased out over time.
And when the bills still don’t get paid? What have you accomplished?
You put the Perpetrators of this CRIMINAL FRAUD in PRISON FOR LIFE, and Sieze ALL ASSETS. Politicians and Union Bosses, everyone involved
The Accomplishment is simple, THEY will think twice next time they try to DEFRAUD THE TAXPAYERS!
Then you Abolish the Fraudulently Created System and roll everyone in to Social Security. Turn Over ALL Pension Assets to Social Security also.
Women are treated the way they accept being treated
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