Superintendent of Tecumseh Public Schools takes state to task for tapping pension fund
A recent account in The Oakland Press reported that the State of Michigan has paid $1 million out of teacher pension money to help pay down a debt incurred by the Pontiac-area movie studio that produced the movie “Oz, the Great and Powerful,” which is currently playing in theaters around the nation.
The Oakland Press asserted that a deal was struck by then Gov. Jennifer Granholm that the state would cover outstanding debt if the studio were unable to make good on money owed.
Michigan Department of Treasury spokesman Terry Stanton told The Oakland Press that 80 percent of the money that may potentially be paid by the state would be withdrawn from the Michigan Public School Employees Retirement System (MPSERS).
That use of teacher benefits has many educators and administrators up in arms, including Tecumseh Public Schools Supt. Mike McAran. “The state pulled $1 million out of the retirement account for teachers and then had the nerve to turn around and raise the rate that we are required to pay into the same fund,” McAran said in a press conference Monday. “I thought it was outrageous that they would do such a thing.”
TPS human resources director Donna Elser said that the remaining payment by the state to the movie company “is still up in the air.” She said that depending on how the movie does at the box office, the balance owed by the studio might still be paid off by studio executives, sparing the state the long-range debt burden accrued by the agreement between the state and the studio.
“Regardless, we are paying more money now to ensure that employees have their benefits,” Elser said. “Even if we contract services from PESG, our expenses rise, because they have to charge more. The money has to come from somewhere.” Elser was referring to Professional Education Services Group, a company that supplies school districts with temporary staff ranging from substitute teachers to janitorial workers.
“The state is constantly telling us that retirement is under-funded, then they turn around and take money out of it to pay the debt off for a movie,” said McAran.
Not surprisingly, MPSERS officials are concerned, also. In an MPSERS newsletter Michigan State Office of Retirement Services defended recent legislation that upped the contributions for the retirement fund. A specific example cited by the Office of Retirement Services of why the increased contributions are necessary is in the case of re-hiring retired teachers for part-time instruction.
“Hiring retirees back to work without paying the Unfunded Actuarial Accrued Liability (UAAL) results in offloading costs onto other reporting units since their wages are no longer part of the payroll base,” a recent newsletter reported. “This causes a financial loss to the retirement system and results in a corresponding need to raise contribution rates.”
Local school administrators take issue with both the increased state-mandated contribution rate and what they consider to be irresponsible disbursement of retirement funds for a totally unrelated non-educational debt retirement, namely cost overruns for a movie shot in Michigan. Formerly, Michigan has become a popular location for movie production, because the state gave tax breaks to producers. The reasoning behind that favorable treatment was the increase in employment that the making of a movie generated in the state. Gov. Rick Snyder has since suspended such tax breaks causing a subsequent reduction of movie production in Michigan.
“State financial policy has direct correlation to what happens to our students,” McAran said, “even if the primary effect is an increase in what we are required to pay into the retirement account. Who actually pays the price? The students.”