Late in 2011, Michigan Speaker of the House Jase Bolger and Senate Majority Leader Randy Richardville seated a workgroup to explore the problem posed by an increasingly underfunded Public School Employee Retirement System.
Their report was sent on February 1, 2012 and captured in the letter below. Lots to chew on, but I see two very key points:
1. The legislature, even by seating this workgroup, acknoweldges the enormity of this problem. It may be the state’s single largest financial dilemma, but oddly one that gets very little coverage. Why? Because the problem manifests itself in 550+ local school district budgets who then get charged with not being able to manage their own finances effectively. This is really a state level problem and they appear now to at least begin to publicly acknowledge that.
2. With no corrective action, not only will the retirement rate rise to over 30% of payroll in two years, its predicted to rise above 40% by the end of the decade. This is the silent killer of local school district budgets. If districts must chip away at their service offerings to flow greater portions of their budget into this state level system, almost everyone will lose.
Here’s the report: