Devos to Legislature: Time to End School Pensions

The Mackinac Center has pushed for years to shut down the state pension system, but pressure has been building. Giving substance to rumors of a push during the next lame duck session, Amway President Doug DeVos announced to attendees at the West Michigan Policy Forum that ending public employees’ pension benefits is the No. 1 public policy priority.pdf-version

Killing pensions and replacing them with 401k-type plans allows investment firms to make billions managing them. Central to this plan is the need to convince the public that the cost of these pension plans is bankrupting cities and states.

This is a nation-wide attack, led by Enron billionaire Tom Arnold, whose Arnold Foundation is flooding right wing think tanks across the nation with funding to do this work. The Enron meltdown cost public pension funds $1.5 billion in losses.

Ramping up for this attack, the Center has published 179 pension articles so far this year, most focusing on the system’s underfunding and always recommending only one solution: privatization. Little attention is paid to the cause of this underfunding (the 2007 stock market crash and its very slow recovery). Only “the sky is falling” prose followed by the usual business-enriching recommendations.

pension-2016A Republican bill package (HB 5218 and SB 102) would do this by converting your pension to a 401k-style retirement plan. That means the only thing that is certain about your retirement is that some unknown amount of money would be invested every pay period. What’s left when you retire depends entirely what happens in the stock market.

Writing about this, Mackinac Center staffer Anne Schieber said:

In a defined-contribution plan, government would be forced to place those retirement payments immediately into an account that was owned by the employee. Employees and taxpayers would no longer have to cross their fingers that retirement funds will be there in the future.

Never one to let the truth get in the way, Schieber fails to state the obvious: pensions are much more dependable to retirees than 401k plans. If you want to worry about whether you can retire on a specific date, invest your entire retirement in the stock market.

The most likely form these bills will take is to force only new employees into defined contribution plans. That would clearly be only a first step, the Mackinac Center would follow through on closing the pension system whenever it can summon the votes.

But this first step serves their ultimate goal: when fewer and fewer employees pay into the system the underfunding grows every year, followed by the inevitable cries to close the entire system.

Converting the state pension system into a defined contribution system is not a new idea. Shifting all the risk to employees has been the objective since Governor Snyder took office in 2011. Within months, he had begun work, starting with new hires in local government, as well as state employees. In 2012 he moved on to school employees.

But there was a problem, a big problem. Thanks to years of underfunding; the 2008 economic crises and its slow recovery; and the growth of on-line and charter schools resulting in fewer and fewer people paying into the system (not an accidental result); the MPSERS unfunded liability has grown.

Again, this is a good thing if you’re trying to privatize the whole thing: As MIT Professor Noam Chomsky said:

That’s the standard technique of privatization: defund, make sure things don’t work, people get angry, and hand it over to private capital.

Years ago, the legislature hired an outside consulting firm, The Segal Group, to:

… evaluate the existing Hybrid plan and the impact of implementing a defined contribution plan for all new hires.

The results were not pretty. Segal found:

segal

The Mackinac Center has to move quickly. As the economy recovers and the stock market with it, the MPSERS unfunded liability crisis will begin to subside, and with it, the sky-is-falling need to convert.

Read the entire study yourself:

segal2

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36 thoughts on “Devos to Legislature: Time to End School Pensions

    • Exactly and Snyder is in his back pocket when he SHOULD be in Jail! I have paid into MPSER (Michigan Public School Employees Retirement System) for 30 years. I have paid so those who retired before me could have a pension when they retired. Who is paying now that I AM retiring? Our pensions would be healthy if they had not robbed from them and stopped new teachers from paying into them.On top of that Snyder still owes public teachers in Michigan over half a billion dollars that he robbed from our paychecks. It was unconstitutional to make us pay 3% more without a promise we would get it back. So he made a law so we would have to and now we are paying it again. We won in court several times in 5 years and he appeals so we do not get it back. I hate how these dirty rich businessmen Republicans can make laws to have their own ways and then lie and make teachers the money-grubbing villains! if the retirement system is broken it is because Devos and Snyder broke it, giving new teachers no options but defined contribution benefits and 401K. They did this so no new teachers would want to hire on. And it worked! So now that they are not paying in they can claim those greedy teachers are bankrupting Michigan and their pension system should go. The public needs to know that this is an attempt to rid Michigan of public schools and replace them with for profit education…And guess who makes money on the backs of our kids? Wealthy thieves like DEVOS! Snyder should be in prison for the damage he has done to Michigan with Detroit Public Schools, EFM’s that by the way, Michiganders voted to end. Then they went on poisoning prisoners with Aramark privatized maggot rotten food, and of course poisoning the good citizens of Flint, who are on what, like 900 days with no clean drinking water? This is what you can expect when a business man runs a government office. All profit with no concerns or heart for the very people he is sworn to serve. No, in a Snyder regime of corporate fascism the people serve King Richard, while he uses their taxes to pay for his defense! Sure wish we had the right to peacefully assemble and strike like all other jobs in the state.

      • Beautifully-said! Thank you for posting a completely honest and heartfelt portrayal of what EXACTLY is going on in public education in the state of Michigan. It’s frankly frightening and criminal.

      • I TOTALLY AGREE WITH YOU! WOULD LOVE TO SEE THIS ARTICLE IN ALL MICHIGAN NEWSPAPERS! I WANT MY PENSION…..NEED MY PENSION TO EXIST. ENGLER STOLE MONEY FROM OUR PENSION FUND BEFORE SNYDER. BOTH ACTIONS HAVE BEEN IN COURT THREE TIMES AND JUDGED ILLEGAL. THEY HAVE APPEALED EVERY TIME. WE STILL HAVE NOT RECEIVED THE MONEY BACK IN THE PENSION FUND.

      • Diane, very well said. I am a retired teacher and am sickened by what the Republicans have done and are doing to public school teachers and public schools. But what also sickens me is how many teachers just take it and have no idea what is being done to them. Teachers comprise a huge voting block but so many vote for representatives who don’t have their best interest. Again, sickens me.
        God bless those of us who are cognizant and who make their voice heard.

      • The pension fund is pilfered, robbed, and argued over for too many years by those who have all they need and are greedy. The pension is an honest fund. Part of the pay for the teacher. Teachers are low paid professionals compared to those in other fields. They deserve the retirement money.

        Teachers do need to speak up louder as a group! Too many sit back and take a passive approach to the problem. The wealthy Republicans like this. The rights to a retirement pension need to be defended regularly and loudly. Make it known to everyone in Lansing that this is not going to be tolerated quietly.

      • Well said! wait for another rich guy who doesn’t value teachers to support his buddies as he takes over the country and disses his supporters.

      • Diane, You’re absolutely right, but the Republicans are better marketers than the Democrats; i.e the recent elections. The middle class has lost it ability to maintain it’s income status, union membership decllines, while the super rich get more super rich, and yet middle class americans vote for them?? Go figure.

    • Or Engels. Remember he “borrowed ” money from the pension fund that has still not been paid back. Would it still be underfunded if we had that money plus interest?

  1. in the past when the pension fund was healthy, funds were diverted to other uses, now with the fund not healthy, with lots more people retired, with the stock market crash, things are bad but instead of keeping promises made, the want to screw the people who worked for less, so we would HAVE A PENSION.If they had paid a fair wage , I could have set up a plan, but even after 30 years teaching, it was tough making it work, making the money stretch, for basics plus all the stuff I needed to buy for my classroom.The Delos family made money screwing others now want to make more by screwing everyone, make them pay their fair share, TAX THE RICH and leave us alone

  2. Leave our pensions alone. We worked for our retirement. The legislature get a lot more money without a 30 year requirement. How can you get your benefits with only 4 years. There will certainly be a majority of people who would fight this change.

  3. DeVos=Devious.They create the liability to justify their desired outcome. I am so sick of corporations and wealthy running the government. Time for people to stand up and demand that our representatives are representing us.

    • Connie, our election proved we did not stand up. Until people begin to think of the “common good”, we cannot expect any change. I am a retired teacher and know what is going on.

  4. So well stated…remember this in November. Don’t ever ever ever vote Republican…especially for president. Trump would bankrupt the country if he could make a buck.

  5. It’s time we vote these people out of office. During the last election I worked the phones and was shocked at how many of our members believed in what they were doing and spouses. Wonder if they still believe now.

  6. End his pension and the pensions of everyone who is elected to a position in legislature. Watch our national debt disappear. These people should not continue to collect after leaving office or being voted out. It is a disgrace to our country that they are the very people who vote for this.

  7. I’m a retired teacher and many times I used my money for supplies, sometimes even a couple of books as we didn’t have enough books for every student. What we need to do is vote this November and vote out these people, not only our state reps but our national ones as well. DON’T put a business man in office, especially a rich business man.

  8. Teachers salaries have not increased with the cost of living over the last several years. However, teachers still continued to pay into their future pensions. The state of Michigan diverted funds from our pension accounts and now you think it would be a great. Idea to cut OUR pensions that WE as teachers payed into. Teachers don’t live on high salaries and many put thousands of dollars into supplies, snacks and materials for their classroom each year. Have you ever lived on a salary of $30,000 to 60,000 a year with a master’s degree? You are out of touch with the middle class. If you want private schools for your children, then be willing to pay higher tuition so your private school teachers can have a pension when they retire after working difficult and important jobs of educating your children. Please get real!

  9. If this comes to pass, look for a mass migration of teachers out of MI, which is what the corporate reformers actually want. Then they can pass laws to hire the anybody-can-teach crowd, devaluing teaching and turning it into a McDonalds-type job.

  10. I get so angry any time teachers are the targets of the wealthy. Why is that Devos thinks taking away pensions teachers are working for is fair. Why would someone with so much money decide to focus
    on teachers who he knows aren’t making huge financial gains while we are working or when we are retiring. I’m fairly sure Devos has never engaged in conversation with a public school teacher–and if there are Devos children, we know that they never went to a public school. Nice thing about Grand Rapids, if you have a child in their private religious schools, they will never encounter people of color, people from low or lower economic status, or people with conflicting ideology, or diversificcation of any kind. And, if you set up a religion that believes good people are rewarded by God, you don’t even have to think about the poor–they are getting what they deserve.

    I remember while I was teaching, a first year teacher in the lounge was trying to figure out how she was going to make payments on her college loans, while needing money to pay for required continuing education classes she had to take in the summer. I think it was going to take almost 20 years to accomplish both.Now there’s a target for Devos; she really needs to be forced into a mediocre pension plan, and let’s not even talk about the health plan available to these same teachers.

    When did hard working teachers become the enemy of the state???

  11. Not funding teacher’s pensions is a recipe for disaster! Teachers need to be paid like doctors! Teachers hold the futures of our children and these children need to grown up as educated, responsible adults. How can that happen if teacher’s salaries are stagnant and pension benefits are taken away? How can the great teachers be available for hire when they are enticed into far better paying positions outside of their careers? How can the truly great teachers live on a 401k that leaves big business gambling with their monetary futures? If you are a teacher, know a teacher, or if you were inspired by a great teacher, you must stand up and fight for what is right for our teachers! Write to your congressman, your senators. Make your voice heard!

  12. Shame on any comment that targets either major party and shames teachers for their right to make a vote with their conscience. I vote for whom I feel is the best candidate for each job…not for the party. Sometimes it is a Rebublican and sometimes it is a Democrat and sometimes it is even a third party candidate. Are we now not free to vote our choice?? Every election we get a choice and every election, America makes a choice. It is up to its citizens and its leaders to work together to make the most of those choices.

  13. You continue to elect Republicans and then complain about what they are doing to you. As a retired educator, I am hopeful that they will not be able to do this. SS, Medicare and now Retirement. Boycott all Amwwy Products.

  14. More than ever before Michigan educators need to become active in fully understanding the status and funding of their fixed pensions in the state of Michigan. First, the current 2016 pension funds are supported to a large extent by investments made by the state in the stock market. This makes the pension fund vulnerable to market downturns. However, the market does tend to rebound over time depending on the manner in which the markets respond to stimulus attempts. Secondly, the current hybrid plan developed and engineered by republican sponsors and politicians may not, over time, fully support the cost of pension stability. Thirdly, with the push being made to privatize Michigan schools the fixed pension plan will be even more vulnerable to unfunded liabilities because of planned attempts for diminishing necessary funding.

    Another issue that will undoubtedly arise with teacher pensioners in Michigan is a major revision by republican lawmakers at the state and federal levels in revising health care. Congressman Paul Ryan at the federal level, for example will likely push the notion of privatizing Medicare. State pensioners should understand that health care is not a benefit that is guaranteed by the state.

    Lastly, a comment about charter schools should be noted. For those people who think charter schools are somehow better than traditional public schools the following comment: As a college supervisor of student teachers in a host of core city and suburban school districts I found little difference in the enthusiasm and classroom learning activities in public and charter schools. What I did observe was that charter schools were more segregated than their elementary, middle, and high
    school counterparts. The other common trend was that if students brcame a problem in charter schools, or if parents did not suppor charter ideals, the public schools became an available conduit for the charters to use. At a first glance, it appears that perhaps there may be a reason that may not be educational that charters are looked at as a panacea for the students they serve and the political suppor they receive.

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