Pension reform: Better teacher benefits; keeping our promises
It's simple math. Today’s vastly underfunded teacher pension systems are not good for our teachers or students. Twenty years ago, our state teacher retirement plan was fully funded, but due to poor financial planning assumptions and not meeting the annual funding requirement, there is now a shortfall of least $29 billion. We are now taking $1,700 per Michigan public school student from the classroom to pay for retired teachers who are no longer in the classrooms.
While it’s simple math, it becomes complicated as we try to resolve the problem with these goals:
1. Keeping retirement promises to teachers by adequately funding past promises (another $400 million per year).
2. Offering flexible benefits designed to attract the best teacher talent.
3. Limiting the future risks of poor financial planning assumptions.
4. Reducing the debt so our children and grandchildren won’t have to pay it, which ultimately will mean more money in the classroom.
There is continued debate over legislation in Lansing tied to changing Michigan’s teacher retirement benefits. I come from a family with great public school teachers, and my wife and I are personally committed to supporting Michigan’s public schools.
I want to challenge our Michigan public teachers to individually get involved, read and learn the facts about this legislation and advocate for the long-term fix for this problem. No legislation is perfect, but SB 401 goes a long way to fix a broken system.
While you may hear otherwise, as you read the details, you will see SB 401 meets the following:
1. Additional funding of the retirement benefits of all current and retired teachers, stabilizing the system.
2. A robust 401(k) plan allowing current and future teachers to receive up to a 7 percent employer deposit via a 4 percent employer contribution and up to a 3 percent employer match.
3. Flexibility for teachers to take their retirement benefits with them wherever they teach or if they change careers. The entire retirement plan is owned by the teacher, not the district.
4. Addresses the long-term problem of paying down the current debt and accurately recognizes the actual years worked by any teacher.
I believe Michigan has recruited some of the best and brightest talent in our classrooms.
Now is the time to support our teachers, stop politicizing this issue and keep the promises we have made.
A copy of the full legislation is available at bit.ly/MISenateBill.
John Kennedy is the founder of the Kennedy Foundation, which provides support to teachers in the Grand Rapids Public Schools to improve early reading for students and has supported Grand Rapids University Prep High School. Kennedy also is a member of the Coalition for the Future of Detroit Schoolchildren and Chairman of the West Michigan Policy Forum.