A West Michigan school district made headlines late last year when it was featured on national news as an example of how escalating teacher pension costs are hurting public schools.
Jenison Public Schools, in Ottawa County, was featured on the Nov. 21, 2005 NBC Nightly News. During the telecast, Superintendent Tom TenBrink said the district could very well run out of money and go bankrupt. TenBrink told Michigan Education Report the condition of his district is not out of the ordinary.
"We’re not the Lone Ranger, going through this by ourselves," he said. "Everyone is experiencing the same difficulties; it’s just that I’ve decided to be more public about it."
Jenison, a district of about 4,700 students, has a $42 million budget. It gets $30 million of that from the state of Michigan, with the rest coming from federal and local sources.
Pension problems in Michigan schools stem from state law that gives teachers a defined benefit plan, whereby school districts put a certain percentage of a teacher’s salary into the Michigan Public School Employees Retirement System and guarantee future payments to retirees. House Bill 4947 would move teachers toward a 401(k)-style plan, also called a defined contribution plan.
"In the last three years, the pension contribution amount has increased from 12.99 percent to 14.87 percent (of teacher salaries)," TenBrink said. "Now they’re saying it’s going up to 16.34 percent. That eats up the foundation allowance."
Public schools in Michigan this year received a $175 increase in the per pupil state aid, also known as the foundation allowance. The minimum guarantee now is $6,875 per student.
"The increase in pension is about $120 of that amount, right out the back door," TenBrink said. "So you can’t really equate that $175 with new money."
TenBrink also said pension costs are not the only culprit leading to the financial problems in his district and many others. Health care costs also have skyrocketed. Many place part, if not all, of the blame on the Michigan Education Special Services Association, a third-party insurance administrator affiliated with the Michigan Education Association. A package of bills in the Michigan Legislature would attempt to reduce those costs, by as much as $150 million the first year according to some estimates, by allowing school districts to access claims data. MESSA frequently refuses to release that information to districts, making it nearly impossible for boards of education to compare prices against other insurance plans.
"It’s very frustrating," TenBrink said. "We can’t compare apples to apples because we can’t get any data from MESSA. Our hands are very much tied from looking anywhere else."
As for the various bills in both the Michigan House and Senate, TenBrink is all for them.
"Anything would help at this point," he said. "We’re looking at a $3 million deficit for next year."
TenBrink did point out that the teachers union in his district did agree to a less-expensive version of insurance through MESSA, reducing costs by about $400,000.
"To their credit, they went against the norm," he said. "It’s a start."
Administrators and support personnel in the district, however, are part of a pool of Ottawa and Kent county area school districts that have joined together for insurance needs. They hope to reduce costs by looking at competitive alternatives.
TenBrink said health care for retirees has also become a budget problem. He pointed to a study done by the Citizens Research Council of Michigan, which said retiree health care is draining resources from classrooms.
"Funding pension and health care benefits by the Michigan Public School Employees Retirement System will constitute an increasing burden on state finances in coming years," the Council said in a 2004 report. TenBrink said part-time school employees, who are not eligible for health insurance while working, become fully vested in MPSERS after 10 years of service and qualify for full retiree health care.
In recent years, Jenison has reduced expenditures by $4.1 million, cut 33 teaching positions by attrition, cut three administrative positions and another 30 support staff.
"We still had to use $2 million from our fund equity this year to balance the budget," TenBrink said. "It’s down to about 6 percent, whereas it should be at about 15 percent."
Not far from Jenison, the Bloomingdale Public School District in Van Buren County recently voted to privatize its janitorial services, a move expected to reduce costs by as much $80,000 in the first year. Coincidentally, they hired a firm from Jenison to do the work.
"This is a widespread problem with a lot of different situations," Bloomingdale Superintendent Dale Schreuder said. "Health care, pensions, utility costs. It’s hitting schools, industry, everything."
Schreuder said privatizing janitorial services is just another step in a series of moves to find dollars to pay for pension and health care benefits.
"We’ve taken small steps along the way," he said. "We’ve laid off administrators and paraprofessionals, reduced the number of field trips and cut teaching materials and supplies."
TenBrink said he’s been in touch with legislators about the financial problems, both before and since the NBC story.
"This is real," he said. "This is not just us saying ‘give us more money’ again. If they want to talk about keeping and attracting new business, we need good schools."