MEA School Union Penion Boost Proposal

Sorry.  But, the offer is not 33%, it's a 16.5% increase.  SB 255 was amended on Friday, March 13th in the Senate Education Committee to offer a 1.75% mulitplier instead of a 2.0% in an equation that is used to determine the pension amount.  

The 2.0% was never going to fly because of the costs/burden to the pension.  However, a Senate fiscal analysis will soon (by the 23rd or 24th of March?) determine if there is any savings to the state/pension fund by offering the 16.5% incentive.

If there is a savings the measure should pass because this is really about providing jobs to the 10,000 to 20,000 people who would be employeed to replace the outgoing retirees.  If there is no savings OR if the costs are prohibitive, then the plan should be scrapped.  We need to keep these people employed and employed here in Michigan, not in Utah or Colorado.

How does this work again?

10 older teachers currently working, and 10 unemployed new teachers.

We harm the economy by taxing citizens to pay for 16% higher pensions.  For this sacrifice, we lose  teacher's skills, and pay pensions longer.  The older teachers are replaced by younger unskilled teachers.  

Taxes go up, harming the economy

No change in overall employment

Net decrease in teacher quality

Higher future pension costs

Where's the upside of this?

Mike, you honestly don't understand?  

Let's say 10 teachers in our school district making about $65,000/yr retire.  The school system is going to probably fill 9 of those teachers' positions.  I'm sure most schools will use this opportunity to make cuts in teachers/secretaries, etc.  (heck, most people who post here think the schools should get "rid of all them thar teecherz" anyway and hire foreigners to come in and teach)  

For all the knit pickers out there, this is a VERY simple and NON-detailed example.

Anyway, the school will save $65,000 by not replacing one of retiring teacher.  The school fills the other 9 positions by paying them about $33,000 per year.  That's a savings of $32,000 per teacher.  That's $288,000 saved by paying 9 teachers only $32,000/yr PLUS the $65,000 saved by NOT paying for the one position that was eliminated.  Add those two saving together and that's a total GROSS  savings of $353,000 at just ONE SCHOOL SYSTEM.

Let's say the 10 retired teachers get an EXTRA 5,500 EXTRA added to their pension because of the buyout.  That's $55,000 EXTRA that now has to be paid the retirees.  $353,000 GROSS saved minus the $55,000 extra pension means there is a NET savings of $298,000 for just ONE year for ONE SCHOOL SYSTEM  (I don't know how to compute health care in that figure so I won't touch it.)

The second year and each subsequent year the school will save less because the 9 NEW teachers that were hired to replace the retirees will be paid about $2,500 more each year.  So, the second year, instead of saving $298,000, the schools might only see a savings of $275,000 and the third year might only save the school about $252,000 and the fourth year only $229,000 and so forth.  

That's how the schools will save money.  Add up the $298,000 from the 1st year, the $275,000 from the 2nd year, and $252,000 from the 3rd year, and $229,000 saved from the 4th year and you will see a savings of about $1,054,000 in only four years.  THAT'S HOW THE SCHOOLS WILL SAVE MONEY.

In ABOUT the 14th or 15th year AFTER the buyout, the schools will probably have to pay more than they've saved.  But, with all the savings they've made in the meantime, the retired teachers would ALL, that's EVERY SINGLE one of them, would have to live 30 years after retirement for the school to take a loss.  THAT'S HOW THE SCHOOL WILL SAVE MONEY.  And, don't forget the purpose of this is to put people to work who would otherwise possibly leave the state with the hundreds of thousands of other people who have already left the unemployment capital of the county----------Michigan.  

This bill is about JOBS--------JOBS FOR THE UNEMPLOYED.  Jobs to reduce the 11.6% unemployment rate in Michigan.  Jobs for people to buy cars in Michigan, homes, food, clothes, restaurants, travel, hotels, and etc. etc.  

If the fiscal analysis says money will be saved, sorry Mike, but I'm going with their recommendation.  If they say it will cost the state/schools/pension money, then I'll believe it.  They know more about this that YOU do and definately more about it than I do.

Oh, I forgot.

YOU WROTE:  Taxes go up, harming the economy

--If it's a savings (wait for the fiscal analysis!!!), that means taxes will NOT go up.

YOU WROTE:  No change in overall employment

Yes there WILL be.  The number of people looking for work will drop.  Why?  The retired teachers are not looking for work and the 15,000 people who are not presently working will be taken off the unemployment rolls because they will have a job.

YOU WROTE:  Net decrease in teacher quality

Maybe----------maybe not.  New teachers are MUCH more technologically savvy, willing to try new ideas, and are MUCH better trained and prepared than the teachers from the 60's and 70's.  Older teachers ARE much more experienced, that's for sure.  

YOU WROTE:  Higher future pension costs

The Senate Education Committee has ordered a fiscal analysis and THEY will make the determination.  No one knows if it will indeed save money or not.  How can YOU know, when no one else does?  You can guess--you can tell everyone what your gut feeling is---------but no one knows for certain.

YOU WROTE:  Where's the upside of this?

If the fiscal analysis says it will save money, the upside is--------------it will save money and PUT PEOPLE WHO ARE PRESENTLY UNEMPLOYED TO WORK!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Valueplus, spoken like a teacher !

I can beat your example easy.  With your numbers.

No pension increase.  Tell teachers making $65K to accept $33K or retire.  You don't care which.  Let's say all 10 retire because they don't want that big a cut in pay (it really doesn't matter for this example).

I hire the same nine of your teachers, plus one for a full staff of TEN teachers at your rate of $33K.  Wahoo!  You are happy with putting people to work somehow (explain how you eliminate 10 jobs, and replace it with 9 jobs and it is a net increase in jobs? Forgotten Man error for you Austrian economic fans)

Anyway You had                                      and I had

New teacher exp   9 x 33K  = 297K              10 x 33K = 330K

More pension cost        55K                    no incr pension

  Your cost        $352K                          my cost   $$330K

Subtract from the beginning costs of 10 x 65K = $650K

  You save $298K with 9 teachers,

While I save $320K with 10 teachers.

With your example, paying someone $65K for a job that could be done for $33K is an example of why government never beats the free market.  If this is a true example, then a government enforced labor monopoly (teacher's union) costs tax payers almost twice as much as a free market.

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