Michigan House of Representatives to vote June 20 on redirecting $670 million from teacher debt to other projects – Michigan Capitol Confidential

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The teachers’ pension system is in debt to the tune of nearly $30 billion

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On the House agenda for June 20 is a proposal to reallocate $630 million earmarked to pay off teacher pension debt to other priorities. It is House Bill 5803, introduced by Representative Matt Koleszar (D-Plymouth).

A successful petition to bring the bill to the House would lead to a vote on redistributing the money earmarked to pay off $29.9 billion in debt to teachers and others included in the Michigan Public Schools Employee Retirement System. The bill would still need to be approved by the Senate and signed by Gov. Gretchen Whitmer.

The change proposed in the bill would reduce pension contributions and increase costs to taxpayers by an additional $1.4 billion, estimates the Reason Foundation.

The pension fund is one of the largest liabilities for taxpayers, said James Hohman, director of fiscal policy at the Mackinac Center for Public Policy. “The state has inadvertently made school employees its biggest creditors by promising them pension benefits but not setting aside enough money to pay them,” he told CapCon.

Koleszar did not respond to an email seeking comment. House Democrats also did not respond to a request for comment.

Two Republican lawmakers had previously informed the governor that they opposed the plan. Representatives David Martin (R-Davison) and John Roth (R-Interlochen) sent a letter to Governor Gretchen Whitmer stating, among other things, that the annual debt repayment payments “must remain in the teachers’ pension system … to pay off the state’s unfunded obligations.”

Rep. Nancy DeBoer (R-Holland) is vice chair of the House Subcommittee on School Aid. She also opposes the move. “Diversion of funds from the Teachers’ Retirement System in previous state budgets created this huge funding hole,” DeBoer told CapCon in an email. “It is difficult to imagine that diverting more funds is financially justifiable. In total, the Teachers’ Retirement System still owes school employees over $30 billion more. Paying off this debt would free up billions for classrooms and benefit current and former school employees.”