Is Michigan school spending up or down? Pension problems muddy the answer

Average teacher pay is stagnating in Michigan, likely heightening the struggles some school districts face trying to fill teacher positions and avoid uncertified long-term substitutes.

The cause: the rising cost of pensions for retired teachers, which now accounts for a third of payroll in the state’s traditional public school districts, according to a report released this week by Citizens Research Council of Michigan.

Teacher pay is one of numerous issues, including whether school funding is actually up or down, that can be traced to teacher pension problems, according to the report.

“We were trying to answer the paradox of per-pupil spending being up, and the claims from the field that we’re not seeing it,” said Craig Thiel, research director at Citizens Research Council.

State dollars spent on public schools have increased, but most of that additional cash is going to pension checks, Thiel said. That means the resources in a typical third-grade classroom – and the paycheck of the teacher leading that class – have barely budged.

“The outlook for Michigan teacher salaries is gloomy,” according to the report. “They have fallen victim to a crowding-out effect arising from the requirements to meet pension obligations.”

The average salary for a teacher leading a Michigan classroom is $62,000 – more than $9,000 a year less than in 2010 when adjusted for inflation. It’s still above the national average of $60,000. But the average starting salary for new teachers in 2018 - $36,599 – is about 7 percent below the national average.

The reason the flatlining of teacher pay matters: Michigan is struggling to lure college students into the teaching profession at rates high enough to fill vacancies in some subjects and in some areas of the state, particularly urban and rural schools.

The gap between teacher pay and other college-educated workers is at a record high, according to the CRC report. In 2018, the weekly wage gap — the difference between teacher pay and other college-educated workers — was 21.4 percent.

Average annual wages for teachers, adjusted for inflation, has decreased by about $1,000 since 1996, while the average weekly wages for other college graduates has risen by about $15,000.

It’s unclear if there is a correlation between teacher pay and student learning. But a teacher’s paycheck size is likely to have an influence on decisions about whether to enter, or stay in, the profession.

“We begin from the premise that good teachers are important,” said CRC’s Thiel. “We also say that people who go into a career, that some of that motivation may be financial. If salaries are stagnant, that may inhibit the ability to keep and recruit teachers.”

The report comes on the heels of a series by Bridge Magazine revealing that the number of long-term substitutes leading Michigan classrooms has grown tenfold in five years. In the 2018-19 school year, about 2,500 classrooms were led by long-term substitutes, who generally are not certified teachers and who are only required to have 60 college credits (the equivalent of two years on campus) and are not mandated to have any background in education.

Related articles:

•  Michigan leans on long-term substitutes as its schools struggle
• Michigan cut school funding and school performance plummeted. Coincidence?

Those long-term substitutes are being utilized because schools are struggling to find enough full-time, certified teachers, particularly in hard-to-fill subjects such as science and math, and in urban and rural schools.

According to the CRC report:

• Per-pupil spending has increased 12 percent in the past five years. But average teacher pay has been flat over those years.
• That’s because increases in pension liabilities are eating up much of the funding increases. Payments districts must make for unfunded liabilities of retiree pensions increased from 22.6 percent of payroll in 2013, to 33.2 percent in 2019.
• Those salaries are an example of overall flat spending at the classroom level. The number of support staff in schools – teaching assistants, for example - hasn’t increased, either.

 Calls to numerous legislators seeking comment were not immediately returned Wednesday.

 “Pensions are part of overall compensation for educators,” said Doug Pratt, spokesperson for the Michigan Education Association, the state’s largest teacher union. “The issue stagnating salaries is that education funding hasn’t kept up with increasing costs over the past 25 years, with the MSU study (a study by David Arsen) pegging us dead last in the country for increases over that period.”

“We can meet pension obligations and pay educators better,” Pratt said, “but we have to fix our broken education funding.”