MEA Votes

This morning on WJR, Senate Majority Leader Mike Bishop told Frank Beckmann and his listeners that the House version of SB 1227 (the pension reform and early retirement legislation) would cause some pensions for school employees in excess of $100,000 per year.

Apparently, the Senator either hasn't bothered to read the bill or he has no clue how pensions are calculated...perhaps both?

Here's a little lesson for Senator Bishop...

Let's say a teacher, with 30 years of service, has a final average compensation of $70,000 per year. Under the normal pension multiplier of 1.5%, you would calculate the pension like this:

---- $70,000 X .015 X 30 = $31,550
---- (that formula is Final Avg. Comp. X Multiplier X Service Credit = Annual Pension)

So, with the multiplier of 1.7%, that same teacher would get:

---- $70,000 X .017 X 30 = $35,700

For those of you keeping score, that's a $4,200 bonus in exchange for choosing to retire early -- a reasonable sum to help ensure that someone who may not have been financially ready to retire can now do so securely.

Now, let's look at the top end of the range. According to the Michigan Association of School Administrators, the average administrative salary is $114,000 per year -- so the House rightly set the top end for the incentive at that salary (anything above that is paid out at the standard 1.5%, not the 1.7%). So, an administrator with a final average compensation of $114,000 with that same 30 years of service would get:

---- $114,000 X .015 X 30 = $51,300
---- $114,000 X .017 X 30 = $58,140

A healthy pension, plus an early retirement incentive of $6,840. But NOT $100,000. Not even close.

So, there are a couple options as to what happened this morning:

1) Mike Bishop really thinks that to calculate this incentive, you actually multiply final average compensation by 1.7 (not 1.7%). (I think we can all safely say we’d like to be signed up for that plan!)

2) Mike Bishop doesn't understand how pensions are calculated at all and is randomly throwing out numbers. (Senator, there's a good calculator on MEA's Web site if you need a crash course.)

3) Mike Bishop doesn't care how pensions are calculated and is intentionally trying to mislead people about the impacts of the House version of SB 1227, a bill that tries to actually balance the needs of experienced school employees, new/incoming employees, and our state’s financial crisis.

You decide. Perhaps share your thoughts with the good Senator from Rochester -- Bishop's office number is 517-373-2417.