Michigan Still Underfunding Teacher Pensions

Made full contribution just twice in last decade

Michigan's school employee pension system is underfunded by $23 billion and to return it to full funding, it is necessary to continue to pay the system's annual required contribution.

The annual required contribution is the amount necessary to pay for the pensions that employees earn and to catch up on unfunded liabilities under the state's assumptions. The state has not been paying the full amounts.

The annual required contribution last fiscal year was $1.9 billion, but the state put in only $1.4 billion.

This has been a long-term problem. The state only paid its full contribution in two of the past 10 years.

This is one reason why the state should convert to a defined contribution retirement system, where it becomes clear whether the state is fully funding the retirement benefits offered to employees.

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