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Proponents of Proposal 5 are selling the measure as a guarantee of "steady" funding for public education. Much like a seedy telemarketer who promises you something that you don’t need in exchange for obligating you to pay costs that you cannot afford, the real purposes and costs of Proposal 5 are buried in the fine print that the salespeople don’t want to talk about.
Proposal 5 backers speak almost exclusively about the inflationary increase in state funding for public education that the measure would supposedly create. What they neglect to say is that this goal has already been met. Since enactment of Proposal A in 1995, the state education budgets covered by Proposal 5’s inflationary mandates have increased 40 percent, substantially outpacing the cumulative 31 percent inflation for the period. Likewise, the per-pupil basic foundation allowance, the largest single program funded by state government, has increased 37.5 percent since 1995.
The majority of that money is spent on salaries and benefits for teachers. The average Michigan public school teacher is paid about $57,000 per year — a compensation rate that is more than $9,000 above the national average and ranks in the top five nationally, according to information from the National Education Association school employee union.
So if selling Michigan voters on a promise to provide a steady school spending level is as hollow as selling them a proposal that would make the leaves come off the trees each fall, what are we really buying with Proposal 5?
How about higher paychecks for the teachers in Detroit who just concluded an illegal strike? Written into the strike’s settlement contract between the union and the school board is a stipulation that the two sides will reopen negotiations with the intent of increasing pay if Proposal 5 should pass. It goes without saying that another illegal strike could eventually be in the offing if these new negotiations fail to produce an agreement.
Proposal 5 would also pay school districts to teach children who are no longer there. The creation of a declining enrollment bonus would provide "per-pupil" foundation allowances to school districts for students who have recently gone elsewhere. Again, the Detroit schools stand to be a big winner: somewhere between 14,000 and 25,000 students did not report for school following the illegal teacher strike. Proposal 5 would allow Detroit to continue collecting "per-pupil" funding for most of them, billing Michigan taxpayers upwards of $100 million.
Finally, the most expensive fine print in Proposal 5 is for a taxpayer bailout of a lavish school employee pension system that provides benefits well beyond what most private sector workers can expect to receive. The first-year estimated cost of Proposal 5 is $565 million in total — with more than $386 million earmarked for pension costs. The annual pension cost increases are expected to rapidly exceed the rate of inflation.
The state of Michigan calls the school employee pension "one of the best public pensions around," and this is no exaggeration. Only one-third of all private employers in 2002 offered the costly retirement health care benefit that is available to Michigan’s public school retirees. In a move successfully resisted by Michigan’s public school employees, most of the other state employees covered by state retirement plans (including legislators and judges) were placed under a modern and less expensive 401(k) retirement plan similar in nature to plans common in the private sector. The school pension system needs these cost-saving reforms, not Proposal 5’s taxpayer bailout, which promises little more than a continuation of the problem by papering it over with more taxpayer dollars.
Proposal 5 is primarily a referendum on protecting a costly public pension. Michigan taxpayers should not be expected to perpetually fund school employee retirement benefits that exceed what the majority of us will ever receive. Nor should Michigan taxpayers pass a measure that would obligate them to pay schools for kids they no longer teach. Taxpayers should carefully read the fine print before casting their votes for a spending mandate with an ostensible goal that is already being met.
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Kenneth Braun is a policy analyst for the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich.
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