Herbart and Hecker: Don’t gamble with school retirement funds for roads scheme

MEA
American Federation of Teachers-Michigan President David Hecker and Michigan Education Association President Paula Herbart at a Capitol rally for public schools, June 18, 2019 | Derek Robertson

Some state lawmakers are proposing to dip into state retirement funds to pay for Michigan’s crumbling roads. 

This dangerous idea should be rejected because it could undermine the retirement of hundreds of thousands of Michigan residents, drive the state deeper into debt, and saddle taxpayers with massive future costs.

Rather than face the fact that fixing Michigan’s roads requires new revenue — something many other states, including many Midwestern states, recognized years ago — some lawmakers are proposing borrowing our way out of the infrastructure crisis we now face.

Borrowing from state retirement funds to “kick the can” down the road further borders on reckless, and may make the problem even worse. Even Patrick Anderson, a conservative economist, has called this plan irresponsible. 

Whitmer, Republicans remain at odds over using pension bonds to fix roads

It is particularly egregious making the Michigan School Employees Retirement System (MPSERS) the target of this irresponsible scheme, as it has seen its funding levels climb back toward a sustainable rate after 10 years of declines.

The Windy City also provides a cautionary tale in gambling with taxpayer dollars. 

Chicago officials considered a similar scheme to solve the city’s pension crisis by issuing $10 billion in bonds. In that case, city officials nixed the idea when it became clear investment returns would be less than interest payments due on the pension bonds.

chicago
Chicago | Creative Commons

Hopefully, it will not take another Great Recession for lawmakers to learn the perils of gambling with state retirement funds — especially since the individuals whose retirement would be imperiled by this plan are Michigan’s teachers and school employees who have dedicated their lives to educating our children, keeping them safe, getting them to school and feeding them nutritious meals.

Threatening the retirement security of school employees is not only unfair, but should sound alarm bells for taxpayers who will be saddled with the financial burden and increased debt if this scheme fails, as many predict it will.

This plan would force yet another generation of educators and students to pay for poor financial management by our state’s leaders.

Groups call on Legislature to continue work on budget, roads, revenue

The problem with Michigan’s infrastructure cannot be solved by raiding retirement funds. Doing so would — just as it has in the past – provide a temporary funding boost at the long-term expense of Michigan taxpayers and retired public teachers and school employees.

We urge lawmakers to reject gambling with state retirement funds and face the reality that our deteriorating roads and bridges require a real plan with real revenues, not something cooked up in a Las Vegas casino.

Paula Herbart
Paula Herbart is president of the Michigan Education Association, which represents about 125,000 school employees, including K-12 teachers, education support professionals, and higher education faculty and staff. Prior to becoming MEA President, Herbart spent her career as a music teacher in Macomb County.
David Hecker
David Hecker has served as president of AFT Michigan since 2001. Previously, he was secretary-treasurer of the state federation. A member of the AFT executive committee, Hecker was first elected as an AFT vice president in 2004. He also serves as executive vice president of the Metropolitan Detroit AFL-CIO.

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