Michigan teacher pension system liabilities increase again

By Tom Gantert | Michigan Capitol Confidential

Public school administrators have called the costs for the teachers’ pension fund a budget breaker. They won’t be happy to learn the costs are increasing.

The Michigan Public School Employees Retirement System saw its unfunded liability increase to $25.8 billion in 2013 from $24.3 billion in 2012, according to the annual actuarial valuation report from the accounting firm, Gabriel Roeder Smith & Company. The pension liability in 2009 was about $12 billion.

James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy, said the additional unfunded liability is from the low rate of returns during the Great Recession that are still being factored in due to several years of “smoothing” where pension funds blend several years of returns and get an average rate. Hohman said it’s possible the returns could be higher than the projected 8 percent in the future, but there are no assurances.

at Michigan Capitol Confidential.