According to the Michigan Public Schools Employee Retirement System (MPSERS), districts pay 16.94% of gross pay to MPSERS for employee's (and retirees) pension and retiree health care costs. Of the 16.94%, 10.13% is for pension costs and 6.81% is for retiree health care.
On page 99 of the MPSERS annual financial report (CAFR) -- which is linked to from the title of this blog post -- the cost of retiree health care for the fiscal year ended September 2008 was $734.5 million. Of this, LEA employer contributions were $649.6 million or 88.4% of the total cost.
Member contributions (i.e., premiums paid by retirees) amounted to $78.1 million or 9.8%.
The balance was paid for with the fund's investment income and miscellaneous other incomes. In addition, the health care fund, i.e., "Other post employment benefits fund", had a slight surplus of $55.7 million.
A retiree without medicare currently pays about $174 per month for family health care coverage (retiree, spouse, and child or children).
A listing of what retirees currently pay for their health care costs can be found at:
www.michigan.gov/documents/R072C_128095_7.pdf
According to the Kaiser Family Foundation, the average employee nation wide pays 17% of their employer provided health premium costs if single and 27% if family coverage. This equates to a premium cost of $65 per month is single or $293 per month for family coverage.
The Citizens Research Council estimated in a 2004 report entitled "Financing Michigan Retired Teacher Pension and Health Care Benefits" that LEAs would be paying 9.3% to MPSERS for health care costs by FYE 2010. With an actual employer rate of 6.81% for 2009-2010, their estimates appear to be overly pessimistic.
In Michigan, the State mandates how much employers pay to MPSERS and the state also mandates how much retirees pay in premiums.
Tuesday, November 10, 2009
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According to Peter Luke's column in the Tuesday, November 10, 2009 Booth Newspapers:
"State Sen. Alan Sanborn, R-Richmond, told Macomb County parents he is reintroducing a measure to require all public employees in Michigan, including school personnel, to pay 15 percent of their health insurance. He said the school aid fund alone would realize $350 million in savings."
I am not sure how Mr. Sanborn got his figure of $350 million in savings.
If current retirees pay 15%, the savings would be about $40 million (since they are currently paying about $80 million) which is about 10% of the total costs for MPSERS benefits.
The remaining $310 million? Is he referring to A) current employees paying 15% of the 16.94%? Or B) 15% of the 6.81% (estimated savings would be $97 million statewide, i.e., 15% x $649 million)? Or C) 15% of their MESSA or employer provided health care coverage? Or some combination of the above?
My guess is that there is no good data available to quantify C).
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