Granholm proposes retirement plan to cut Michigan budget costs
Michigan Gov. Jennifer Granholm proposed a broad plan on Friday to cut government costs, including a proposal she hopes will coax thousands of eligible state employees and public school employees into retirement.
Granholm also wants to create a health care plan that would cost many state workers more. She also would eliminate lifetime health care benefits for state legislators and prompt local school districts to do more to share services in an effort to save taxpayer money.
The proposals are among the Democratic governor's priorities for her final year in office. Granholm can't run for governor again because of Michigan's term limits law.
"Government can't be all things to all people," Granholm said in a speech to the Lansing Rotary Club. "We have to focus on the things that matter most."
Michigan faces a budget deficit of at least $1.6 billion for the fiscal year starting Oct. 1. Granholm estimated that combined, her proposals could save around $450 million in their first year.
Roughly 7,000 state employees and 39,000 teachers and other public school employees already are eligible for retirement. Granholm's plan would increase benefits for those retiring during a specified time period. Employee contributions to retirement systems or other benefits costs could be boosted for state employees who stay on the job.
Granholm proposes replacing two of every three state workers leaving under the program.
Her ideas appear to have some common ground with proposals already pitched by both Republicans and Democrats in the Michigan Legislature. But there also key differences.
A plan backed by Republican Sen. Majority Leader Mike Bishop, for example, calls for many public employees to take a 5 percent pay cut later this year and remain at that level for the next three years.
"The bottom line is we can't afford to run government like we've been running it," said Gary Olson, director of the nonpartisan Senate Fiscal Agency.
Granholm will detail more proposals during her State of the State speech next week and her budget proposal in February.
Comments
Jack Panitch
Fri, Feb 5, 2010 : 7:15 a.m.
We could argue semantics -- "I am on record as saying that this is public education and anything the public wants to discuss is on the table" -- but the Board has scheduled an executive session later this month for negotiations with the union. We, the public, may not be able to participate in those negotiations, but we're eventually going to be able to form an opinion about the outcome (i.e., the proof will be in the pudding). From discussions in other threads, I think some folks have begun to recognize that the ultimate objective for the District will be maintaining excellence to continue attracting students and avoid the downward financial spiral inherent in our current system of funding public schools when excellence is diminished. A sense of "fairness" between public sector and private sector workers might help leverage the District's position in negotiations, but as we have discussed before, the ultimate objective is maintaining educational excellence (for the sake of maintaining excellence because that is an important objective unto itself), to preserve the climate that attracts students to the district and to avoid a hit to the revenue stream that would potentially have a "race-to-the-bottom" effect. But the resources dwindle, and that's a fact aataxpayer and others appropriately point out (and Mr. Satchwell and the District clearly recognize) that we cannot run away from.
Jack Panitch
Wed, Feb 3, 2010 : 9:46 p.m.
@Jimmie Olsen -- I'm not going to call you a cynic, and I think your idea is excellent. We should regroup later in the process and use the speech as a benchmark to compare the outcome. We may ultimately have differing views of that outcome, but I still think it's a worthwhile exercise.
Jimmy Olsen
Wed, Feb 3, 2010 : 6:56 p.m.
@Jack We'll pull out the speech again when the new contract between the district and the teachers union is signed, sealed and delivered. Since very little of the actual negotiations are made public, I'll bet that sense of entitlement will/does not go away during those very private conversations. Call me a cynic, but public posturing is something EA presidents in this county are trained very well in. The MEa's joining of the "A Better Michigan Future" include no proposal about looking at their own practices, yet proposes more taxes. The status quo is not going to go away.
Jack Panitch
Wed, Feb 3, 2010 : 3:32 p.m.
Sincere thanks, bornblu. But let me tell you a humorous, true story that, I hope, will illustrate the unbelievable talent of the current Board members and explain why I won't likely run against an incumbent. I attended the community budget meeting at Skyline High School. The BOE trustees held a regular meeting at Skyline, and then filtered out into the crowd to attend the community meeting. At these meetings, members of the community sat at tables and listened to Dr. Roberts present the District's proposals. At the end of the presentation, each table discussed the proposals and other ideas we had. Then, each table presented its views and ideas to the entire gathering. I was the "stuckee" for my table, the guy who had to get up and present. I had to faithfully present the views of the group, not necessarily my own. One of the ideas my group had come up with was ceding from the state's funding system entirely and funding the schools on our own. I had tried to explain to the table that we had only the powers given to us by the state and that we probably couldn't do this: you know, the legal reason. My explanation was not compelling to the other people at the table. So I found myself in the slightly awkward position of having to present this view to the entire audience. In the meantime, out of the corner of my eye, I could see Trustee X sitting there at the next table, listening carefully and running numbers on a tiny sheet of paper. When I sat back down, Trustee X tapped me on the shoulder and showed me the computation: in the space of about a minute, Trustee X had computed both the homestead and nonhomestead millage it would take to fund the schools entirely locally. I forget the number, but it was obscene. I just laughed at myself. The nice, crisp, legal answer didn't convince anyone, but his computation would have been a conversation ender. You see, I had forgotten that even before Proposal A, the state was picking up 35% of the tab, and even if we could legally opt out of the foundation allowance system, we would have to make that additional 35% up on our own. Folks wouldn't be able to leave town fast enough. Each of the current BOE trustees brings amazing talent to the Board table, a passion for excellence and equity and sympathy for the taxpaying public. They have my vote. But I truly appreciate your confidence.
bornblu
Wed, Feb 3, 2010 : 1:56 p.m.
@Jack Thank you for the link!. Although I do not live in A.A. and did vote against the county wide millage, I was impressed (and unaware) of the position stated by Brit Satchwell. These are the kind of first steps that need to be taken by all school districts in order to bring the taxpayer (public) into a meaningful discussion of where to go, what to do, etc. The acknowledgement of this crisis, and understanding of what the voters indicated (not just apathy), will, I believe, allow for progress. I will confess, that when I see this willingness to share the burden that many of us have experienced so significantly, I have much more hope for the future. BTW, even though we disagree and I am not in your school district, please keep us (me) informed as to your intentions to run for school board again (you would have my support).
Jack Panitch
Wed, Feb 3, 2010 : 10:17 a.m.
Re: Mr. Olsen's "sense of entitlement" observation and everyone's very legitimate concerns expressed elsewhere in this running commentary: Brit Satchwell gave a short speech during the public comment period at the Board of Education's January 6, 2010 meeting. To my knowledge, the speech was not reported anywhere. His comments are insightful and worth taking five minutes to read, since he speaks on behalf of an 800+ member union. When you finish reading the comment, you may feel a bit less concerned about that sense of entitlement. Looks more to me like a sense of responsibility in partnership with the community. http://www.aaps.k12.mi.us/boe.home/files/1_6_10aaea.pdf
Jimmy Olsen
Wed, Feb 3, 2010 : 7:16 a.m.
@Lisa Im not sure where you got the idea I am retired, but not for many more years. Your condescending attitude about my tax bill is insulting to say the least. The extra tax money I saved went to help my daughter pay for her college textbooks. One of them cost $200 dollars. I dont drink Starbucks. How would you like to be in my shoes? My employer took away one week of time off, doubled my health care premium (my total out of pocket is now 11,000) and took away 9% of my pay. This was on top of similar cuts in 2009. Am I thankful I have a job absolutely!! Im not asking you to pay for anything Im asking you to live in the reality of the people who pay your salary via our (and your) taxes. I agree with Basic Bob the sense of entitlement is astounding.
Alan Benard
Tue, Feb 2, 2010 : 8:30 a.m.
Michigan: Vote Republican and this is your future: http://www.denverpost.com/news/ci_14303473MColorado Springs cuts into services considered basic by manyMore than a third of the streetlights in Colorado Springs will go dark Monday. The police helicopters are for sale on the Internet. The city is dumping firefighting jobs, a vice team, burglary investigators, beat cops dozens of police and fire positions will go unfilled. The parks department removed trash cans last week, replacing them with signs urging users to pack out their own litter. Neighbors are encouraged to bring their own lawn mowers to local green spaces, because parks workers will mow them only once every two weeks. If that. Water cutbacks mean most parks will be dead, brown turf by July; the flower and fertilizer budget is zero.Of course, vote Democratic and you can be certain they will let the Republicans decide what to do, anyway.
Basic Bob
Tue, Feb 2, 2010 : 6:22 a.m.
@Lisa, Your education and experience are an asset, but many of us who have equal qualifications have been hit hard by the economic conditions in this state. Your qualifications entitle you to absolutely nothing except to make you more competitive in your next job interview. I am sorry I came to this state, and I encourage my kids to leave. The cultures of the schools, unions, and major corporations are broken and people have entrenched themselves in their beliefs and entitlements rather than work together to fix the problems. Not to mention the weather sucks.
Lisa Starrfield
Mon, Feb 1, 2010 : 9:21 p.m.
Mr. Olsen, I can't speak for other districts or even for other teachers within my district but I pay an additional third of what my employer pays. Does that change your opinion? Somehow I doubt it. You've mentioned you are retired. I suspect that means you collect Social Security, yes? So, how would you feel if one day the country decided that they would rather cut social security than pay an extra couple of hundred a year? How would you like to be told that Social Security would be cut by 5% and there would be a freeze for the next three years on payments because taxpayers would rather give themselves a tax cut? Being retired typically means that you are on Medicare. How would you like to be told to pay an extra 20% next year because voters don't want to give up a couple of Starbucks a month? I understand you are on a fixed income. So are many others. But part of planning to retire is to plan for obvious contingencies like gas prices going up and your taxes going up. You are asking me to pay for YOUR increase in taxes plus another 14 to 19 families. I don't think that is reasonable.
Steve Norton, MIPFS
Mon, Feb 1, 2010 : 8:29 p.m.
Hmmm. I certainly do not want to minimize the pain that most people in Michigan have felt. But I think the logic being used by many commentators here just doesn't fly. Lisa Starrfield is right: not everyone in Michigan has been hurt by the long downturn. Economic inequality in the state has risen consistently over the last decades. But other analyses show that people in the lower income brackets provide more than their share of state tax revenues. We've also seen that, even with the state hitting hard times, our tax system has collected less and less of our state personal income as a percentage of the total. So even in these hard times, we are contributing a smaller share of our income to keeping public services running. My own data has shown that the same is true specifically for K-12 education, at least since 2004. My campaign colleague, Glenn Nelson, presented research that showed that if the state legislature had kept the percent of personal income spent by the state on K-12 constant, every district in the state would have $1000 more per child right now, despite the recession. So we're not just seeing a decline in state income: we are seeing the consequences of cuts in the state income tax, caps on property taxable values, and a sales tax that misses the fastest growing part of the economy. We've simply cut the share of what we have that we're willing to spend on education. Now I don't know about you, but when my family's income falls, I don't cut everything equally. There are some things that you eliminate, and some things that you protect at all costs. Since education is, in my mind, not just the key to my children's future but also the way out of this economic collapse, I believe we ought to sacrifice to keep schools strong. No blank check, but a real commitment to give a priority to education.
Jimmy Olsen
Mon, Feb 1, 2010 : 12:41 p.m.
@Lisa, I will go there....from your own response...Industry wide... "employees contributed $2,522 - or 22 percent - of the cost." Tell me, what percent of the cost do teachers contribute? You left that out of your response but it was contained in the same article.... In districts where employees were required to chip in, the average annual contribution was 4.2 percent. Most of the districts have little or no deductibles and co-pays, which means people have very little invested to limit and question their use of medical benefits, which just lead to higher costs for everyone.
Awakened
Mon, Feb 1, 2010 : 12:22 p.m.
@Lisa Every single person I know has taken pay and benefit cuts over the last couple of years. Some have taken 20% cuts. Some are struggling to maintain their homes. Some have had to leave the state for lower paying (non-union) jobs in the south. Some had to just allow forclosure. (Read no taxes for the state and community.) All have had to cut back on how they use health care. The ones left in this state just cannot afford to have their taxes raised. Costs must be cut. Educators need to recognize this. Accept reality. Michigan cannot continue to pay high dollar for services. If your education, etc. allows you to go where the grass is greener then good for you. If you stay you will have to pitch in your share.
bornblu
Mon, Feb 1, 2010 : 10:14 a.m.
@Lisa: Sometimes I feel that this gets old as it seems to be the same people, but here goes anyway. I sincerely respect the work you do, the time and commitment involved, and the outcomes your efforts have achieved. I also understand your position as my spouse is a "retired" teacher. What seems to me to be the core/simple issue is that we now have a set amount of money (say $100.00) and a budget of a larger amount (again say $150.00). What do we do? We can argue proposal A, defeat of the milleage, value of education (all those involved), loss or opportunity, loss of quality graduates, etc. None of this gets us to the issue of how we fit our $150.00 want into our $100.00 have. It just seems obvious to me that we have to reduce our spending by the amount we are short ($50.00 in my case). Anything else at this moment in time will not suffice. Where this reduction would come from is the key question. That is what we need to face regarding our state budget, county and city budgets and I would venture to guess, every school district budget. I do agree that we also need to focus on a long term solution to the situation we are now in but that will not correct the immediate problem of too little money. I will again say I do not believe that teachers should bear the brunt of any budget correction, but all those who receive revenue from this source (the people through tax) need to be part of the solution. Please remember, specifically as my wife and I are retired, any tax increase is nothing more than a reduction in MY PAY (not to mean I would be oppossed to an appropriate tax distribution reconfiguration). There need to be people such as you, DonBee, Jack, Jimmie Olsen, aataxpayer, Steve MIPF, and others, that would meet to build a consensus on not only what to do in the present, but also spearhead an organization working on positive reform for the future.
MsWebster
Mon, Feb 1, 2010 : 9:04 a.m.
Thanks for pointing me to the correct information, Lisa :)
Lisa Starrfield
Mon, Feb 1, 2010 : 8:52 a.m.
Aataxpayer, I believe that my pay is appropriate for my education and experience.
Lisa Starrfield
Mon, Feb 1, 2010 : 8:49 a.m.
Ms. Webster, You are incorrect. See: http://www.annarbor.com/news/mackinac-center-ann-arbor-public-schools-lead-in-lowering-health-costs/ "In Ann Arbor, the school district contributes $916 per month - $10,992 annually - to coverage for each of its 989 teachers who participate in health plans. The district also offers teachers the choice of spending up to $332 monthly to expand the coverage..... According to an analysis provided by the center, the average Michigan family premium in 2008 for all businesses and industries was $11,321, and employees contributed $2,522 - or 22 percent - of the cost."
MsWebster
Mon, Feb 1, 2010 : 8:16 a.m.
re: benefit cost - please see attached article http://www.crainsdetroit.com/article/20091119/FREE/911199988# AAPS teachers have over $12,000 in health insurance alone, and if they choose a PPO will receive money BACK in their paychecks to make up the diffrence between the PPO and MESSA. I don't know about deductibles, though - can you comment on that for us please, Lisa. ( I apologize in advance if this is double posted - my first comment did not appear after I posted it.)
MsWebster
Mon, Feb 1, 2010 : 8:12 a.m.
@Lisa, Your statistic on benefit cost is incorrect. see http://www.crainsdetroit.com/article/20091119/FREE/911199988# Compare this data to how much AAPS pays for benefits under the latest contract - over $12,000 for health insurance with teachers actually getting money back in their paychecks for not taking MESSA and going with a PPO. Please read the article and get back with us here. I don't know the deductibles teachers pay, so maybe the statistic you sited IS correct.
Lisa Starrfield
Mon, Feb 1, 2010 : 7:14 a.m.
Mr. Olsen, My benefits are below the average cost of benefits in INDUSTRY in Michigan. Don't go there.
Lisa Starrfield
Mon, Feb 1, 2010 : 7:09 a.m.
aataxpayer, When times are good, we are insulated from that economic condition. When the economy picks up, do you think there will be article after article with dozens of comments each all calling to increase teacher salaries and benefits? Of course not, the same people will still be calling for our wages to be frozen, for less taxes.
Jimmy Olsen
Sun, Jan 31, 2010 : 10:36 p.m.
@Lisa, You are correct salaries are not the problem alone. Benefits play a part in the equation as well as the almost 18% districts are forced to pay into the retirement pool. I'm tired of people blaming the "real estate mogul" - voters did their research and gave their answer - and that is the status quo is unacceptable. Raising taxes is not the answer. You and I both benefited from the lower tax rates, not just the "wealthy". Like any business or like my family - I can only budget what I have to spend (my salary) and that has taken another 9% reduction this year. Like it or not, the state has only so much to give and that means districts have only so much to spend. Basic economics 101.
Lisa Starrfield
Sun, Jan 31, 2010 : 9:47 p.m.
Mr. Olsen, The salary of teachers is NOT the problem. The problem is that we have cut taxes again and again... especially for the very wealthy (think how much the defeat of the millage saved our friendly real estate mogul). We've cut taxes so much that services will be cut.. like road maintenance, like schools, like county health services. You keep telling me that all of Michigan is in this boat. I say it is not. Only the working class. We have watched a great transfer of wealth from the middle class to the very wealthy through outsourcing, destruction of unions. Granholm's proposal will continue that. It has not been good for Michigan so far, why would you want to see it continue?
Jimmy Olsen
Sun, Jan 31, 2010 : 6:04 p.m.
@lisa I actually expect you to come to the realization that things in this country are very broken and they won't probably be fixed within several years. In those years you will be forced to take pay cuts, benefit changes and start discussion of merit based pay raises, etc. Change is difficult, but once you accept it and work towards a new model, your anger will probably lessen. As a note, the MEA "us" versus "them" is getting pretty old. I'm not sure what part of your indoctrination/training (I've read the "seminar" topics" hosted by the MEA at the annual training event) this hopes to accomplish, but it is starting to not play well with the public. The UAW learned the hard way, and I guess the MEA will too.
DonBee
Sun, Jan 31, 2010 : 4:14 p.m.
Lisa - Sorry, something is going to have to change. I don't know what it needs to be. We need the state to work for everyone (including state employees). There need to be roads and schools, we need fire departments and police. We need hospitals and ambulances. We have the following state functions: 1) Agriculture - one of the largest parts of our economy and the people who check the safety of food in the state? Does this go away? 2) Attorney General - do we need a state legal department? 3) Civil Rights - 40 years after the riots in Detroit - do we still need a Civil Rights department? 4) Civil Service Commission - do we need rules for state workers and their employment? 5) Community Health - do we need state funded health services? 6) Corrections - do we need to have a prison system? 7) Education - do we need state level education support? 8) Energy, Labor and Economic Growth - do we need the state to support jobs for people? 9) The Governor's office - Do we need a state executive? 10) Human Services - do we need welfare and other state assistance programs? 11) Information Technology - does the state need to have information systems to keep track of things? 12) Judiciary - do we need courts and judges? 13) Legislature - do we need people to pass laws and budgets? 14) Management and Budget - do we need to track what we are spending and how as a state? 15) Military and Veterans Affairs - do we need the National Guard and to support returning veterans? 16) Natural Resources and Environment - do we need to maintain the environment we all live in? 17) Secretary of State - do we need drivers licenses, license plates, and car titles? 18) State Police - do we need law enforcement in the state? 19) Transportation - do we need roads? 20) Treasury - do we need someone to administer the State Taxes? What goes and what stays? How much of each of these do we do in the future? Who is willing to easily give up their favorite department or job? This is going to be a very difficult process. The State owns millions of acres of forest and parks - how much of this should be sold to private individuals. Remember early in Grandholm's tenure she purchased the largest tracts of forest land in the UP that were in private hands. We the down economy - can we make any money selling assets - does it make sense? We can change the laws about sentencing for criminals - but then we will put more people on the street - many with little in the way of job skills and little chance to find work. It reduces prison costs, but does it help the state overall? Changing to a defined contribution plan for state employees - tough for everyone with a job, it is fundamental change in what people expected when they signed up. It weakens that hand that the state can use to attract great people. And on and on...$1.6 Billion in the hole for 2011 - and more in 2012, based on raises and inflation. The expectation is that the state will not recover from this downturn until 2020 at the earliest. Add taxes - to who? young people coming out of college - they are mobile and will move. Add up the sales, income and property taxes and we have more in the way of taxes than many other states. To business - I though we wanted to bring business in - not chase it away. I watch good startups leave the state as fast as they can for a better business climate. For families - how many more do you want to push into food stamps? There are no easy answers. There is no money tree, and something has to give. If it does not in the next few years the state will have to declare bankruptcy and that will not be good for anyone - all the existing defined benefit pensions, bonds, and other state obligations will be worthless and it will hurt everyone. The one place to look is at our state delegation to Washington - they do not do the job there - bringing our taxes back to Michigan - we are still a donor state (only $0.85 of every dollar in taxes comes home to Michigan) - giving more each year than we get back. If you want to be angry with someone - be angry with our US Senators and Congresspeople - they are not helping the state of Michigan - and it does not matter what party they are part of. Want to change things - start in Washington DC.
Lisa Starrfield
Sun, Jan 31, 2010 : 3:34 p.m.
Oh and aataxpayer, when will it end? You want to cut my salary by 4-6%, the legislature wants to cut it by an additional 5% plus a pay freeze and forcing me to pay more for benefits and that's just for this years crisis. When will it end? Every time there is a budget shortfall, someone is screaming that we make too much money. Only nobody talks about the cut in taxes that is constantly causing these shortfalls. Reform Proposition A because it is the problem, not my salary.
Lisa Starrfield
Sun, Jan 31, 2010 : 3:28 p.m.
Aataxpayer, The economic reality is that taxes were cut in this state fifteen years ago and now teachers and civil services are being expected to pay for the rise in costs of services rather than the taxpayers bringing their taxes back to where they were or seeing a cut in services. To ask me to pay the extra taxes for 15 to 20 families is unreasonable but that is what you are asking of me with your 4 to 6% cut.
Lisa Starrfield
Sun, Jan 31, 2010 : 9:43 a.m.
Mr. Olsen, Do you honestly expect us to stand by as our collective bargaining rights, our pay and benefits are shredded?
Jimmy Olsen
Sat, Jan 30, 2010 : 9:32 p.m.
@Lisa Welcome to the reality of almost every tax paying citizen in this state. State government and educators are finally last on the list of pay cuts and benefit changes that we all have experienced. I've lived in this state my entire life except for 2 years in North Carolina and the grass isn't always greener on the other side. The long over-due changes are coming. Despite the cuts - educators would still have better starting salaries and benefits than most other states.
Lisa Starrfield
Sat, Jan 30, 2010 : 7:35 p.m.
So let's offer more benefits to our retirees and screw our new hires for 30 years? More work for less pay, less benefits and they should be glad to get it? Who would come to a state like this? What kid starting out would stay?
Do not taunt Happy Fun Ball
Sat, Jan 30, 2010 : 8:16 a.m.
Perhaps a a State HIRING FREEZE would have been nice - say about 5 years ago!