Why Do Taxpayers Get the Bill for a Union President’s Pension? The Michigan Education Association keeps its employees technically ‘on loan’ from school districts. By Alex Cortes and Jarrett Skorup
https://www.wsj.com/articles/why-do-taxpayers-get-the-bill-for-a-union-presidents-pension-1496187459
The year was 1993. Bill Clinton had recently been elected president. A gallon of gas cost $1.16, and the Chicago Bulls won the first of three consecutive National Basketball Association championships. Over in Lansing, Mich., a teaching assistant’s dreams were about to come true as well.
This public employee, Steve Cook, was making a relatively low hourly wage at Lansing Public School District. But he had an opportunity to enter the private economy, where his new employer would pay him a lot more. Even better, he would be allowed to continue accruing taxpayer-funded pension benefits.
Why? This was no ordinary private employer. Mr. Cook was going to work for the Michigan Education Association, the state’s largest teachers union. His new employer worked out a deal with the school district that made Mr. Cook an “educator on loan,” a scheme that allows public employees to be paid by a government entity while being “loaned out” to another organization. Under the arrangement, the district technically pays Mr. Cook’s salary and the union reimburses the district. This allows him to accrue a much higher pension, by basing it on a far higher salary and many more years of service.
Richard Halik, the district’s superintendent at the time, agreed to the request. “You want a positive relationship with the MEA,” Mr. Halik said in a 2016 interview, explaining why he agreed to the deal that he expected to last only one year. “You pick the hill you die on. . . . We were going to be cooperative.”
Nearly 25 years later the scheme is still going. And this is not unique. Michigan’s largest teachers union has these types of agreements with its past three presidents, most of their current executives and even some low-level union employees. Dozens of people working full time for the private union are technically getting paid by a public school district.
It’s not hard to see why union employees go for such a setup. The lucky ones get to boost their taxpayer-funded pensions by pretending that they are still public employees. Since they are technically being paid by school districts—even though they work exclusively for a private union—union officials accrue benefits and stay eligible for Michigan’s school-employee pension system. That system is $29 billion underfunded, thanks in part to arrangements like this.
Mr. Cook became president of the MEA in 2011. He is set to retire later this year. His current salary is more than $200,000. While his pay was determined by the union, his paychecks still came from the Lansing school district. Had Mr. Cook stayed on as a teacher’s assistant in 1993, his annual pension benefit in retirement would be around $10,000, according to estimates by the Mackinac Center for Public Policy (which uncovered the scheme). Instead, Mr. Cook is in line to receive an annual pension of at least $105,000 for the rest of his life, at taxpayer expense.
The school district says it didn’t intend for this to happen. But three words in Mr. Cook’s “educator on loan” contract prohibit the district from terminating the arrangement. The contract, according to language contained in it, “shall be renewed.” Since there is no end date specified, the union claims the arrangement renews in perpetuity—and it has.
Union officials in Michigan and throughout the country benefit from these and other schemes. “Release time” arrangements enable public employees such as teachers to work full time for their unions, while still receiving their full school salaries and benefits. In Michigan, at least 70 school districts spend millions offering this benefit to union officials.
Last year, the Arizona Supreme Court upheld one such arrangement after the Goldwater Institute challenged it under the state’s constitutional “gift clause” provision. In California everyone from janitors to schoolteachers to college professors takes union release time, paid for by taxpayers, and the California Legislature actually expanded the practice in 2013.
The Office of Personnel Management tracks release time for federal employees. Its most recent report in 2014 showed that union employees logged 3.4 million hours of release time, at a cost of more than $162 million. In the Veterans Affairs Department alone, employees took more than a million hours of leave time.
Using taxpayer money to pay for union activities and private pensions should outrage anyone interested in efficient and effective public services. Taxpayers are on the hook twice—once to pay for the released worker and again to pay for a replacement employee. There’s no legitimate reason why governments should provide these types of extra benefits to unions and their officials. States and the federal government should end these schemes. CONTINUE AT SITE
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