State Budget Update: MPSERS and Academic Building

One element of Gov. Rick Snyder’s executive budget not covered in our initial report the day it was unveiled is proposed funding that begins to address the growing financial strain of annual retiree pension liability and retiree health care costs through the Michigan Public School Employee Retirement System (MPSERS). NMU is one of seven public universities that has an unfunded annual liability and cash health costs related to MPSERS. The universities have no control over these costs, which represent 11 percent of their state appropriation. NMU pays about $4.2 million annually for the state-mandated pension liability and retiree health care. Snyder is recommending about $446,000 in funding to help offset some of the projected increase in these costs for the seven schools.

“It is encouraging that the governor has recognized the significant impact of this state-mandated liability on university budgets,” said Gavin Leach (Finance and Administration). “This has been a concern of the seven schools for some time and we have consistently raised the issue during the state budget process. Representatives met to discuss ways to reduce that cost and submitted a special project request to the state as a way to help fund our MPSERS liability. The proposed funding to help offset some of the increase is a step in that direction. The seven schools are continuing talks with the state to try and address this long-term problem.”

Also, separate from the budget but announced at the same time were the capital outlay projects for construction funding consideration. The new academic building to replace Jamrich Hall remains on the list. It had been approved to proceed through the design phase and now awaits construction authorization.

The House and Senate higher education appropriation subcommittees will develop their own versions of the funding bill as the next step in the state budget process. NMU President Les Wong is scheduled to testify at a House subcommittee hearing in Lansing on Wednesday, March 21.



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Updated: March 5, 2012

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