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Analysts outline MPSERS costs, state cap change and timetable to pay unfunded liabilities
Summary
House fiscal analysts told the subcommittee MPSERS appropriations total about $2.8 billion this year, described recent one‑time payments and said the statutory district cap on employer contributions will drop from 20.96% to 15.21%, with projections that unfunded liabilities will be paid off by 2038.
LANSING — The Public School Employees Retirement System (MPSERS) remains a large and growing share of the school aid budget, House fiscal analysts told the House Appropriations Subcommittee on School Aid.
Jacqueline Mullins said the budget currently allocates about $2.8 billion for MPSERS in the current fiscal year and described several recent one‑time payments intended to reduce unfunded actuarial liabilities (UAL). She said FY23 included a payment that paid off university liabilities and provided an additional $1 billion payment toward remaining UAL, and the current fiscal year includes about $252.5 million in additional payments.
Mullins explained that a statutory cap limits the share districts pay for retirement costs; historically the cap was 20.96% of payroll for participating districts, and beginning in the next fiscal year that cap will be reduced to 15.21%. Mullins said the change means the state will assume a larger portion of UAL payments and that the timetable in the presentation projects UAL will be paid off by 2038.
Analysts also discussed assumption changes adopted in prior years — including lowering the assumed investment return from 8% to 6%, moving to level‑dollar amortization and creating a contribution floor — all measures intended to produce more realistic funding schedules and to avoid unexpected liabilities.
Committee members asked about the distributional impacts of cap changes, noting district savings will vary by payroll exposure. No formal action was taken; analysts provided the projections and background for lawmakers to consider during budget deliberations.
