Brixie: Don’t Gamble our Future on Bonding Scheme
LANSING — State Rep. Julie Brixie (D-Meridian Township) announced today her opposition to bonding against the state’s pension system for teachers, known as MPSERS, which is being floated as a way to fix the roads by one organization in Michigan.
“Gambling our future on this bonding scheme is fraught with financial peril and won’t fix the roads,” said Brixie, the former treasurer of Meridian Township. “The markets are at historic highs right now, and when there is a market correction or recession, we could lose these bonds overnight.”
Financial experts say issuing pension bonds has rarely succeeded and has historically led to fiscal stress and even defaulting on the bonds. Patrick Anderson, a conservative economist and a former state deputy budget director under Gov. Engler, called the plan, “a really dumb idea.”
The city of Chicago explored and backed away from a nearly identical plan to issue $10 billion in pension bonds just last year in part because return on investment to its pension fund was less than the interest payments on the pension bonds.
The city of Detroit issued $1.44 billion in pension bonds and lost it all in the markets in just 5 years.
“Borrowing money in an attempt to beat the market is fiscally irresponsible,” said Brixie. “It forces you to make extremely risky investments to even have a shot at earning more than you owe in interest and you lose your shirt when the market tanks. Let’s not get hoodwinked into gambling.”
The West Michigan Policy Forum is the group pressuring lawmakers to make such a risky gamble with the state’s teacher pension system. The organization’s leadership includes notable conservative Dick DeVos.
“DeVos and his group don’t care about the roads, they just want to cripple the public school retirement pension system,” said Brixie. “They want to strip our public school employees of a secure retirement so they can recruit the best educators away from traditional public schools and bolster the profit margins at their charter schools.”