LANSING Mich. (Michigan News Source) – The recently signed School Aid budget requires the school districts to take on more of the costs of the public schools employees underfunded pension system.

The approved budget removed $350 million that the state had previously sent to school districts to reimburse them for paying into the Michigan Public Schools Employees Retirement System (MPSERS).

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The public school employees pension is a major cost to school districts. For example, Grand Rapids Public Schools made a $43.1 million contribution in 2024 to the pension system.

For years, the state of Michigan underfunded MPSERS that led to a large liability. The MPSERS net pension liability is $24.4 billion. That means the pension plan has projected costs of $96.9 billion and has $72.5 million set aside to pay for those costs.

The state is making more of an effort to reduce the pension liability as of late. In 2018, MPSERS was underfunded by $33.8 billion. The state has made several attempts at pension reform, the latest in 2017.