The Fleecing of Michigan’s Teachers and Public Employees

The MEA, through it’s subsidiary the Michigan Education Special Services Association (MESSA), is diverting over $367 million in badly needed funds from classrooms. It does this through its practice of reselling Blue Cross Blue Shield insurance products under it’s own banner. The Hay Group Report shows that on average MESSA is the most expensive program of all other choices. It's simple math, Blue Cross makes a markup, then MESSA makes it mark up and the cost goes up.

MESSA's balance sheet (show below) quantifies the true cost of this manipulation. As of the most recent audit (full 2008 report here) MESSA has earned and holds over $365 million; it would be $394 million if MESSA was not forced to disclose $28 million in pension liabilities for MESSA staff. MESSA claims a portion of the reserves are for rate stabilization. This is a marketing claim because MESSA is not required to hold reserves. The truth is that Blue Cross Blue Shield is required to hold these reserves because they are the actual insurance provider, not MESSA.

From MESSA’s own 2007 financial statement (page 11 of MESSA financial statement), the reserves belong to “our members and their school districts.” REALLY? OK, I want MESSA to return our share of these “reserves” back to my district -- or failing that, return it to my employees because it is part of their negotiated compensation. Of course I will not hold my breath, MESSA will not even comply with state law which requires disclosure of experiential data (Public Act 106), the law is over a year old and MESSA has not complied (MESSA has no excuse for this, their systems are fully capable of producing this data).

About that $28 million in MESSA pension liabilities: a part of this is attributable to a nonconforming, and underfunded pension plan. Why is it nonconforming? The main reason is to cover extra pension contributions for executives earning over $225,000 per year. Is this really in the best interest of the public employees “covered” by this organization? These are employees that are at significant risk because of massive funding shortfalls at the state level. We ALL need to aggressively cut costs to save the jobs of the people that matter the most -- the teachers in the classrooms.

MESSA is redundant organization (Blue Cross Blue Shield already provides the same administrative functions) that marks up its product (which is buys from Blue Cross Blue Shield), and withholds the rebates it earns through the good health of its members (rebates given by Blue Cross Blue Shield to reflect cost savings) so it can fatten its executive ranks and manipulate its own political objectives (by deciding when and where to change the rate it charges for its Blue Cross Blue Shield insurance). The MEA is selling its members short, it should live up to its own words and recognize that these funds belong to “our members and their school districts.”

MESSA 2008 Balance Sheet

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MEA LM2 Report - MEA Directors 14% pay hike.

The following is a summary of the MEA's LM2 report that is filed with the Department of Labor. It shows MEA directors profit off the back of the teachers and from earnings at MESSA. The last page of the images shows how, for directors being paid over $100,000 a year, 2007 was a very good year with an average compensation increase of nearly 14% The full report is available here (click on this link) and includes the ability to do a name search.

Otherwise, you can review the pages below (it may be small, you can print by clicking on the printer icon in the upper right side of the window below):

Yes Virgina, MESSA does EARN money!

Contrary to what MESSA says, they do earn a profit. The proof is in the image below of MESSA's own IRS filing from June 2005. Updated data (of which I don't have an image) shows MESSA earned nearly $100 million more in 2006. The MESSA spin doctor, Gary Fralick (MESSA's director of communications and government relations), said that MESSA is a non-profit 501(c)(9) organization that does "not earn profits." Gary needs to look at his organizations IRS tax return; on line 72 it shows NET EARNINGS of over $68 million in 2005.

That's pretty good if you're a business, but MESSA is supposed to be, and claims to be, a non-profit. The IRS form tells a different story. These profits are a cost burden layered on top of a state that cannot afford to support the ulterior motives of this organization. We are struggling to keep teachers employed and paid - MESSA piles up earnings on the backs of students and its own members at the cost of real jobs and lives. Our teachers, our students, and the tax payers of Michigan deserve better.

Just click on the image to make it bigger. The lines highlighted show accumulated profits and earnings.