One more time for SB 1040?
The Senate will try again tomorrow to take care of SB 1040, legislation dismantling the Michigan Public School Employees Retirement System. (MPSERS). They tried last month but were short the votes (16-22) to pass the House version.
Senate Majority Leader Randy Richardville and Senate Appropriations Chair Roger Kahn--author of the original bill--claim "there is a deal in principle" and they have the 20 votes needed to pass the bill. Gov. Snyder has been in favor of cost-cutting changes to the system--so much so that they were included in the 2013 budget.
All along a key issue has been switching members from a defined benefit plan to a defined contribution one and eliminating the current hybrid system. While some Republican legislators favored the switch, Kahn has been opposed to it because of the $300 million per year cost to do it. Just switching new hires over would cost school districts an additional $8 to $10 billion over the next 30 years.
School districts will pay more than 27 percent of retirement costs if there is no action on the bill. If passed, SB 1040 would cap district costs at 24.46 percent, but none of the changes would take place until next year.
It's believed the new Senate version will include a call for a series of studies on switching to a defined contribution plan, stranded costs for retiree health care for universities, and stranded costs to schools because of privatization. The Governor and Richardville will decide who will do the studies which are to be completed by Nov. 15--just after the election.
MEA still opposes SB 1040 because the cost-shifting to current and retired school employees and new hires from school districts is financially devastating. Contact your Senator and let them know that this legislation is not the way to fix the retirement system. All sections of the bill--not just a defined contribution provision--should be studied.