It will have to be the courts again to ultimately decide whether the Legislature has overstepped its bounds when it comes to school employees and their retirement benefits. Gov. Snyder is appealing a recent Michigan Court of Appeals decision that the 3 percent “tax” on employees for their retiree health care is unconstitutional.
The Governor's ink was barely dry on PA 300 (originally SB 1040) yesterday afternoon when MEA and AFT/Michigan were in court winning two temporary restraining orders on parts of the new law. Judge Rosemarie Aquilina issued the TROs and promised a full hearing on the constitutionality of the new law this fall.
The passage last week of SB 1040 has given MEA members more to think about than just the start of a new school year. Participants in the Michigan Public School Employees Retirement System (MPSERS) have until Oct. 26 to make choices about their retirement plans and MEA is helping out by providing information and sessions to guide you in making your decisions.
Last week’s combination of the passage of SB 1040 and the Court of Appeals ruling that the existing 3 percent employee contribution for retirement health care is unconstitutional is raising questions about whether or not school employees will be seeing a refund of those funds, like state employees already have.
IMPACT OF SB 1040 H-3, as Finalized by the Legislature 8/15/12
For current retirees under age 65 and those who retire January 1, 2013 or later:
Will pay 20% of MPSERS health premium. Retirees currently pay roughly 10% for self and any dependents, except that retirees on Medicare pay only the Medicare premium on themselves and 10% of the MPSERS premium for any dependents.
For retirees who are 65 or older, who are Medicare-eligible and have retired by January 1, 2013
Unfortunately the House voted 57-48 in favor the (MPSERS) overhaul, a compromise that includes a study to fully transition from a defined benefit (DB) to a defined contribution (DC) system. Earlier in the day the Senate passed the bill, SB 1040, by a vote of 21-16, sending it to the House. The bill moved to the Governor's office for his signature.
The changes made in this version include the following:
There's little good news in the Senate and House finally voting out SB 1040 today. On a 21-6 Senate vote and a 57-48 House vote, they increased current employee contributions to their pensions, increased retirees' share of their health insurance, and ended retiree health insurance for new hires.
"This bill is not fair. It just shifts costs around and solves nothing," said Rep. Jeff Irwin (D-Ann Arbor) who spoke in opposition to the bill.
Under SB 1040, new hires will not be moved to a defined contribution retirement benefit. They will stay in the current hybrid system which combines a defined benefit and defined contribution mix. New to the bill, is the call for a study of the financial impact moving new hires to the defined contribution would cause. The study will be done by Nov. 15.
Don't buy into the idea that your vote doesn't count. Your vote is your voice and when we all vote, we send a loud and clear message to politicians and special interest groups who would prefer we stay home tomorrow.
Lists of recommended candidates are available in the Members Only area of www.mea.org. The list represents the voice of MEA members across the state who interviewed the candidates and recommended your support of them because they will stand up for public education, working families and the middle class.
When the Legislature returns for one day on July 18, it's expected the Senate will take up the unfinished business of SB 1040. While the House passed its version of the bill, the Senate adjourned on June 14 before taking any action.
The Senate will take up the House version which includes the prefunding of the retirement system, giving new hires the option of a defined contribution plan, and a freezing of the retirement rate for school districts. All along, there have been Senators interested in forcing all new hires into a defined contribution plan, but at issue is the cost of such a move. The House version calls for a study analyzing the cost benefit.