SB 1040 Talking Points

  • The latest assault on public school employees, SB 1040, comes under the guise of fixing the problems with the Michigan Public School Employees Retirement System (MPSERS).
  • In reality, SB 1040 makes dramatic cuts to employee pension benefits while drastically increasing the out-of-pocket costs for both active and retired members. This is not fixing the problem, but rather shifting the cost from school districts to employees.
  • Under this legislation, current retirees will also be impacted when an 80 percent cap on the subsidy for retirement health benefits is imposed. Currently there is a 90 percent cap on that subsidy. That means premium costs will double for those who are already on a fixed income. This is not what they expected or planned for.
  • 39% of Michigan School Retired Employees earn a pension of $12,000 a year or less and will be dramatically impacted by having to pay 20% of their health insurance premiums.  In all likelihood, they will become uninsured.
  • Mid-career and recently-hired employees are struggling with wage cuts, increased pension and health care costs and student loans. They’re unable to support a family. Their middle class dream made possible by a career in education is no longer possible. Increased pension contributions will make it even worse.
  • The retirement security of new hires is decimated by SB 1040.  Moving them to defined contribution plans for both their pension and their health insurance provides huge uncertainty for new school employees who aren’t making much to begin with.  Furthermore, this change will actually cost more over the next few years, starving even more money from public schools.
  • Why would anyone choose to become a school employee when doing so means giving up any chance of making a decent living and supporting a family?  The best and the brightest are being discouraged from ever entering the profession. What does this do to the future of public education in Michigan?
  • Current and retired school employee can’t afford these changes, which simply shift costs onto the backs of employees, rather than actually addressing the problem – the $45 billion unfunded liability caused by the outsourcing of school employee jobs, bad investment choices, and the failure of past Legislatures to properly fund the system.
  • The "unending nightmare" of a relentless attack on school employees that adds retirement costs to their already shrinking wages and benefits and taxes senior citizen pensions continues.


For more background information on MPSERS and the problems facing it, please see a recent report from Gary Olson, former director of the Senate Fiscal Agency