EAST LANSING — The Michigan Education Association is praising the Senate’s decision to table costly legislation that would have forced all new school employees into a defined contribution, 401(k)-style retirement plan.
“Tabling this discussion rather than ramming this legislation through is the right decision,” said MEA President Steven Cook. “Education leaders and fiscal experts agree that dismantling the school employee retirement system would have been bad for school employees, parents, kids and taxpayers.”
Contrary to claims by Republican Senate sponsors that the change would save the state money, Senate Fiscal Agency budget experts projected the change would have cost the state $1.6 to $3.8 billion over the next five years. Those increased costs could have meant a cut of $412 in the per pupil foundation allowance in the first year and over $500 per pupil in each of the next four years. Experts at the state’s Department of Technology, Management and Budget pegged the 30-year cost of closing the pension system to new hires at an extra $24 billion for taxpayers.
While the change was portrayed as only affecting new hires, closing the defined benefit plan would have put current and retired school employees’ pension security in jeopardy as well, since no new money would have been coming into system to keep it sustainable.
“The fact that many Senators in both parties recognized the high costs of this legislation and the damage those cuts could do to public schools is heartening,” Cook said. “They deserve thanks for listening to the thousands of constituents who contacted them on this issue.”