Expensive School Funding Change a Slippery Slope?
Michigan Education Association members anxious to learn if they’ll be reimbursed their 3 percent retirement contributions have been waiting for news of a Michigan Court of Appeals decision since November, the latest step in MEA’s long legal fight to get our members’ money back.
No decision has been issued, and no word has come to indicate if the court will order oral argument or simply rule on the case, according to MEA General Counsel Mike Shoudy.
MEA and American Federation of Teachers Michigan filed briefs with the Appeals Court last November in opposition to Public Act 75 of 2010, which mandated school districts withhold 3 percent of each employee’s wages for retiree health care. That money has been sitting in escrow for five years.
A 2010 lawsuit by MEA and AFT Michigan challenging the constitutionality of PA 75 prevailed at the trial court and Michigan Court of Appeals. The state then sought to have the Supreme Court hear the case, but the justices declined and sent the issue back to the Court of Appeals for this latest review.
Meanwhile, another bill has been introduced to eliminate the Michigan Public School Employees Retirement System (MPSERS) as a retirement choice for newly hired school employees. Introduced by Tim Kelly (R-Saginaw), House Bill 5218 would require new school employees to participate in a defined contribution plan, such as a 401K.
The House bill is identical to Senate Bill 102, introduced in January 2015 by Sen. Phil Pavlov (R-St. Clair), which awaits action in the Senate Appropriations Committee.
Earlier analyses of the cost of shifting entirely to 401K-style retirement plans for new teachers show it would be prohibitive, since no one would continue paying in to MPSERS, and the state would have to pick up the entire cost – hundreds of millions of dollars – of funding current retirees’ benefits.