In the last week, Gov. Snyder has signed legislation setting the education budget for next year and enacting retirement changes for new school employees.
The retirement legislation, SB 401, passed in June despite bipartisan opposition. An analysis of the bill shows the variety of impacts it will have on new school employee retirement, including maintaining a choice between an improved defined contribution, 401k-style system and a riskier version of the hybrid defined-benefit/defined-contribution system.
“We continue to believe this complicated legislation was rushed through the process without proper analysis of the outcomes it will have for school employees and the state. Although it retains choice in retirement plans for school employees and improves the defined contribution option available to them, there are still too many unknowns,” said MEA President Steven Cook on Thursday when Snyder signed SB 401 (which is now Public Act 92 of 2017).
“The bill’s passage less than two days after introduction failed to carefully consider key concerns. Uncapped cost increases in the event of shortfalls in the new hybrid system put unknown levels of risk onto new educators and school districts. The legislation fails to provide stability in the hybrid system and fails to pay down the unfunded liability so often decried by politicians. And language in this bill places new restrictions on the ability of educators to invest in their retirement, including banning the ability for school employees to purchase service credit when they take parental leave.”
On Friday, Snyder signed the Education Budget, which increases the K-12 foundation grant by $60 to $120 per pupil (based on the 2X formula, with the lowest foundation grants getting the highest increase), while also increasing community college funding by 0.9 percent and higher education funding by 2.9 percent. Learn more the details in the budget here.