House Dems Fight Back Against Teacher Retirement Changes

Retirement changes to negatively impact current, future and retired teachers
Thursday, June 14, 2012

Today House Democrats fought against Senate Bill 1040 (H-3). In the end, the bill passed by a vote of 57 to 47. The package of bills will amend the Michigan Public School Employee’s Retirement System (MPSERS).

“Our teachers will be forced to take on the burden in such an extensive way, that it will not only make it more difficult for them to survive, but will also impede on their ability to maintain an effective school system,” said State Representative Steven Lindberg (D- Marquette).

SB 1040 (H-3) is designed to decimate all retirement health care benefits for future employees hired either on or after July 1, 2012 and replace it with matching employer contributions of up to 2 percent of compensation deposited into a 401(k) account. Current employees will see an increase in the retiree health insurance premium contribution to 20 percent, capping the MPSERS premium share at 80 percent beginning Jan. 2, 2013, whereas the current cost sharing arrangement is approximately 10 percent. This legislation would also require that all currently retired school employees under the age of 65 would start to see an increase in their retiree health insurance premium contribution, also to 20 percent capping the MPSERS premium share to 80 percent. This is an amount many retired employees may be unable afford due to their fixed income.

“These attacks on our teachers have been taken to a new level,” said House Democratic Leader Richard E. Hammel (D-Mount Morris Twp.) “This bill is stripping them of their hard-earned pensions and benefits. Our teachers and schools already suffer due to the constant stream of budget cuts. It is time to say enough is enough.”

SB 1040 (H-3) will ignite a chain reaction. Not only will current and retired employees suffer, but any potential new employees would be discouraged from attempting to work in Michigan. Forcing current employees to take on the increased pension contribution rates will reduce their take-home pay, making their ability to take care of themselves and their families that much harder.

The average pension level for members of MPSERS is based on the average final earnings of the member along with the service credits earned while working. The current Comprehensive Annual Fiscal Report of MPSERS states that during fiscal year 2010-11 the total level of pension benefits paid was approximately $4 billion to a total of 187,722 pension recipients, leading to an average $21,189. Furthermore, the number of active employed members of MPSERS has declined by 23.8 percent between Sept. 30, 2001 to Sept. 30, 2010.

“It is our job to find ways to balance the budget without punishing our Michigan citizens,” said State Representative Richard LeBlanc (D-Westland). “In addition to affecting teacher’s pension and retirement, it affects their ability to teach effectively, the education the students are receiving and the schools are forced to find ways to adapt and survive. No one wins in this decision except the special interest groups.”