Changes to SB 1040 address some concerns

Late Friday, Gov. Snyder, Senate Majority Leader Randy Richardville, and House Speaker Jase Bolger announced some significant changes to SB 1040—the bill to drastically change school employee retirement benefits.

The changes were reported in news stories and releases. No substitute bill has been offered yet. When one is available, MEA will provide a full analysis of it.

With the changes, public school employees hired before June 30, 2008 will still qualify for full health care coverage once they've been employed for 10 years. And employees won't have to wait until they reach 60 years of age to qualify for retiree health care coverage.

In a news release, Richardville claimed that the changes were made in the interest of fairness and in response to school employees who were concerned about the impact SB 1040 would have on retirement plans they had already made.

Originally, SB 1040 mandated that all current employees would be subject to a graded retiree health care premium requiring them to work 10 years in the system to earn 30 percent of their health care premium, with an additional 3 percent each year for a maximum of 80 percent.

To avoid the impact of the serious financial changes in SB 1040, many school employees would have to retire by June 1, 2012. Reports showed huge numbers of teachers were considering retiring before school ended and leaving school districts short of teachers.

While the changes are a step in the right direction, there are still parts of the bill which drastically increase costs for current school employees, who could be paying 8 percent of their salary toward retirement. The changes don't address additional out-of-pocket health care costs for retirees, many of whom are already struggling to make ends meet with the new tax on their pensions. Future employees still won't have health care into retirement. And finally, these changes still don't solve the fundamental problems with the retirement system—a lack of prefunding for retirement health benefits and the failure of the Legislature to deal with "stranded costs" caused by charter schools and outsourcing of school jobs.

While Republicans are taking credit for these changes, the real heroes are MEA leaders, members and staff who lobbied legislators and explained the impact this legislation will have on school employees who are already bearing a financial burden. There's still a lot of work to be done to make SB 1040 fair for all. Using MEA's SB 1040 updated talking points, continue your efforts and contact your Senators. Tell them their work isn't over.