Issues and legislation

Information on the current legislation and legislative news.

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Retirement Issues and Legislation

Education Reform


 

Analysis of impacts—SB 1040

Unfortunately the House voted 57-48 in favor the (MPSERS) overhaul, a compromise that includes a study to fully transition from a defined benefit (DB) to a defined contribution (DC) system. Earlier in the day the Senate passed the bill, SB 1040, by a vote of 21-16, sending it to the House. The bill moved to the Governor's office for his signature.
 
The changes made in this version  include the following:

SB 1040 finally passes House, Senate; employees, retirees stuck with the cost

There's little good news in the Senate and House finally voting out SB 1040 today. On a 21-6 Senate vote and a 57-48 House vote, they increased current employee contributions to their pensions, increased retirees' share of their health insurance, and ended retiree health insurance for new hires.

"This bill is not fair. It just shifts costs around and solves nothing," said Rep. Jeff Irwin (D-Ann Arbor) who spoke in opposition to the bill.

Under SB 1040, new hires will not be moved to a defined contribution retirement benefit. They will stay in the current hybrid system which combines a defined benefit and defined contribution mix. New to the bill, is the call for a study of the financial impact moving new hires to the defined contribution would cause. The study will be done by Nov. 15.

One more time for SB 1040?

The Senate will try again tomorrow to take care of SB 1040, legislation dismantling the Michigan Public School Employees Retirement System. (MPSERS). They tried last month but were short the votes (16-22) to pass the House version.

Senate Majority Leader Randy Richardville and Senate Appropriations Chair Roger Kahn--author of the original bill--claim "there is a deal in principle" and they have the 20 votes needed to pass the bill. Gov. Snyder has been in favor of cost-cutting changes to the system--so much so that they were included in the 2013 budget.

All along a key issue has been switching members from a defined benefit plan to a defined contribution one and eliminating the current hybrid system. While some Republican legislators favored the switch, Kahn has been opposed to it because of the $300 million per year cost to do it. Just switching new hires over would cost school districts an additional $8 to $10 billion over the next 30 years.

Vote today--Make a difference

Don't buy into the idea that your vote doesn't count. Your vote is your voice and when we all vote, we send a loud and clear message to politicians and special interest groups who would prefer we stay home tomorrow.

Lists of recommended candidates are available in the Members Only area of www.mea.org. The list represents the voice of MEA members across the state who interviewed the candidates and recommended your support of them because they will stand up for public education, working families and the middle class.

School aid rewrite will change how the pie is sliced

One of Gov. Snyder’s goals in his April 2011 education message was to change how schools are funded and it seems a group he has appointed will help him accomplish that.

Richard McLellan, a former advisor to Gov. John Engler, is leading the group which intends to rewrite the 1979 School Aid Act with the focus on school aid following the student, rather than going to school districts. To accomplish that, the group is determined to make the School Code and the Act work together and incorporate changes that take into consideration “reforms” like unlimited charter schools and cyber schooling. McLellan is a strong supporter of school choice and vouchers. He helped draft the Kids First Yes! ballot proposal in 2000 that would have allowed school vouchers for students who are in supposedly “failing schools.” The proposal was soundly defeated by voters.

In a public hearing last week, McLellan announced the rewrite goal is to “provide more flexibility to families in sending their kids to the school district they wish their child to attend.” The group is getting its inspiration from Snyder’s education message of providing education “any time, any place, any way, any pace.” McLellan doesn’t intend to add any more money to the school aid fund which currently provides $14 billion for education, but instead focus funding based on performance—another item on Snyder’s wish list.

When McLellan took comments from the audience, the theme shifted away from money to how Michigan students are educated. State Superintendent Mike Flanagan, a resource for the group, was joined by others who encouraged the group to consider the design of the current education system and decide what a school should look like.

Legislators still tinkering with school policies

Even though SB 1040 couldn’t get anywhere in yesterday’s one-day legislative session, some other bills affecting school districts and school employees did.

Senate can’t get its act together on retirement reform

 

Sen. Phil Pavlov (R-St. Clair) and Sen. Mark Jansen (R-Grand Rapids) tried all day to convince fellow legislators that their plan to shut down the current hybrid system and put all new hires into a defined contribution plan was the logical path to reforming the retirement system.

The new plan also called for a return to retirees paying 20 percent of their premiums instead of the 10 percent the House proposed. And there was no help for paying off the system’s stranded costs caused in part by the privatization of jobs.

Their plan couldn’t get traction with legislators, but then neither did the House’s version (H-3) of SB 1040 which was defeated on a 16-22 vote. The issue now goes to a six-member conference committee appointed by Senate Majority Leader Randy Richardville and House Speaker Jase Bolger.

Every Democrat voted against the bill and was joined by Republican Senators Brandenburg, Colbeck, Hune, Jansen, Jones, Meekhof, Nofs, Pappageorge, Pavlov, and Proos.

SB 1040 rears its ugly head again

When the Legislature returns for one day on July 18, it's expected the Senate will take up the unfinished business of SB 1040. While the House passed its version of the bill, the Senate adjourned on June 14 before taking any action.

The Senate will take up the House version which includes the prefunding of the retirement system, giving new hires the option of a defined contribution plan, and a freezing of the retirement rate for school districts. All along, there have been Senators interested in forcing all new hires into a defined contribution plan, but at issue is the cost of such a move. The House version calls for a study analyzing the cost benefit.

Little help for schools in new budget

Gov. Snyder signed into law the 2012-13 $48 billion budget this week. The new budget year begins Oct. 1. 

SB 1040--it's not over yet

The House passed their version of SB 1040 on June 14—the last day of session—and it was expected that the Senate would do the same. But they didn’t. They adjourned without having taken any action because they didn’t have the votes to pass it. Some Senators still oppose the House’s move to keep new hires in a hybrid pension plan. They would prefer new hires be stripped of any pension and be put into a defined contribution 401(k) plan. 

Until July 18, legislators are back in their home district talking to constituents and campaigning to save their seats. It’s a good time to make face-to-face contacts with your legislators and let them know how financially destructive SB 1040 is to current school employees, retirees and future education employees. Tell them using school employees to fix a systemic problem with the retirement system—one they didn’t create—is not fair.

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