Senators get an earful on SB 1040

The Senate Appropriations Retirement Subcommittee heard six hours of testimony yesterday on SB 1040 from a variety of people—current school employees, retired teachers,  community college employees, a student teacher, and a concerned parent. 

Different people—same message: “SB 1040 isn’t fair.” 

SB 1040 is the most sweeping attack on school employee retirement benefits in history. It breaks promises made to both current and active retirees, while discouraging the best and the brightest from ever entering the profession. The proposed legislation continues the 3 percent employee contribution to retiree health care and further increases out-of-pocket contributions to a total of 8 to 11 percent of salary. And current employees would have to be 60 years old before they could receive any health care benefits. Retirees would see an increase in their health care premiums.  

Nevertheless, members of the Subcommittee are convinced SB 1040 is the solution to rising retirement costs for school districts, the Michigan Public School Retirement System’s $45.2 billion unfunded liability and the sustainability of the current system. And in front of hundreds of concerned school employees and retirees gathered in the hearing room, Subcommittee Chairman Mark Jensen boldly said, “We ‘re not out to get anyone. We just want to make sure we can uphold those promises.” 

It was clear from those who testified, they certainly felt like targets.  

Saginaw Township teacher Terry List had hoped to retire in the next three years when she was 47 years old. That wouldn’t be possible under SB 1040. List would have to work another 16 years to be eligible for health benefits.  “By the time I’m 60, I would have put in 43 years of service, earning a salary at the top of the pay scale. How does that save the district money? You could hire two people for the cost of one and encourage young people to join the profession. Right now, I would not recommend to my pupils to become a teacher in Michigan.”

After teaching in Florida because there were no jobs in Michigan, List said she “took a leap of faith” and came back here. She’s in the process of purchasing service credit so she could retire early.

“I understand we have to tighten our belts, but we don’t have to use a tourniquet and cut off the blood supply entirely,” List said.

School employees and retirees view this legislation as a broken promise. They have been counting on and planning for a pension and health benefits which are now being attacked.

Retired Huron Valley teacher Jim Pierson called SB 1040 an example of “bait and switch.” 

“Since I retired in 2010, I’ve been hit with a tax on my pension. Along with other increases, my out-of-pockets costs have doubled. I didn’t go into teaching to get rich. I sacrificed lower pay for greater security. None of this was in my retirement plans. If I had seen this coming, I would not have gone into teaching.”

SB 1040 doesn’t just impact current employees or retirees. The legislation provides no incentive for young people to enter the profession, since new hires wouldn’t be provided any health care in retirement.

Gary Scott, Student MEA president and currently a student teacher in East Lansing schools, said, “The best and the brightest won’t come to Michigan to teach. I’m shocked. A good education is pivotal for kids.  The attacks on wages, benefits, working conditions and education funding cuts—it’s not right.”

The issue of fairness was central to Steve Norton’s testimony. Norton is the Executive Director of Michigan Parents for Schools, and while the group itself is neutral on the bill, Norton has concerns about funding and fairness.

“Let’s not overreact. This bill really doesn’t remove the burden on school districts. It just redistributes costs to employees and students, but they’re not to blame for the problem. Costs should be borne by everyone.”

Sen. Patrick Colbeck (R-Canton), often contentious in his questioning and comments, was insistent that the current retirement is not sustainable and SB 1040 would reduce $260 million in pension costs and approximately $120 million in retiree health care costs in the first year—or $250 per pupil. And Colbeck claims that without reform kids and taxpayers will be paying for MPSERS down the road.

Colbeck said, “There’s a larger picture here. You can’t rob Peter to pay Paul. Everyone loves their teachers but the reform is about sustainability. Right now, that’s going to be pushed off to the students we’re talking about.”

Sen. Morris Hood III (D-Detroit) sees a different “larger picture.”

“We know that for every action there is a reaction. We also have to look at not just what we need to do here today, but what’s going to happen in 2112 if we start to deteriorate the efforts and the commitment that teachers will bring to the classroom?”

Whether or not Subcommittee members were listening or just pushing their own agendas is debatable. Yesterday’s testimony made it clear that SB 1040 is only a short-term fix to a long-term problem. The bill’s intention to shift the pension and health care costs is just another attack on school employees.

MEA Lobbyist Chuck Agerstrand’s testimony echoed audience sentiments, “Whatever we do here, take it slow enough to understand the present and future consequences.”

The Subcommittee will meet again April 19, but it’s not clear whether the bill will be discharged or not. Hansen said the bill is on a fast track, with hopes of it in place by the end of May.

In the meantime, contact members of the Senate Appropriations Retirement Subcommittee. Tell them your story and put a face to the impact SB 1040 will have on you and your family. MEA has created an analysis of SB 1040 along with talking points.