Frustrating “3 Percent” Case Awaits State Supreme Court Ruling

As the lame duck legislative session winds down and the year comes to a close, many school employees are wondering when they will see the return of money taken from their paychecks to fund retiree health care – the subject of an ongoing six-year court battle waged by MEA.

The short answer – we await a ruling. Briefs have been filed, arguments made, and the matter remains in the hands of the state’s highest court – again. Last July, Gov. Rick Snyder appealed after a lower court in June ruled the involuntary payroll deductions from 2010-12 were illegal.

Three court decisions have deemed it unconstitutional for the state to deduct 3 percent of school employees’ wages to fund future health care in retirement – a benefit they were not guaranteed to receive. The $550 million taken from teachers, secretaries, bus drivers, food service workers, and other support staff during those years has been held in escrow since the lawsuit was filed in 2010.

Both the trial court and Court of Appeals agreed the law violated state and federal constitutional protections involving the taking of private property without compensation, due process, and impairment of contracts.

The case has already been appealed to the Supreme Court once – after the state lost at the trial and appellate courts. The Supreme Court sent the case back to the Court of Appeals for further consideration, which resulted in the ruling in June.

Last summer, MEA members signed petitions and protested outside Snyder’s offices, urging him to drop further appeals at taxpayer expense and put an end to attacks on school employees and public education.

State Attorney General Bill Schuette declined to assist in further appeals, so continued court action has cost taxpayers extra money for outside counsel.

After Snyder’s decision to appeal, hundreds of MEA members participated in a day of action last August, staging rallies and pickets in cities across the state.

Many protesters pointed out that state employees won a similar lawsuit on constitutional grounds over a similar law that deducted money from their paychecks to fund a separate retirement system. Those workers were refunded their confiscated money four years ago.

In 2012, state lawmakers passed a replacement law which was upheld by the Supreme Court last April. Under that law, school employees were required to make elections regarding health care in retirement and voluntary deductions.