Governor Signs Teacher Retirement Overhaul

By: Lindsay Veremis Email
By: Lindsay Veremis Email

Governor Rick Snyder signed into law Tuesday an overhaul of Michigan's school retirement system. The move has teachers staring at higher pension and benefit costs, the very day students were back to school.

Snyder says the law helps fix a $45 billion unfunded liability in Michigan's Public School Retirement system.

Teachers call it a promise broken they're prepared to fight in court.

"This is particularly tough for support staff, lower income staffers, who are going to feel the brunt of this and for retirees, people living on fixed incomes," Todd Tennis with the Coalition for Secure Retirement said.

The new law increases pension contributions for public school employees, doubles health insurance premiums for retirees and eliminates health coverage in retirement for new hires.

New workers will instead get a health reimbursement account and 401-K plan.

"It's not just about the short term, it's about the long term," Snyder said, at the Tuesday bill signing.

He says the law bails out an unsustainable program, cutting Michigan's unfunded liability by a third, to $30 billion.

"If we don't do anything it keeps piling up until it's untenable and then it crashes and nobody gets anything," State Representative Chuck Moss, R-Bloomfield Hills said. "The whole goal of this was to save the system, it's not to hurt anybody, it's not to cheat anybody, it's to save the system while it can still be saved."

Tennis agrees something must be done about the liability problem, but says the answer is not in employee pockets.

"Making changes to benefit levels is something we want to talk about," he said. "We want to negotiate, but really we need to shore up the structural deficiencies in this program in order to make sure we're not back here three or four years from now with the sky falling again."

Teachers filed a lawsuit Friday, saying the plan breaks contacts. They're calling for a judge to put a hold on the law until their legal challenge is decided.

Snyder expected the court battle and others, and expects to win.

"These are smart, good things to do, we're doing them in good faith," he said.

According to the state, retirement costs for schools have doubled since 2002 and were slated to grow to 35 percent of payroll by 2016 if no action was taken.

The new law also sets up a study group to examine what it will cost the state to move solely to a defined contribution plan, rather than the current hybriud plan. The group's report is due in mid-November.

In the meantime, teachers unions are planning information sessions across the state to guide school employees through the changes.

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  • by Fairness? Location: SE Mich on Sep 5, 2012 at 07:38 AM
    shouldn't this be done in collective bargaining ? Unilateral cuts by one side violates contract law - Say I buy something from you on payments, then a month later I say it is unsustainable and cut it by 50% - would you take that? No -- collective bargaining with REAL numbers in the answer, not this unilateral act (I am NOT a school emp. of anyway associated). fair is fair.
  • by Anonymous on Sep 5, 2012 at 07:21 AM
    This may fix things in accdording to Snyder, but it is harming people who are on fixed incomes. I am 67 and am still working as I can not afford to retire. This is not right. These people paid their dues, and now the state has decided they need to pay more.
  • by Colleen Location: Metro Detroit on Sep 5, 2012 at 03:50 AM
    I have paid into my retirement through the MIP for 22 years. Now because of bad budgeting by politicians I have to pay more? I will vote in November to end the abuse by politicians.
  • by Ricardo Location: Lansing on Sep 5, 2012 at 12:09 AM
    It is about time that the unsustainable government expenses are reduced. Nobody likes to see promises broken etc., but these costs can not be supported by the taxpayers! Nearly every private company has had to make extreme cost reductions and/or benefit eliminations to stay in business. Governmental employees must face the fact that they have been grossly over paid for years, plus their benefit packages have become way to costly to the taxpayers. Thank You. Ricardo
    • reply
      by Anonymous on Sep 5, 2012 at 07:24 AM in reply to Ricardo
      I agree with you, but the unsustainable expenses, such as a full time legislature, and huge benefits for the same, is still in effect, raises every year for the politicians is still in effect. But the people who have worked 30 years, and are now retired are the ones being hurt. Not the people with the big paychecks and deep pockets. Trust me teachers do not make big bucks.
  • by David Location: Lansing on Sep 4, 2012 at 07:02 PM
    Vote the politicians out off office in November. Support our teachers who educate our children.
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