Supporters of the reforms say the Michigan Public School Employees Retirement System (MPSERS) is on an unsustainable path.
"Times have changed and unfortunately this whole dynamic has become totally unattainable when you build a $50 billion debt and you're not paying it down at all," said Rep. Bill Rogers, R-Brighton.
Under S.B. 1040, current school employees would contribute up to 7% of their salaries to their pensions. Current employees and retirees younger than 65 would also have to pay 20% of their healthcare premiums, up from 10%. New hires won't get retirement healthcare. Instead, they'll get $2,000 deposited into a health reimbursement account and a maximum 2% matching contribution into a 401(k).
Rep. Bill Rogers says school districts are spending too much on pension and health care.
"How does that correlate? It's less money schools can spend on classrooms, on students, on books," said Rep. Rogers.
Supporters say it's the right thing to do but opponents couldn't agree less.
"The increased costs these retirees will incur for their health insurance will force many to abandon health care in order to put food on their table," said Chuck Agerstrand, lobbyist for the Michigan Education Association.
House Democrats also called the bill an attack on teachers, which would ultimately affect the students.
Donald Wotruba from the Michigan Association of School Boards says the bill is not perfect, but he is in support of the reforms.
"It's the perfect versus the workable and making sure we still can attract quality candidates for teachers to work with our kids and I still think our system does that," Wotruba said.
However, teachers' unions argue the reforms could make it difficult for Michigan to attract the best employees to public schools.