School Employee Pension Changes Coming

Gongwer: October 28, 2011

MOSS: SCHOOL EMPLOYEES RETIREMENT BENEFITS NEXT

As major changes to retiree benefits for state employees moved forward Thursday, Rep. Chuck Moss, House Appropriations Committee chair, said the Michigan Public School Employees Retirement System is in even worse shape and changes are coming.

“We’re going to have to address it for the school employees as well,” Mr. Moss (R-Birmingham) said.

Kurt Weiss, spokesperson for the Department of Technology, Management and Budget, said the unfunded liability on the MPSERS pension system is $17.6 billion. That’s about double the size of the unfunded liability for the state employee’s system.

But unlike the system for state employees, the problem with MPSERS debt is that it falls on local school districts and is eating up their budgets, Mr. Moss said.

“People need to know that this can’t go on,” he said. “We can’t crush our school districts with this debt.”

He said that every penny saved by potential changes would go to the classrooms and current teachers.

“These are things that should have been addressed years and years ago, and it falls to our watch to do it,” he said.

Mr. Moss said he was not ready to discuss specifics of what those changes would look like, but he would use the same language to discuss it as he did the with the state retirees system.

“We have to cap the liability, and pay down the debt,” Mr. Moss said.

That has Democrats and union officials worried that the GOP’s plan will be one that would no longer offer retirement benefits to new teachers, and instead enroll them in a 401k system.

Rep. Ellen Cogen Lipton (D-Huntington Woods) said she thinks what the GOP did to state workers will be the blueprint going forward for teachers.

“I took that to mean, ‘we’re getting the rest of you next,’” she said.

Michigan Education Association spokesperson Doug Pratt said legislators in recent years have already made major changes to the system by instating a graded premium and establishing a hybrid plan for new hires last year.

Mr. Weiss said school employees hired before July 1, 2008, contribute about 4 percent of their pay toward the retirement system. Those hired after that date contribute up to 6.4 percent of pay.

Mr. Pratt said education is a profession that is clearly under attack by this Legislature, and all that teachers have been forced to pay more or give things up, making it harder for them to get by and discouraging people from entering the field.

It was unclear how soon the committee would begin work on the issue, and Mr. Moss said it would be ambitious to have it finished by the end of the year.

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