As Reported in MIRS – 11/2/11

After a series of Democratic amendments were shot down Wednesday in the House to alter bills making major changes to the retirement benefits for state employees, the package will be ready for passage Thursday.

The bills (HB 4701 and HB 4702) would still require state workers under the defined benefit plan to pay 4 percent of their salary toward their pension, but all workers who have been paying 3 percent of their salary toward retiree health care costs – which is being challenged in the courts – would have that money refunded.

Unions representing state employees all oppose the legislation, but were able in committee to win some changes, the biggest being that current workers on the defined contribution system would not lose their retiree health care.

But on the floor, one other change they had hoped for – continuing to allow mandatory overtime pay to be part of the retiree benefits calculation – was rebuffed.

Rep. Steven Lindberg (D-Marquette) offered the amendment saying it was unfair that state workers who are mandated to work overtime are not be able to count it.

Other changes in the bill package would give workers in the defined contribution system the option to switch over to the system being implemented for employees hired after the first of the year. If they make a choice to switch, it is irrevocable.

That plan would eliminate retiree health coverage for employees hired after January 1, and allow them to contribute 2 percent of their earnings into a 401(k) or 457 matching plan. If the employee contributes up to 2 percent of his or her compensation, the state would match that 2 percent.

An amendment by Rep. Vicki Barnett (D-Farmington Hills) was also rejected that would have exempted public transit workers from the bill. She said this bill and others enacted this year by the Republican-led Legislature have violated a federal labor law, known as 13C. She said a number of transit authorities around the state have received letters from the federal government making them aware that they are due to lose large amounts of federal funds because of the Legislature’s action.

Ms. Barnett said Grand Rapids will have to forfeit more than $13 million in federal funds and the Suburban Mobility Authority for Regional Transportation in metro Detroit will lose more than $26 million.