LANSING (AP) – Hundreds of active and retired teachers and other school employees crowded into a Senate hearing Wednesday to voice concerns that proposed changes to their retirement benefits would unfairly push more costs onto them and even drive some out of education.
The Senate Appropriations Retirement Subcommittee is considering a bill under which all school employees would continue to pay at least 3 percent of salary toward retiree health care. They also would have to contribute anywhere from 1 percent to 5 percent of their salaries to keep their pensions above the contributions they’re already making, up to 8 percent.
Retirees would be required to pay 20 percent of their health care premiums, and retiree health care wouldn’t be offered before age 60.
Republican lawmakers say the state can’t afford to continue offering the benefits without higher employee contributions. Retiree health care benefits make up the bulk of the $45 million hole Michigan finds itself in for unfunded school employee liabilities.
“We’re not out to ‘get’ anyone. We’re just out to make sure we can uphold those promises,” said committee Chairman Mark Jansen, a Republican from Kent County’s Gaines Township.
But many current and retired teachers said the changes are unfair, especially because many teachers already saw their pension contributions increased in 2007 and now will have to pay state income taxes on their pensions under legislation passed last year.
“It’s just attack after attack after attack, and it just doesn’t stop,” said Gary Scott, a recent Michigan State University graduate who’s doing a teaching internship and is dismayed by how much of his future salary would go to pay for benefits under the bill.
Retired teacher Lyn Hotia said she fears she may end up on food stamps if she’s constantly asked to pay more.
“I worked hard for very long so I could be independent,” she said. “Think about what you’re doing to seniors and the middle class.”
The Coalition for Secure Retirement-Michigan held a news conference before the hearing to say the measure would undermine the retirement security of current and future school retirees and “dramatically” increase employee contributions. Opponents say the state constitution guarantees the state has to live up to pension promises, and that a lawsuit challenging the changes is likely if they pass.
Those guiding the measure through the Legislature say a quarter of school districts’ payroll costs now go to cover pension costs, an amount that will climb 3 percentage points next school year if nothing is done.
Asking teachers and administrators to pay more toward their pensions will shift the larger contributions needed to dig out of the hole to individuals rather than school districts. As of a year and a half ago, the Michigan Public Schools Retirement System – or MPSERS – had only enough money to cover 71 percent of future pension costs owed.
As of last September, when the most recent fiscal year ended, MPSERS covered 192,435 retirees receiving monthly benefits and 236,660 active members, of which 114,680 are eligible to receive benefits now or in a few years, according to the state Office of Retirement Services.
The nonpartisan Senate Fiscal Agency estimates the bill would wipe out $9 million of the unfunded future retirement costs.
The committee didn’t plan to vote on the bill Wednesday. Supporters hope to have the measure passed by late May so it can take effect over the summer.
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