LANSING (AP) – Long-sought changes to the state public school employees’ retirement system have been delayed by weeks, as the Michigan Senate on Wednesday evening rejected the House version of a bill that would end state-provided health care coverage in retirement for new public school hires and require current employees to pay more toward their pensions.

The Senate action during its only scheduled session in July means a compromise now will need to be forged in a conference committee with House and Senate members. No more legislative sessions are scheduled until mid-August.

The Senate previously approved a measure that would have forced new teachers into a 401(k)-style plan, but the House and Gov. Rick Snyder say that move would cost billions to implement. A compromise proposal that included elements from all plans failed behind closed doors, said Senate Majority Leader Randy Richardville.

“It’s a matter of affordability at this point,” Richardville said. “I voted for the House (version) because I believe reform is so important. … We have to move to get something out quickly.”

Republicans have said the whole point of the legislation is to save the retirement system, adding that legacy costs are harming the Michigan Public School Employees Retirement System.

Democratic lawmakers have echoed concerns raised by retired and current teachers, arguing that the changes erode promises of pensions and health care coverage in retirement.

Many teachers already saw their personal pension contributions increased in 2007, and now will have to pay state income taxes on their pensions under legislation passed last year.

The inaction with several weeks to go before school starts also concerns school administrators.

“This creates a significant amount of uncertainty for school districts,” said Brad Biladeau of the Michigan Association of School Administrators. “School districts need to set their budgets for the coming school year.”

Snyder’s administration has worked closely with lawmakers on the planned overhaul, and administration officials came in and out of closed-door meetings Wednesday afternoon with Republicans.

The original House substitute contained many of the administration’s suggestions, including the state putting $130 million from the school aid fund toward covering some retirement costs school districts are facing.

“Though we weren’t able to wrap this up today, we’re close and look forward to continue partnering with lawmakers and getting this critical work done for the benefit of our schools, school employees and ultimately, our kids,” Sara Wurfel, Snyder’s spokeswoman, told The Associated Press.

Despite the delay, Richardville is optimistic that a compromise will be worked out by August.

“In the last two years (state) budgets have been done faster than in the past 30 years,” he said. “If this takes four extra weeks … it’s for the betterment of the school system.”

© Copyright 2012 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.


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