New Bill Would Eliminate State Pensions For Teachers, School Workers

LANSING (WWJ) - Legislation that would change how teachers and school workers in Michigan are compensated after they retire -- now moves to the full Senate.

Detroit Democrat David Knezak, who is against the proposal, says there are too many unknowns about moving the workers to a new 401k system.

"We've had senators come before us and say this is going to open up more money for the classroom ... the experts disagree," says Knezak. "The experts are telling us this will be less money in the classroom - it's going to cost more - to the tune of hundreds of millions of dollars on the upfront and additional costs in the long-term."

Under the legislation, new teachers and other public school employees in Michigan would be moved to a 401k system--and no state pension.

The Bill's sponsor, Senator Phil Pavlov of St. Clair, says it will be a win for taxpayers.

"I'm comfortable with not only meeting our future commitments for the people that have worked hard but also one of the main factors in this is to protect the taxpayers," he says. "There's a massive hole and we've accumulated a large unfunded liability for the people who work hard in our classrooms everyday."

Since mid-2010, new hires have qualified for a pension and 401k hybrid plan.