Senate Democrats are saying a GOP plan to reform the Michigan Public School Employees Retirement System approved by Senate Republicans Thursday will actually cost Michigan money.
According to Democrats, the plan to move all new school hires to a 401k plan will cost the state billions of dollars in retirement costs to pay for school employees who remain under the old system.
“I don't understand how the Senate majority can justify waging war against our seniors and making them the scape goats for all of our state's financial challenges,” said Sen. Glenn Anderson, D-Westland, who represents Livonia residents. “These school employees did the responsible and correct thing. They worked hard their whole lives to ensure a stable and secure life in retirement for their families, only to have their taxes hiked last year and their health care costs doubled with this bill. Many of our seniors are making due with fixed and meager incomes, budgeting carefully to make ends meet, and they can ill-afford these ‘gotcha' maneuvers by the Legislature to bilk them of more money.”
Senate Bill 1040 would require educators to significantly increase their retirement contributions or face a decreased retirement multiplier upon retirement, and would double the cost of health coverage for most retirees. Anderson introduced an amendment that would have exempted individuals already in retirement from the changes in this bill. The amendment was defeated and Anderson voted against passage of the legislation.
“These retirement benefits were negotiated for and offered as part of the compensation to attract and retain quality school employees to educate our children, and now the Legislature wants to go back on their promise and take more money away from our seniors,” said Anderson. “The continued disrespect and exploitation of our kids, our school employees and our seniors is sickening and must stop now.”
Democrats maintain that while the Republicans have been laying blame at the feet of teachers for shortfalls in the retirement system, the real problem rests with 15 years of legislators raiding the fund in order to fill budget holes. The retirement system had been successfully prefunded until it was tinkered with by then-Gov. John Engler, leading to drastic changes in how the system was operated, they said. Hardworking school employees who played by the rules are now being asked to foot the bill for mistakes made by Senate Republicans, they said.
“The plan pushed through by the Republican Majority is not a fiscally sound plan, despite their claims that they are the party of fiscal responsibility,” said Senate Democratic Leader Gretchen Whitmer. “Their plan was more about scoring political points and using teachers as a scapegoat, and when offered an alternative supported by their own Republican governor that would provide a better path forward, they ignored that bipartisan solution and instead pushed forward with their own misguided plan.”
Democrats offered several amendments to improve the legislation before again voting against the bill when the amendments were defeated.
David Hecker, president of the American Federation of Teachers Michigan, called the retirement “reform” package more bad news for public school retirees and future hires.
“First Lansing politicians created an unfair pension tax, and now they want to double the cost of retiree health care,” he said. “Their goal was to reduce the rate charged to employers, but this bill would reduce employee benefits and increase employer costs. According to the Office of Retirement Services, the first year cost of conversion would be $400 million, with a projected cost of $1.4 billion over six years.
“It's time Lansing politicians go to work protecting middle class families instead of attacking the women and men who educate our children,” he said.