Proposed legislation may increase MPSERS payments for teachers, administrators
A recently-introduced Michigan Senate bill may reduce retiree benefits for public employees enrolled in the Michigan Public School Employees Retirement System, including some at Central Michigan University.
The legislation, Senate Bill 1040, would require select teachers and administrators enrolled in MPSERS to pay about 10 percent more for health premiums, increase salary contributions toward benefit pensions and reduce a portion of the cost for school districts. Testimonies will be presented for the bill during the Senate Appropriations Retirement Subcommittee’s April 11 hearing.
Sen. Roger Kahn, R-Saginaw, was the primary sponsor of the legislation and released a written statement regarding the proposed bill, highlighting the $45 billion liability caused by MPSERS.
"In 2013-2014 the Office of Retirement Services estimates that school districts will pay a total of about 31 percent of MPSERS employee payroll into the retirement system to cover the costs of school retirement," he said in a released statement. "This is roughly equivalent to 20 cents of every education dollar set aside to pay retiree pension and health care costs. Skyrocketing retirement system costs in conjunction with the $45 billion unfunded liability will ultimately incapacitate our school districts. It is imperative that the system undergo significant and necessary reforms that will ensure stability for the future of retired school employees."
Along with increasing the cost of health premiums and benefit pensions, the bill would require current teachers to work until age 60 to qualify for retirement health care. Current retirees' pensions would remain unaffected by the legislation, though contributions to the existing retiree health plan would increase by 10 percent.
Employees hired after July 1, 2012 will remain to be required to make a 2 percent contribution to a 401K health plan, which will be matched by employers.
Sen. Mark Jansen, R-Grand Rapids, sponsored the Senate bill along with many other recent reform bills. Deborah Drick, Chief of Staff for Jansen, said the MPSERS reform is necessary as the retirement plan continues to be a liability for Michigan.
"MPSERS has been a system that has been going along, and because the economy kind of took a tank and because of other contributing factors, the MPSERS plan in itself is unsustainable," Drick said. "There’s a lot more liability than there is revenue."
Drick said the biggest change would be for those enrolled in MPSERS who plan on retiring in the near future, as some school employees will have to adjust plans and work until age 60 before retirement.
"The short answer is that we can see the growing trend of people retiring more and more are and less and less is being put in the system," Drick said. "If we just ignore this, within 10 years, there’s not going to be any left."
Administrative Clerk Caral Turner, a member of UAW Local 6888 and recipient of MSPERS, said she opposed the bill after contributing to her current pension plan for more than 30 years. Turner said the legislation could make finances very difficult for recent retirees or teachers and administrators planning on retiring within the next few years.
"What they’re indicating is that the health care is getting too costly, but they not only want us to pay more in to cover health care costs, but we'll also have to pay more out of pocket for that health care to the tune of like $100 a month more," Turner said. "It’s like I’m paying in to help support this, but it’s still going to cost me more out of pocket when I do retire."
School of Engineering and Technology executive secretary Karen Bellingar, president of UAW Local 6888, said she expects the legislation to significantly impact certain retirees if passed.
"I don’t know how they think retirees can take a 10 percent hit on premiums and a hit on health care, especially one that’s unexpected," Bellingar said.
