Wednesday, May 23, 2012

H-1 - The House Version of the Retirement Bill

I wanted to share with you some of the information we received from our speaker at Tuesday night’s meeting at Clifford Smart. Most of this information is from the House Fiscal Agency Report. The House of Representatives is now calling the SB1040 Retirement Bill, H-1.

1) H-1 would require all School employees (except those already in the Hybrid plan- newer hires) to choose one of the following options by August 31, 2012 and would take effect October 1, 2012:

a. Those on the Basic Plan – Increase contributions to 4% to maintain the 1.5% multiplier

b. Those on the MIP Plan – Increase contributions from current level to 7% to maintain the 1.5% multiplier

c. Continue current contribution rates (Basic – 0%, MIP – around 4% depending on when you were hired) TO FREEZE CURRENT BENEFITS AT A 1.5% multiplier, but receive a 1.25% multiplier for future years of service

d. Freeze existing pension benefits and move into a defined contribution plan (401K style) and get a flat 4$ employer contribution for future service.

2) Cap FAC to $100,000

3) Increase retire health insurance premium contribution to 20% for CURRENT retirees and future retirees

4) Eliminate retiree health insurance for all those hired after July 1, 2012; replaced with a 401k or 457 plan with an employer match of up to 2% plus a lump sum deposit of $1000 or $2000 upon termination.

5) Continue the 3% employee contribution for retiree health but guarantee an employee’s individual contributions. Use the 3% contributions to prefund future retiree health benefits. Current employees can opt out and move into the 2% matching plan described above.

6) Shift paying for retiree health care benefits to a prefunding system with employee and employer contributions, as well as state funding

FROM TERESE: I will send the entire Fiscal Agency Report later today.

MY OPINION: The state is still breaking the promises they made to everyone regarding their retirement and what they would have to count on. Future school employees will not be contributing substantially to the plan, thus at some point the retirement fund will run out of money again (unless there is some gigantic gain on the stock market).

We should be very cautious of 401K plans and would advise anyone who is considering that avenue to consult with their financial planner. It may work for you, or it may not. There are a few problems with it.

First, it further depletes monies being paid into the retirement fund, thus creating a future financial problem for retirees, school districts, and the school state aid fund which might be held liable for deficits in the future.

Secondly, I believe the state is setting the stage for education to be “business friendly” businesses. By thrusting retirement costs onto the employees, businesses don’t have to pay the costs of pension plans which have strict prepayment requirements. It makes education cheaper to take over.

Thirdly, the state is proposing a 4% employer contribution rate for the 401K type plans. However, they are capping the employer’s retirement fund charge at 24.46%. That is good for the districts, but if you pull out of the retirement fund to get 4% from the district, they are saving 20.46% on you!!!! You deserve more!

Also, if the payment to the state exceeds 24.46%, the state will require the excess to come from the State Aid Fund, which means less money being given to the school districts.

The House is also planning to change the way they assess the districts the charge for pension and health care, which could ultimately cost the districts more depending on how many employee groups they have privatized. While this will help cover some of the retirement fund costs for school employees who have been privatized and no longer pay into the fund, it really isn’t providing much relief for the districts considering the increase in contributions members of MPSERS are making.

WRITE YOUR HOUSE REPRESENTATIVE AND TELL THEM these things. Do they really understand what they are doing? It is worth a shot to see if they listen.


Click on the following link for an EASY way to email your House Representative - CLICK HERE

TALKING POINTS -Use the references above or your own!

Monday, May 21, 2012

Retirement bill to be heard in House committee TODAY!

The latest version of SB 1040—legislation that attacks school employee retirement benefits—will be taken up TODAY by the House Appropriations Committee at 9 am this morning (MONDAY). According to sources in the House, their goal is to pass it WITH CHANGES and send it back to the Senate by FRIDAY!!!

Here are the elements of the SB 1040 passed by the Senate last week:

· New public school employees hired after July 1, 2012 sill be forced into a 401K
contribution plan, effectively stripping them of a pension.

· Current employees who are in the basic plan will be paying 5 percent to maintain the
1.5% multiplier.

· Current employees who are in the MIP plan will see their payments increase to 8 percent
(from 3.8 or 4.2) to retain the 1.5% multiplier.

· To avoid the higher costs in the future, employees can take a smaller multiplier (1.25%)
or move into a 401K plan.

· Final average compensation will be capped at $100,000 (probably more of a worry for

· The bill puts “merit pay” back into the final average compensation figures.

· TheSenate set a new effective date to be July 31, 2012.

· They eliminated the graded premium for health care and eliminated the requirement of
being 60 years old to receive health care.

· CURRENT and FUTURE retirees will see their health insurance premiums double since SB
1040 burdens them with a 20 percent cost, an increase from the current 10


Click on the following link for an EASY way to email your House Representative - CLICK HERE


  • Tell your House representative that these laws are punitive and they break the promises made to you by the State of Michigan regarding your retirement.
  • This bill does NOT solve the funding problem for MPSERS! These bills only kick the problem down the road. When future employees no longer contribute to the fund, the state will have an even larger funding problem!
  • Tell your House representative that charging employees from 8 to 11% of their salaries, as well as paying 20% toward your insurance, while inhibiting what can be counted toward your Final Average Compensation is punitive and serves no other purpose.

  • Tell your House representative that charging employees from 8 to 11 % of their salaries, as well as paying 20% toward their insurance costs, will seriously inhibit your ability to provide for your families and save your own money toward future retirement.
  • Tell your House representative they are punishing your families and inhibiting your ability to provide a college education to allow them to become productive adult citizens of Michigan.
  • Students considering future careers have no reason to pick teaching - the constant attacks have made the profession unattractive. There is no hope for earning a wage that will allow them to leave comfortably or have adequate funds for their retirement and health care!

Tuesday, May 15, 2012

From MEA President Steve Cook -
We’ve just received word that the Senate Reforms, Restructuring and Reinventing
Committee will take up HB 4059 (prohibits public employer contracts that pay
union officials for conducting union business) 8:30 am tomorrow morning in rooms
402 and 403 in the Capitol located at 100 S. Capitol Avenue.4059 passed
the House in April 2011
PLEASE CALL YOUR SENATOR OR WRITE! (use home emails or cell phones, please!)

Click on the following link for an EASY way to email your Senator - CLICK HERE

Here is what to tell your senator!

HB 4059 Talking Points

· HB 4059 is another attack on unions. There are only 12 large school districts that allow for a full-time release president to take care of union business. And in most cases, the union reimburses the district for any costs.

· This is a local control issue. If the school district and the union determine that it’s helpful for the district to pay union officials to conduct union business, the issue can be negotiated at the
bargaining table.

· Many times, union business is school business. When problems arise, they can be resolved quickly during the day. The school district and the union benefits.

· In the long run, solving problems before they become more serious and sharing in decision making saves the district money. This is just good business practice.

· This legislation does nothing to create jobs. Michigan’s economy would be better served if lawmakers focused on creating the jobs it promised instead of further undermining the middle class.

Monday, May 14, 2012

The Latest news on the RETIREMENT Bill

The latest version of SB 1040—legislation that attacks school employee retirement benefits—will be taken up TODAY by the Senate Appropriations Committee. Despite the fact that there is no specific language yet for the bill, and there is talk that a REPLACEMENT bill will be proposed today. THIS BILL IS PREDICTED TO HIT THE SENATE FLOOR on WEDNESDAY, 5/16.

Of the currently known proposals, one of the most significant changes is the move to pre-fund health care and guaranteeing a member’s right to receive health care upon retirement. The current legislature is quick to claim that the current system is suffering from a $47 billion unfunded liability, but they are slow to remember their predecessor’s (Gov. Engler) decision to stop supporting it. It is also unclear how they plan to fund this "pre-funding!" However, you can bet that it will be on the back of current employees.

Another change to SB 1040 reduces the contribution rate from 5 percent to 4 percent for members in the Basic Plan and from 8 percent to 7 percent for those enrolled in MIP. This is a bit of good news!

Other changes to SB 1040 were announced last week. Public school employees hired before June 30, 2008 will still qualify for full health care coverage once they’ve been employed for 10 years. And employees won’t have to wait until they reach 60 years of age to qualify for retiree health care coverage. This is good news for those of you who thought you might have to retire by May 31st.

More changes are expected, so don’t rush to make any retirement decisions.

Continue to call or email your senator! (Please use cells or home email carriers!)

Click on the following link for an EASY way to email your Senator - CLICK HERE

Here is what you should tell your senator -

1) While the 1% reduction in the percentage of contribution for retirement for school employees is going in the right direction, the 3 to 4% loss of income, on top of the current 3% deduction for health care puts a strangle hold on your family's finances. Funding college, paying for homes, and providing a quality life for your family is endangered!

2) You are already paying 10% of your current insurance rates and will pay 20% or anything over the hard cap set by them next year. You can not also pay for your future health care when your present health care costs are soaring!

3) THAT IT IS FLAT OUT WRONG for them to be diminishing your income when they have given a $1.8 BILLION dollar tax refund to the businesses of Michigan! There is very little to show for that $1.8 Billion dollar refund given to businesses at the cost of our schools.

4) THAT IT IS FLAT OUT WRONG for them to give businesses yet another tax break through changes to the Personal Property Tax while reducing the income of educators and state workers.


Here is the easy to use website to contact your senators! CLICK HERE