A REPRINT OF MEA’s “Capital Comments” from August 15, 2012
There's little good news in the Senate and House finally voting out SB 1040 today. On a 21-6 Senate vote and a 57-48 House vote, they increased current employee contributions to their pensions, increased retirees' share of their health insurance, and ended retiree health insurance for new hires.
Under SB 1040, new hires will not be moved to a defined contribution retirement benefit. They will stay in the current hybrid system which combines a defined benefit and defined contribution mix. New to the bill, is the call for a study of the financial impact moving new hires to the defined contribution would cause. The study will be done by Nov. 15.
Current employees will be paying either 4 percent or 7 percent to their retirement pension, depending on what plan they are in. Current employees will also continue to make the 3 percent contribution to their retiree health insurance, but now the money will be used to prefund the retirement system. Employees could end their 3 percent contribution if they move to a 401(k) plan which will include an employer match up to 2 percent.
Retirees will see their share of their health insurance premiums jump from the current 10 percent to 20 percent if they are 64 or younger on Jan. 1, 2013. Retirees 65 or older on that date will remain at the 10 percent share.
Employees first hired on or after Sept. 4, 2012 won't be receiving retiree health insurance. Instead they'll be placed in a 401(k) plan that includes an employer match of up to 2 percent. When new hires end their employment, they'll get a lump sum deposit.
The Senate also voted to keep the current calculation for a school district's MPSERS contribution based on payroll. The House had proposed basing the calculation on current operating expenditures.
Republican Senators Jones, Nofs, Pavlov, and Proos voted with Democrats in opposing the bill.
ME (Terese): The MEA and the WLEA will be presenting more information regarding 1040, as all school employees will need to make decisions regarding the deductions by the state for their retirement by October 26th.
- · Eliminates retiree health insurance for new hires
- · Increases current retirees’ premium share from 10% to 20% (only for those 64 or younger on 1/1/13)
- · Increases pension contributions for current employees
- · Gives current employees not already in the “hybrid plan” a choice whether to contribute 3% to maintain their retiree health insurance or give up their retiree insurance and get a 2% contribution to a 401k
As expected, the Board of Canvassers split 2-2 on whether to put the constitutional amendment to protect collective bargaining on the November ballot. For now, the proposal is off the ballot. The Protect Our Jobs campaign will now take the fight for working families to the Michigan Supreme Court for a decision, bypassing the state Court of Appeals.
Opponents to the ballot proposal want the effect of the constitutional amendment and the list of laws impacted written into the language--and keep it to 100 words. Supporters maintain that the proposal met all legal requirements even before the petition drive began.
Two weeks ago, at the request of Gov. Snyder, Attorney General Bill Scheutte issued an opinion that the collective bargaining proposal should be kept off the ballot. He claims that the proposal does not specifically list the parts of the constitution that will be impacted by the amendment. His opinion, however, is based on faulty legal reasoning and is not legally binding.
The whole action seems politically motivated since in 2004, Schuette had a totally different opinion. As a Court of Appeals judge, he rejected his current argument when it came time to put the proposal banning affirmative action on the ballot.
It's unfortunate that political motivation is working to silence the voices of nearly 700,000 voters who signed the Protect Our Jobs petitions. Those voters know the importance of collective bargaining when it comes to school employees and student success; to firefighters when it comes to saving lives; and to nurses when it comes to patient care. Too bad some politicians don't.