Wednesday, April 8, 2015

Supreme Court Rules Against Challenge to Retirement Changes

The Michigan Supreme Court today rejected an appeal that has been in the courts for almost 3 years that challenged changes made to the public school employees retirement service. The MEA and AFT maintained that it violated both the Michigan and U.S. Constitutions.

This law change concerning public school employee retirement occurred in 2012, now called PA 300, requiring school employees to pay between 1% to 4% more of their salary to keep the multiplier at 1.5% or have the multiplier lowered to 1.25%.  The MEA and AFT argued that PA 300 was unconstitutional because it was contrary to statements in Office of Retirement Services publications over many years.  This new statute changed the retirement benefits in the middle of people’s careers.

A challenge made through the courts regarding the mandatory 3% deduction to pay for retiree health care (PA75) made in 2010 is not affected by today’s decision regarding PA 300.    The case involving this 3% remains before the Court.  It had been rumored that the courts were holding off on the decision regarding the retiree health care case pending the decision on the constitutionality of the PA 300 case.   However, no one seems to say when they expect the PA 75 decision to be made.  This decision will be different because there is no constitutional mandate for retiree health care subsidies.

(Newly elected Justice Richard Bernstein did participate in the decision as he was not on the court when the court).