Beginning Tuesday, November 29th, the Michigan
Legislature will be in session for three weeks.
This seems like a very short period of time, but it has proven in the
past to be one of the most destructive times for Michigan’s public education
system. This time period is the last
three weeks of the current legislature’s “reign” before newly elected officials
are sworn in for the next session in January of 2017.
There have been numerous rumors about what will happen
during this 3 week period, and as of this morning the legislature’s agenda has
not been published. What is known is
that the DeVoss family (of Amway fame and major Republican campaign
contributors, as well as Betsy DeVoss, current appointee of Donald Trump) has
announced a plan to move Michigan public employees into a 401(k) styled defined contribution plan.
The premise is that the current pension system is “broken”,
and that there are dangerous unfunded liabilities that need to be
addressed. The truth is that the
economic crash of 2008 was more detrimental to pension funds than any other
factor. However, recent changes have
dramatically increased employee contributions into the system. You all know that your contributions
increased in 2012! Also, in 2012 a
“hybrid” system was put into effect for all school employees hired after that
date. The hybrid system is fully
funded. The 2012 law also eliminated healthcare benefits for anyone hired after that date. These changes will also bring relief to the retirement system over the next several years.
So, what’s broken? And, what’s the problem?
Here’s what the MEA has researched and found:
1)
First, no one is getting rich off public school
employee pensions. 45% of public school
employees receive a pension of less than $14,500 a year.
2)
Some people do not realize that retirees receive less than 45% of
their Final Average
Compensation as a pension payment.
3)
Hedge fund managers and other Wall Street
corporations are the real winners in eliminating traditional pensions plans and
moving the money to their 401(k)s.
Please ask around; how many people lost more than half of their
retirement funds when these accounts were devastated by the 2008 Wall Street
collapse? In retirement, people need
secure funds!
4)
Numerous studies have shown that, in addition to
being much less secure than a traditional pension, any savings to the state for
making such a change would not be realized for more than 30 years.
What Have Educational Employees Done
to Sustain the Michigan Public School Employees Retirement System (MPSERS)?
1)
In
1986 the MIP plan was introduced that required members to make contributions to
their retirement benefits
2)
In 2012 the 1.5% multiplier was reduced to
1.25% unless a member chose to pay from 1 to 4% more into their retirement fund
a.
Basic
members increased from 0 to 4%
b.
MIP Fixed increased from 3.9 to 7%
c.
MIP Graded members increased from a graded
percentage of up to 4.3% to 7%
d.
MIP-Plus members increased from a graded
percentage of up to 6.4% to 7%
3)
In 2012 new employees hired after PA 300’s
effective date were placed in a “hybrid” system. These employees will receive a smaller
guaranteed monthly pension that will be combined with an individual retirement
account.
4)
Healthcare in retirement was ended for those
hired after September 4, 2012. Employees
can choose to contribute up to 2% in a health account with an employer matching
contribution.
Currently, public school employees are
likely contributing almost 10% of their income to funds for a pension and to
get some sort of health benefit in retirement. Add this to the cost of student
loans many of our young teachers are paying, plus the cost of a place to live,
transportation, and continuing costs for the education credits they must have
to maintain their certifications…it is overwhelming.
