LANSING, MI (WNEM) -
There are big changes on the way for thousands of public school employees throughout Michigan who plan to cash in off the Michigan Public School Employee Retirement System in the future.
Gov. Rick Snyder, R-MI, signed legislation Tuesday overhauling the way school employee pensions are funded and the way they'll get healthcare when they retire.
"It's not just about the short term, it's about the long term," said Snyder.
The governor said the old pension program would have collapsed if the changes weren't made. The state is dealing with a $45 billion of unfunded liabilities in the school employees retirement program. The reformed pension program is expected to save the state $15 billion. State Sen. Roger Kahn, R-Saginaw Township, authored the bill.
"Cut a third of it off. That's really a ground-shaking change!" said Kahn.
But the move will cost school employees. The new law increases pension contributions made by current employees and doubles health insurance premiums for retirees. It also puts in a new retirement healthcare plan for future public school employees.
Todd Tennis, spokesman for the Coalition for Secure Retirement, said he doesn't believe this is the right move.
"This bill is shifting costs on people who really can't afford it and it's not solving the real root of this retirement program," said Tennis.
John Nixon, the state's budget director, believes this reform comes at the right time.
"If nothing was done, the thing I think would have ultimately imploded," said Nixon. "We've really put the pension system on a sustainable course for the employees who have been committed benefits to."
But Tennis believes the reforms signed Tuesday are only the beginning.
"One big problem is that until you address the structural causes of why the pension system is struggling, you're just going to have to come back every couple of years and take more and more and more," said Tennis.
Late Tuesday afternoon, part of the law signed by Snyder was struck down by an Ingham County judge.
That's according to press release sent out by the American Federation of Teachers - Michigan Chapter.
The new legislation set a 52-day window for teachers to decide on whether they take part in the new pension system, but that section was blocked by a judge after the teachers union filed suit.
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