The Republican-led Michigan House has narrowly voted to coax more newly hired teachers into a 401(k)-style retirement plan by making them assume more of the risk if they pick a pension option.
Identical legislation cleared the GOP-controlled Senate Thursday. The votes set the stage for final voting next week after Gov. Rick Snyder and top Republicans reached a deal in recent days.
One Republican says pensions are a `vestige of a bygone era' and the bill would keep Michigan from accumulating debt. Democrats say the legislation would make it harder to recruit teachers and would be more expensive for the state.
The change would affect school employees after on or after next Feb. 1. Also, those who have already chosen a 401(k)-only plan would see an enhanced employer contribution.
The Michigan League for Public Policy issued the following statement:
These changes to the school retirement system (SB 401 and HB 4647) passed today do little to clear up the state’s fiscal picture while clouding the future of our students, teachers and schools. These bills still come with significant short-term costs and more importantly, do not resolve the broader concerns about the state’s financial obligation to school retirees in previous plans. At the same time, the League believes that a strong educational system is the key to economic recovery in Michigan. Highly qualified, experienced teachers are the foundation of a high-quality education for children, and this new system will make it even harder for schools to attract and retain teachers and encourage longevity.
Michigan should be doing all it can to keep top teaching talent in the state and in the classroom. Our state’s dismal national ranking in education—41st—is because of underfunding education and other harmful policies, and we clearly need to put more emphasis on improving Michigan schools. In that regard, today’s bills get failing marks.
The American Federation of Teachers - Michigan released this statement:
These bills are nothing but political ideology of corporate donors like the DeVos family masked as a solution to a problem that, in reality, doesn’t exist. The MPSERS Hybrid system is not broken and all these bills will do is make planning for a secure retirement a volatile process for teachers, while costing Michigan taxpayers. Gov. Rick Snyder must veto these bills,” said David Hecker, president of AFT Michigan. “This assault was coordinated during closed-door meetings with Republican leadership while other elected officials and even teachers and school support staff, whose lives are impacted by this decision, were not consulted in the decision-making process. If Michigan is interested in attracting the best and brightest teachers to our neighborhood schools, what has happened today in Lansing should be a signal to the public that those in control of state government have little interest in making that happen.
Policy experts at the Mackinac Center for Public Policy hailed the legislation.
“For decades, elected officials around the United States failed to reform public pensions, hoping the ever-growing liabilities would be dealt with by someone else,” Mackinac Center for Public Policy President Joseph Lehman said. “Speaker Tom Leonard, Majority Leader Arlan Meekhof and their colleagues who supported this needed legislation deserve real credit for having done more to secure their state’s financial future from pension debt than any other group of legislators in the nation.”
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