LANSING, Mich. (AP) — The Michigan Senate is poised to vote to close the pension system to newly hired school employees and instead provide them solely a 401(k) in retirement.
The Republican-controlled chamber plans to approve the plan Wednesday once it clears a committee.
Republican Senate Majority Leader Arlan Meekhof says the Michigan Public School Employees Retirement System is “unsustainable” and at some point won’t be able to finance pension benefits because of a $26.7 billion unfunded liability.
Since mid-2010, new hires have qualified for a “hybrid” plan, with a blending of a traditional pension and a 401(k). Older teachers receive a pension.
The bill is unlikely to affect current school workers or retirees.
Democrats say they’re unified against the measure. Senate Minority Leader Jim Ananich says people “want more economic security, not less.”
Grand Rapids School District and West Michigan Talent Triangle, which represents all of Kent, Muskegon and Ottawa intermediate schools thinks the Legislature needs to pump the breaks. The schools think a decision this big shouldn’t be made in the last few weeks of this year’s lame-duck session.
“Most of the lawmakers that are going to be voting on this have had next to no time to review it,” said John Helmholt, the spokesperson for Grand Rapids Public Schools.
Helmholt says it’s too rushed.
“This is one of the most complex issues in the state of Michigan.”
Ron Koehler with Kent County ISD, agrees there is no need to rush this. He spoke to 24 Hour News 8 on behalf of West Michigan Talent Triangle.
“They will maintain their majority in the next session they have plenty of time to do this,” he said.
Koehler says whatever is decided it shouldn’t cost schools any more money and it should create a retirement that is good for teachers.
“So that we can have an attractive plan and bring the best and brightest into our schools to educate your children,” said Koehler.
The two organizations say they are open to change, but it needs to be the “right” change.
“There is recognition that we need to do something because the current system, while it will bring us into sustainability with the next 40 years, the state is putting in a billion dollars annually toward that long term debt,” said Helmholt.
The Michigan Education Association, which represents teachers and other education professionals, says strongly oppose getting rid of pensions; arguing it will cost too much money.
If the bill passes the Senate, it will go to the House.