Teacher retirement dispute may hold up budget

Governor, Republicans in legislature differ on transitioning to 401(k) plan

A file photo of Michigan's Capitol Building in Lansing on May 25, 2016.


GRAND RAPIDS, Mich. (WOOD) — The budget for the state of Michigan’s next fiscal year isn’t “due” for another four months, but in recent years, the process has normally been wrapped up by early June. That may not be in the cards this time around.

It’s not because there isn’t enough money to go around, or even a disagreement over most spending. It comes down to an argument over teacher retirement.

“They don’t agree with me,” Gov. Rick Snyder said.

“They” are Republicans in the House and Senate who want to change the teacher retirement system.

Essentially, legislators want a straight 401(k) system for new school employees versus the current hybrid pension/410(k). They say it’s more affordable and fair. But the governor says the plan would cost billions more in the long run.

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That has led to an impasse.

“It’s been a disappointing process. Obviously, the Republican leaders have stopped talking to their own governor,” Democratic House Leader Sam Singh of East Lansing said.

Instead, those Republicans have set aside $475 million to start the process in making the changes to the teacher retirement system without the governor.

“I fully intend (that) the House and Senate … are going to complete our work in June (like) the last six years,” Speaker of the House Tom Leonard, R-DeWitt, said.

Asked if Republicans would just vote out a plan and drop it on the governor’s desk without his input, Leonard replied, “What I would say right now is we need the governor to come to the table.”

Republicans have made a special point of getting the budget done early every year since Snyder became governor.

“Not getting a budget done by the end of June is not just about hitting a phrase. Our municipalities, our school districts are on a different fiscal year than we are. Their fiscal year starts July 1. We’re leaving them hanging in uncertainty,” Snyder said.

The House and Senate could have a budget done in the next two weeks before the are scheduled for a three-month summer recess, but it remains unclear if an agreement on the retirement system can be reached by then.

They could pass a budget an leave town, stay and negotiate, or do nothing and to try to finish the budget when they return in September — something that hasn’t happened this decade.