State legislature OKs teacher retirement bill

Michigan Capitol, rotunda, Lansing, Michigan legislature
Looking up at the ceiling in the rotunda at the Michigan Capitol building in Lansing. (file)

LANSING, Mich. (AP/WOOD) — The Republican-led Michigan legislature 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 pieces of legislation cleared the House and 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.

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.

Most — but not all — Republicans were on board. 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.

Senator Majority Leader Arlan Meekhof of Grand Haven had been pushing for a new retirement system and likes the finished product.

“We believe this is a more portable modern system that’s going to be even better for future teachers,” he told 24 Hour News 8 shortly after the vote. “Gives them portability if they don’t want to continue to teach. But it gives them a better product and it matches exactly what legislators get.”

Rep. David LaGrand, D-Grand Rapids, says there are pluses and minuses to the plan.

“So now teachers are going to get the same 401(k) option that we all do in the legislature. And that’s good — it’s much more realistic than the old 401(k). The bad news is that the pension legislation we did today is going to shift substantial risk to school districts. It’s going to shift substantial risk to teachers,” he said.

The disagreement over teacher retirement was threatening to hold up the budget process. It is expected that after a procedural vote in both chambers next week for final approval of the identical bills, lawmakers will agree to a budget before leaving for their summer district work period.

The next scheduled sessions day would be in September.