Michigan House of Representatives passes bill to divert excess teacher pension funds to K-12 budget • Michigan Advance
The Michigan House of Representatives passed a key budget bill on Tuesday setting the state’s budget for the upcoming fiscal year, which begins October 1.
After nearly six hours of deliberations behind closed doors, Democrats in the House of Representatives came to the floor and quickly passed party lines Bill 5803, sponsored by State Rep. Matt Koleszar (D-Plymouth). The bill reduces school districts’ contributions to teachers’ pensions and uses excess money from the fund to cover classroom needs. It is a companion bill to SB911sponsored by State Senator Kevin Hertel (D-St. Clair Shores), which passed the Senate last week.
The bills would eliminate the 3% tax that some public school teachers pay into a health insurance fund for their retirement and are supported by education organizations such as the Michigan Education Association (MEA), the Michigan Association of School Board (MASB) and the Michigan Association of Superintendents and Administrators (MASA), which Lobbying in Parliament to pass the law.
Koleszar, a former public school teacher, said the bill is a win-win situation for teachers and students.
“When I first came to Lansing nearly six years ago, my number one goal was and remains to do everything in my power to ensure our schools have all the resources they need to help Michigan students succeed,” he said on the floor. “That’s why, as the only teacher speaking on this bill, I strongly support my bill, House Bill 5803. It would take us a long way toward that goal by putting hundreds of millions of dollars directly and annually into classrooms across Michigan without raising taxes, while still ensuring our pension obligations are paid off by the original 2038 date that all of us in this room have known for years.”
However, Republicans in both chambers called the diversion of funds a “raid” on the teachers’ pension fund that threatens its future sustainability by increasing pension and health insurance liabilities in the Michigan Public School Employees Retirement System (MPSERS).
“Current state law makes it clear that MPSERS is a single fund,” said Rep. Sarah Lightner (R-Springport Twp.). “With the system still over $30 billion in debt, this approach puts pension benefits at risk in the future. Passing this bill would be a serious misstep.”
Last week, Republican Senate Minority Leader Aric Nesbitt (Porter Twp.) called the legislation a “last-minute maneuver … without public hearings or adequate oversight, which is unfortunately par for the course for the new Democratic majority in the Senate.”
“This unwise raid on Michigan’s teachers’ pension fund is not worth the cost of educating our children. Unfortunately, we have seen the consequences of this kind of fiscal irresponsibility before – the hardworking people of Michigan simply cannot afford to return to the policies of the lost decade of (former Gov. Jennifer) Granholm administration, piling up debt and leaving future generations to foot the bill,” Nesbitt said. said in a statement.
Speaking to reporters afterward, Koleszar said the bill was not a seizure of funds because the money saved would stay in classrooms where it is most needed.
“Because the schools paid too much, OPEB (Other post-employment benefits), it takes that money and puts it right back into teaching,” he said. “It also means that any public school operator that pays the 3% no longer has to pay that 3%. The schools bear that cost, but they also get a big increase in the revenue that they get from the reduction in rates.”
He added that the maturity date for the MPSERS liabilities remains as always in 2038.
“We were faced with a decision here in Parliament,” said Koleszar. “We could not give the money back to the schools and maybe help the children in 12 years, or we could give the money back to the schools now and help the children in 12 years, but also help the children now.”
Rep. Ann Bollin (R-Brighton) countered that the MPSERS funding change will be included in next fiscal year’s budget, although they have not yet seen the specific details beyond what the committee passed several weeks ago.
“As a member of the Budget Committee, I’ve sat through a lot of hearings and I don’t see big cuts. I see a lot of increases. I mean, where is the money going to come from eventually?” she asked. “First, I think we have to meet our constitutional requirements, our laws, and then our priorities. And to me, that’s an obligation to pay those pensions and protect the retirements of our teachers who are fighting hard every day to make sure our children have a future. And to potentially jeopardize their retirements is not fair.”
The idea to redirect the funds came about when Governor Gretchen Whitmer presented its draft budget worth $80.7 billion in February and suggested Her government said $670 million had been released through the early repayment of certain MPSERS liabilities.
While both the House and Senate have passed their own versions of the budget, lawmakers continue to negotiate with Whitmer on a final plan with the comprehensive goals announced last week.
Details are still being worked out, including House and Senate versions of the MPSERS bill. Two omnibus bills are expected to be voted on Wednesday, one for the K-12 budget and another for the state’s other departments and agencies.
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