Under a tentative plan forged by Michigan’s Republican lawmakers, newly hired teachers in the Great Lake State would only have a 401(k) retirement plan, unless they opt for the less-generous hybrid pension benefit, and the teachers’ unions are not happy.
The provisional plan — a compromise between Republican Gov. Rick Snyder and the state’s GOP leadership in the House and Senate — will bring changes to the teacher retirement system and Michigan’s $55 billion budget, the Detroit Free Press reported.
The Republicans are hoping to steer school employees toward the 401(k) plan by making the hybrid plan, which blends the 401(k) and a pension, more costly for the teacher.
Under the current Michigan Public School Employees Retirement System, the employer contributes a 50 percent match of an employee’s contribution of up to 6 percent of total compensation. In other words, the state government’s contribution to the teacher is capped at just 3 percent.
The new plan would call on the employer to contribute 4 percent of a school employee’s salary into the 401(k). In addition, the teacher would be able to contribute, and the employer would match the first 3 percent of an employee’s contribution.
The tentative proposal would also allow for the closing of the hybrid offering in the future if it becomes underfunded.
“We have a tentative framework,” Synder told reporters Thursday. “We still need to continue to work out some of the things that provide, I think, better retirement for school employees.”
The changes from the old plan to the new plan really aren’t much to call home about, but that hasn’t quashed the frustration from the left.
Democrats as well as organized labor have criticized the tentative changes, claiming they will only worsen a teacher shortage. Instead, Democrats and union leaders want to see the state increase classroom spending and focus more on infrastructure, according to The Associated Press.
And Rep. Tim Greimel, a Democrat, thinks the Republican-backed proposal is an underhanded scheme to benefit charter schools and advance the wishes of Education Secretary Betsy DeVos. Most charter school teachers are not included in the MPSERS.
“Those who are really pushing this are the DeVos family and their charter school allies,” he said during a town hall event earlier this week, MLive reported. “Of course, charter schools have long found it much more difficult to recruit good educators than traditional public schools because they pay less and offer worse benefits.
“Instead of wanting to address that challenge by improving the pay and benefits that charter schools offer,” the lawmaker continued, “the for-profit companies that operate charter schools would rather cut the benefits that traditional public schools offer.”
In 2016, Dan Quisenberry, president of the Michigan Association for Public School Academies, penned a column urging lawmakers to eliminate the state-run teacher pension program. He argued most employees who pay into the pension system rarely reap the benefits of their investment.
According to a 2014 analysis of the MPSERS system by the Washington, D.C.- based Bellwether Education Partners, only 43.4 percent of Michigan teachers remain long enough (10 years) to qualify for pension benefits, and only 27.3 percent remain in teaching long enough to reach retirement age.
Currently, MPSERS serves 211,000 retirees, who receive monthly pension benefits, and 217,000 working members, the Free Press reported.
Synder, for his part, was initially against changing the teacher retirement program, but came around once Republican lawmakers added the pension-401(k) hybrid option in addition to the 401(k) plan. House Speaker Tom Leonard (R) said that once the new plan is finalized, it will be made public and considered at public legislative hearings.
The House Fiscal Agency, a non-partisan group, projects the switch would cost roughly $46.2 billion over 40 years in addition to $410 million in fiscal years 2018-2019 to move teachers to the 401(k) system.
Budgets crafted by the House and Senate for fiscal year 2018 have set aside hundreds of millions of dollars to cover the transition costs in the first year, Leonard’s spokesman, Gideon D’Assandro, said, according to MLive.
All of this comes as Snyder’s approval rating has slowly ticked upward. A poll released in April found Michigan’s Republican governor the fourth most unpopular governor in the United States. His disapproval rating now rests at 54 percent — a modest improvement from the 61 percent disapproval rating he had in September 2016.