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House Debates
Merits Of Defined Contribution For Teachers
MIRS, December 1, 2005
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Outside of the
political dynamics taking place on a bill to end pensions for
future teachers in exchange for a 401k-like system, a lively
debate over the merits of the proposal took place in the House.
"We can't continue to have a Delphi education retirement system,
folks," said Rep. John GARFIELD (R-Rochester) in defense of HB
4947.
Rep. Hoon-Yung HOPGOOD (D-Taylor) argued against the bill.
"These changes to the retirement system won't yield any benefits
or savings for years, maybe decades," Hopgood said. "This is a
unilateral attack on teachers' benefits."
Ward strove to make a distinction between what would be good for
the overall education system and what was purely a union issue.
"I believe every member of this chamber supports education,"
Ward said. "This isn't about supporting education, it's about
supporting education or supporting education unions."
Ward said that retirement costs are bleeding Michigan's
education system dry. He argued that to keep up with retirement
costs alone, the state would have to boost education funding by
$200 per pupil annually.
"That means when we added $175 this year we were actually $25
behind," Ward said. "That's why schools, no matter how much we
give them, are going to be in financial straits."
House Education Committee Chair Brian PALMER (R-Romeo), the
sponsor of the bill, said the legislation would change a system
that is simply not sustainable.
"A previous speaker (Hopgood) was right when he said we won't
feel the effects of this for a matter of years. This only
applies to new employees," Palmer said. "If we don't do
something now, school funding will continue to go down that
black hole of retirement."
Rep. Aldo VAGNOZZI (D-Farmington Hills) said it was ironic that
the House was voting on the bill on the same day that a group of
teachers were visiting the Capitol.
"We're going to tell them, 'We'll cut your benefits but keep up
the good work,'" Vagnozzi said.
Rep. Bruce CASWELL (R-Hillsdale) spoke out in favor of the bill,
and argued that, as a former teacher, he would not vote for
something that detracted from teacher benefits.
"We are not taking anything away," Caswell said. "If we were, I
wouldn't be here supporting this. This is about the fact that,
if we do nothing, the bill will get bigger and bigger, and then
what will we do?"
In addition, Caswell said he is introducing legislation that
would make the same change to the retirement system of
lawmakers.
An initial vote was taken on the measure and the board was left
open a long time prior to 1 p.m. At that time the bill received
about 43 yes votes in the untallied test of support. None of the
Democrats supported the measure in this vote. A handful of
Republicans were up as "no" votes and several other Republicans
did not put up votes on the test vote.
Under HB 4947, as it started out the day, employees who were
hired prior to July 1, 2006 would continue to be part of a
defined benefit retirement system, although they would have the
option of electing, instead, the defined contribution retirement
system.
The current traditional defined benefit pension system
guarantees a lifetime pension benefit for those employees who
are "vested" in the system (those who have at least 10 years of
service), and the amount is based on a formula that multiples
the employee's years of service times his or her final average
compensation times 1.5 percent.
Basically, the system is funded by contributions made by
employing school districts on behalf of their employees. The
portion of the system devoted to pensions is actuarially
calculated to ensure that the system has enough assets to pay
benefits to current retires. The portion of the system devoted
to health care has been funded on a pay-as-you-go basis for
about a decade.
In the proposed newly-defined contribution system, a school
district would contribute a fixed amount to each employee — four
percent of his or her salary, plus a matching contribution of up
to three percent, if the employee contributed an equal amount.
Thus, a school district's contribution rate would remain steady
at (at most) seven percent of payroll. The employee would take
responsibility for investing his or her own account in a
401(k)-style plan, and bear the risk of whether the amount
invested would grow enough to provide an adequate retirement
income.
The Michigan Chamber of Commerce and school administration
groups support the bill, while unions oppose it.
MEA Wins In House, Loses In Senate
MIRS, December 1, 2005
The lobbying muscle of the Michigan Education Association (MEA)
was put to the test Thursday when the Republican-controlled
Legislature successfully pushed through teacher health care
reforms in the Senate but failed to end pensions for new teacher
hires in the House.
The scene at the Capitol was nasty. Democrats accused
Republicans of pulling infrastructure projects in their district
for refusing to play ball. Republicans accused Democrats of
reneging on agreements. It was rumored that legislators who
refused to go along with leadership would have their committee
assignments yanked.
One Senate Democrat tried to pull off one of the first
filibusters in many years, and then ultimately paid a political
price for it. House Speaker Craig DeROCHE (R-Novi) locked the
doors to the House chamber for the first time this year so the
107 legislators present couldn't leave.
All the while, in the lobby, arguably the two biggest political
heavyweights in Lansing — the MEA and the Michigan Chamber of
Commerce — kept their eyes glued to the televised legislative
proceedings. For the MEA, the question was if they could protect
their union members from what they viewed as weaker benefits.
Meanwhile, the Chamber was hoping that after years of effort,
the Republican Legislature could finally crack the MEA's hold on
the process and push through reforms they argue would save
taxpayers and school districts money in the long run.
The final score: 1-1.
Both the House and Senate efforts came seemingly out of nowhere.
In both chambers, leadership set up both packages seemingly
without warning.
In the Senate, the product was a four-bill package that will let
school districts form education health care pools without the
oversight of Multiple Employer Welfare Arrangement (MEWA), which
it's argued would have created real competition for MEA
subsidiary, Michigan Education Special Services Association (MESSA),
and could save school districts money. MESSA argued the bills
water down teacher protections without saving anybody any real
money.
The four-bill package, which includes SB 0895, SB 0896,
sponsored by Sen. Shirley JOHNSON (R-Royal Oak) and SB 0897 and
SB 0898, sponsored by Sen. Wayne KUIPERS (R-Holland) were
discharged from the Education Committee by Sen. Ken SIKKEMA
(R-Wyoming).
Kuipers said the bills were discharged for three reasons, the
first and second being he wanted to get legislation that's been
talked about for years through the Legislature before it breaks
for Christmas. The third reason:
"When you have votes, you vote. And when you don't, you don't,"
he said.
In this case, the Republicans had most of their own votes, but
couldn't have pulled it off without three votes from the Detroit
delegation, which felt comfortable voting for a package that had
the support of the Michigan Federation of Teachers (who
represent the Detroit teachers) and the AFL-CIO.
Sens. Burton LELAND (D-Detroit), Martha G. SCOTT (D-Highland
Park) and Buzz THOMAS (D-Detroit) voted in favor of all of the
bills, including SB 0896, the main piece of the package. On the
Republican side, Sen. Bruce PATTERSON (R-Canton), Sen. Alan
SANBORN (R-Richmond) and Sen. Laura TOY (R-Livonia) voted no.
The final vote on SB 0896 ended up being 22-13 with three
Democrats being absent.
The vote didn't come without some political carnage. Earlier in
the day, four infrastructure projects involving colleges and
universities in Macomb County, Washtenaw County and the Upper
Peninsula were iced in the Joint Capital Outlay Committee to
send a message that some semblance of cooperation from the
Democratic senators representing the aforementioned schools
would be appreciated. That message was heard to some extent.
Apparently, the projects in Macomb County and the Upper
Peninsula are on the agenda for the Joint Capital Outlay
Committee for next week. The one for Washtenaw Community College
is, at this point, not. It's hard to not to make the connection
between the shelved project and the failed effort of Washtenaw's
senator, Sen. Liz BRATER (D-Ann Arbor), to filibuster SB 0896.
Over in the House, things got similarly messy, but, in the end,
the House only managed to pass (and then reconsider and postpone
for the day) a watered-down version of bill that originally was
going to replace new school employees' pensions with a 401k
style set-up.
At the beginning of the day, HB 4947 would have replaced the
school employee defined benefit retirement system with a defined
contribution retirement system, beginning July 1, 2006. But by
the end of the day, the defined contribution aspect of the
measure was gone.
Not only was the defined contribution watered down to the point
that it no longer included defined contributions, but after it
passed, a motion was adopted to keep the bill in the House for
the time being.
The watered-down version that was ultimately voted on this
evening, and the reconsideration of the vote by which it passed,
were the result of an agreement between DeRoche and Michigan
Education Association (MEA) lobbyist Al SHORT.
According to DeRoche spokesman Matt RESCH, most of the actual
savings in the bill involved portions that did not involve the
defined contributions. In addition, he said that the Speaker and
Short had agreed on a list of issues to work on in conjunction
with that bill — and that's why it was determined that HB 4947
would remain in the House
This was the climax of the nine-hour saga of HB 4947, which
ultimately passed 55-52 with only Republicans voting yes. Two
Republicans, Reps. Mike NOFS (R-Battle Creek) and Jack
BRANDENBURG (R-Harrison Twp.), voted no on the bill. Rep. Gary
NEWELL (R-Saranac) was not present by the time of the vote.
Newell had been allowed to leave earlier in the evening to catch
a flight despite of the fact that the House was under a "Call of
the House" between 1 p.m. and 10:15 p.m. That call of the House
came after the first vote had been taken on the, as yet
unchanged, version of HB 4947.
On the other side of the coin, it appears the State Police were
not dispatched to retrieve the two members absent at the time of
the vote — Rep. George CUSHINGBERRY (D-Detroit) was representing
a defendant at a Macomb County murder trial and Rep. Clarence
PHILLIPS (D-Pontiac), recently elected mayor of his hometown,
who was attending a mayoral workshop out of state.
The legislation was changed to bring over the votes of five
Republicans — Reps. David FARHAT (R-Muskegon), Roger KAHN
(R-Saginaw), David LAW (R-Commerce Twp.), Tim MOORE (R-Farwell),
and John STEWART (R-Plymouth).
For about six hours, roughly between 2-8 p.m., the voting board
remained open as House Speaker Craig DeROCHE (R-Novi) and other
leaders in his caucus worked to bring over the four votes (only
four were needed because Newell was there at the time) needed to
pass the unchanged version of the bill.
This version was apparently something Gov. Jennifer GRANHOLM
would rather not have arrive on her desk.
Only Republicans supported the bill, and throughout the
afternoon and early evening only 51 were up on the voting board
with green "yes" votes next to their names. The GOP holdouts
during this period of the day were Brandenburg, Farhat, Kahn,
Law, Moore, Nofs and Stewart.
By late afternoon, DeRoche told reporters that the problem was
with six Democrats who he claimed had promised to vote for the
bill.
"Specific agreements were made, some involving legislation,"
DeRoche said, as he told the news media that six Democrats had
"given their word" to vote for the bill.
MIRS asked if some of the legislation involved had already
moved, and the Speaker said, "yes," it had. DeRoche went on the
claim that contributors (labor lobbyists) had pressured House
members to go back on their words.
"The first thing I was told when I came here was that my word
was my bond," said House Majority Floor Leader Chris WARD
(R-Brighton), who had been directly involved with the alleged
deal. "When someone looks you in the eyes and says they'll vote
for something, then they don't, there has to be consequences."
The lawmakers the Speaker claimed had reneged on their promises
were Reps. Frank ACCAVITTI (D-Eastpointe), Paul CONDINO
(D-Southfield), Cushingberry, LaMar LEMMONS III (D-Detroit),
LaMar LEMMONS, Jr. (D-Detroit), and Steve TOBOCMAN (D-Detroit).
Cushingberry was not at the session today. However, the other
five members DeRoche named all denied having promised to vote
for HB 4947.
"Wrong," Lemmons III told MIRS after being asked if he'd pledged
his vote. "They never helped me with any piece of legislation.
They pressured me on some things if I voted for it and I
acknowledged that I'd look at it generally."
"No, I didn't promise a yes vote," Condino said. "How good can a
leader (DeRoche) be when he can't even get his caucus members to
vote for what he wants?"
"No. I have not broken my word, I've lived up to my word,"
Tobocman said. "Calling people liars isn't a way to get things
done."
"I looked at the board today and noticed that it wasn't
supported by some people on the other side who the Speaker had
named as committee chairs," Accavitti said. "I made my vote
today for the kids."
After the "six Dem" plan fell through, the Democrats charged the
Republicans with trying to strong-arm other Dems to put up a yes
vote. The most tangible evidence was when the Senate
Appropriations Committee inexplicably iced a $10 million
Michigan Tech construction in the Capital Outlay budget after
Rep. Rich BROWN (D-Bessemer) and Rep. Steve ADAMINI
(D-Marquette) declined to cross over.
"It's a sad day when Michigan Tech is held hostage in an attempt
to force votes on legislation that undermines teacher pensions
and benefits," Prusi said, adding that the cuts could cost 160
jobs. "I'm proud of my Democratic U.P. colleagues for standing
firm and standing together on this important vote."
MIRS learned that Republicans are expected to put the Michigan
Tech project back in the budget by next week.
Spade Honored By 'Michigan's Children'
MIRS, December 2, 2005
Rep. Dudley Spade (D-Tipton) was honored this week with the
'Doing Something Wonderful Legislative Award' from Michigan's
Children.
Spade, who was recognized by the group as a "visionary freshman
legislator," serves on the Family and Children Services
Committee where he has had the opportunity to apply his
experience as a child advocate.
"I promised when I came to Lansing that I would fight for
children in our State," Spade said to the group assembled at the
Michigan's Children Much Ado about Something Wonderful reception
Tuesday evening. "But, it is easy for us to get caught up in the
daily battles we fight. While none of us do this job for
recognition, it is wonderful to be honored and this award is
special to me. It reminds me that I am keeping the promise I
made to myself, my constituents, and the children of Michigan."
Spade, who spent 17 years as the Controller at Boysville of
Michigan (now Holy Cross Services) and continued his service to
child advocacy charities at Starr Commonwealth, most recently in
the capacity of Director of Information Systems and Technology,
has been recognized before for his work on behalf of Michigan's
children.
Under Spade's watch, Starr Commonwealth was noted by Consumer's
Digest as the 6th most efficient charity in the nation.
Additionally, in 1994 Spade was awarded the first Michigan
Federation of Private Child and Family Agencies' Peer Award for
outstanding dedication in service to Michigan's families and
children.
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