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Michigan
Senate Panel Still Exploring Teacher Pensions
Gongwer News Service, August 31, 2005
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The Senate
Education Committee will still move legislation yet this fall
moving teachers from a defined benefit pension system to one
where contributions are set, but not until all outstanding
questions are answered, said Sen. Wayne Kuipers (R-Holland),
chair of the committee.
Under the bills (SB 635 and SB 636), teachers hired after July
1, 2005, would have up to 10 percent of their pay contributed to
a retirement account (4 percent from the district and up to 3
percent on their own, also matched by the district). Their
retirement benefit would then be based on the earnings from
those funds instead of their years of service and pay at the
time they retired.
Health insurance premium subsidies would be based on years of
service, but, under SB 636, teachers and other school employees
would be prohibited from purchasing service time.
Mr. Kuipers said he planned to continue discussing the bills
until the questions raised indicate that all committee members'
concerns had been addressed.
"My goal is still to move bills this fall," he said.
Some of the committee's concerns were drawn out in presentations
on the benefits and costs of converting to a defined
contribution retirement system. And key among those concerns, at
least for committee Democrats, was a loss of security that
retirement income would be there.
"That is the scary part of what this legislation is about:
there's a lot of unknowns," said Sen. Burton Leland (D-Detroit).
"There will be a whole bunch of folks who would make unwise
decisions."
But Ted Kennedy with AIG noted that, under the current system,
at least half of the teachers in the state do not benefit at all
from the state's pension system because they do not stay in the
schools long enough to accrue any benefits.
And he said it was important that school employees be educated
on investments and how to manage their retirement funds.
"These are well educated people," Mr. Kuipers said of teachers.
"If they don't know how to do it themselves, they know how to
find someone who does."
Chris DeRose, director of the Department of Management and
Budget Office of Retirement Services, which oversees the
Michigan Public School Employee Retirement System as well as the
system for the state employees and judges, argued that the
effective date for the bill needed to be moved back a year.
"That implementation is probably a little too aggressive for
us," he said of the July 1, 2005 date. And there was a
substitute circulating that would make that change.
Mr. DeRose also argued against allowing current employees to opt
into the defined contribution system. Much of the cost of any
conversion would be in providing those employees the information
they would need, including the current value of their plan, to
decide whether to switch. "If you allow everybody to transfer,
I've got 330,000 people I've got to reach out and touch," he
said. "Almost everybody wants to know what the value of their
pension is."
The final cost of any switch was also a concern, but Mr. Kuipers
admitted that, short-term the proposal was expected to be at
best a wash. "This particular side of the equation is more
forward-looking," he said. The short-term savings for schools
would instead come from changes in health care benefits, he
said.
"The cumulative from the two sides will free up some money that
can be put back into the classroom," he said.
Teachers Must Get New Fingerprints Again
MIRS, August 31, 2005
The Michigan Education Association believes as many as 295,000
school teachers, cooks, bus drivers, teachers aides and even
volunteers will have to be re-finger printed because the
Michigan State Police destroyed the first batch of prints.
This was one late hour angle that emerged during Senate debate
today over legislation being labeled as child safety
legislation. The state police told lawmakers that it did not
have room for the old finger prints but it will have a new
system working by the first of the year to keep the new prints.
But the issue raised by the Senate Minority Leader Robert
EMERSON (D-Flint) and others was who would pay the estimated
$70.00 for the screening. Senator Wayne KUIPERS (R-Holland) who
moved the bills through the Senate said the compromise was, that
would be determined at the bargaining table between local school
boards and instructors.
"It's a condition of employment," he said.
Kuipers added teachers will have a window of 30 months to
re-comply with the fingerprint mandate and when they move from
district to district their prints will go with them. Under
current law if a teacher moved, he or she needed a new set of
prints for that district.
Having shelled out $70 for the first prints that were destroyed
by the MSP, it's unclear what gripes teachers may have about
having to do it all over again.
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