I am writing to inform you that due to your efforts, and the efforts of other supporters of the Michigan Public Schools Employees Retirement System, the Senate today has decided not to vote on Senate Bills 102, 1177 & 1178 during the remainder of the current legislative session!
The decision to back away would not have happened without your strong efforts to oppose this legislation. Of particular note, many members of the Senate were concerned about the transition costs to close out the system ($25 – $33 billion of additional costs) that would have to be paid by the taxpayers of Michigan. Additionally, there was concern that these bills were rushed to the floor and that the reforms instituted in 2012 were working and rapidly reducing the unfunded liability.
Let me offer my thanks and congratulations for “dodging this bullet” and I hope your holidays are a bit less stressful as a result.
Now for the other side of this coin: I fully expect these bills will be offered almost immediately in the Senate and House when the new legislative session begins. I also expect a strong effort will be made to increase the costs you will be responsible to pay for your health care. Whether that is in the form of increased monthly premiums, substantially higher out-of-pocket expenses or reduction in coverage is yet to be determined but, in any event, be prepared for a renewed effort to reduce your benefits.
Taking appropriate steps to head off the next round of these efforts is critical to our success. First and foremost, do not become complacent. For every argument we have put forward, there will be an effort to undermine each point. Stay committed to the financial implications of closing out the MPSERS plan. The transition costs are real and the State cannot afford to close out the system. It is, simply put, very bad fiscal policy for the taxpayers of the State of Michigan.
In fact, the 2012 reforms have reduced the unfunded liability in the system by over $12 billion. This includes pre-funding of health care costs that previously had not been set aside. The bottom line is the reforms are working extremely well and there is no solid reasoning for moving to close the system.
Please continue your efforts to engage with your Senators and Representatives. Thank those who have opposed these bills and express your concerns with those who have yet to make a public comment on them.
The last and possibly most important action you can take is to ask public school retirees or active employees to join MARSP. Nothing speaks louder to elected officials than the power of the vote. Increasing our membership (currently just over 40, 000 members) will exponentially expand our ability to influence critical legislation. Getting a friend, spouse or someone you just met who worked in public schools to join MARSP is the best way to support our mission: Protecting your future.
Yesterday the Senate Appropriations Committee passed new pension reform measures in a 9 – 8 vote. The bills, SB 102, 1177 & 1178 have now moved to the full Senate for possible action today. I am asking you to take action to stop these bills from moving forward.
Specifically, contact your Senators by phone or e-mail and ask them to oppose these bills. The full reasoning was presented in yesterday’s article (Lame duck session is the wrong time for MPSERS reform), but the primary reasoning is two-fold: First, this is a highly complex issue and should not be taken up in the very short lame duck session. Second, the numbers prove conclusively that the costs to close out the system add a substantial burden to the State of Michigan and its taxpayers. It is bad fiscal policy to move these bills forward.
Of particular note, please thank the following Senators for opposing these measures in Committee and ask them to remain in opposition in the full Senate:
Curtis Hertel – East Lansing (D)
Vincent Gregory – Southfield (D)
Goeff Hansen – Hart (R)
Hoon-Yung Hopgood – Taylor (D)
Marty Knollenberg – Troy (R)
David Knezek – Dearborn Heights (D)
Mike Nofs – Battle Creek (R)
Coleman Young II – Detroit (D)
The Michigan Legislature is considering taking up MPSERS reforms in the upcoming lame duck session. The goal of these reforms is to close the MPSERS defined benefit pension system in favor of a defined contribution 401(k) plan for new public school employees. Although the closure of the defined benefit plan will not directly impact current retirees’ pensions, it will impact the health of the retirement system overall. MARSP is asking all public school retirees to call and write both their Senators and Representatives to discuss the following information:
- Lame duck is the wrong time to address this seriously complex issue.
- 2012 reforms are working and should be allowed to continue to work, as the Governor and Lt. Governor have stated.
- The unnecessary closing of MPSERS will cost the State an enormous amount of money.
A more detailed description of each of these points is below. To find your legislators use the Contact Your Legislator feature on the MARSP website.
MPSERS reform critical issues to discuss with your legislators
Any further reforms should be carefully measured and planned, with an eye toward long-term stability, not rushed through during lame duck.
- Undertaking reforms of this magnitude during a lame duck session would be irresponsible and runs the risk of creating problems down the road if not done properly.
- Such reforms will have wide-ranging effects on many Michigan workers, and must be done with proper public debate and input.
- Lt. Gov. Brian Calley has said that it’s unrealistic to rush through further reforms during lame duck because of their sizeable scope compared to the short time allowed by lame duck.
There is no problem to fix. The MPSERS reforms that were put in place in 2012 eliminated $12 billion in debt and stabilized the system for the future.
- These reforms, sought by Gov. Snyder, strengthened the financial health of the system by paying down debt and reducing future obligations.
- The Pension Plus plan (Hybrid Plan) created in 2012 for school employees is 100% funded and carries less risk than the MPSERS Legacy plans.
- The hybrid plan is financially manageable with a cost to employers of just over 4 percent of payroll.
- Replacing the hybrid plan with a defined contribution plan – whether it’s modeled after the state employee plan or the plan proposed in Senate Bill 102 or House Bill 5218 – will cost more, and begs the question of where the money will come from to pay for it.
- Gov. Snyder has defended the hybrid system calling it, “A good program,” signaling he has no “intention to…talk about changing it at this point,” while acknowledging the major upfront costs associated with a change.
Closing MPSERS is unnecessary and will cost the state over $2.5 billion over the next five years.
- Closing MPSERS comes with a high price tag and does not eliminate one dime of existing liability. There will be zero savings over the next 30 years.
- Costs associated with closing the system are estimated to be $550 million in 2017 alone, and an additional $2 billion over the next five years.
- Closing the system would result in a 67% increase in the money paid by school districts to fund retirement. This will result in higher costs for schools in the short term, and will impact kids in the classroom immediately.
- Failing to address these costs would hearken back to the days of accounting gimmicks that led to Michigan’s structural deficit. We cannot afford to move backwards.
MARSP strongly agrees with 2016 Michigan Teacher of the Year, Rick Joseph. Public school pensions are a critical component to quality education. And, additional pension “reforms” will actually increase the expense to Michigan taxpayers! Share this article as widely as possible. It speaks the truth about pension reform.
There is an error on page 5 of the November/December VANGUARD in the BriovaRx Pharmacy section at the bottom. Non-preferred specialty drug prescriptions filled at a non-BriovaRx pharmacy will have a 40% copay with a $10 minimum and no maximum. We apologize for any inconvenience caused by this mistake. The online version of the publication has been corrected.
MARSP encourages you to check out this very helpful voters guide. My Ballot is an interactive voting guide that allows you to compare different candidates in Michigan.
Priority Health, one of three HMO options available to MPSERS members, is hosting several 90-minute informational seminars around Michigan to answer questions members may have about Priority Health. Click here for more information.
Starting on Oct. 11, MPSERS will hold member benefit seminars across Michigan, Florida and Arizona. The purpose of these seminars is to help members learn more about their healthcare plans and receive health and wellness information. For dates, times and locations, view the Michigan flyer. View all locations here.