Teacher retirement account funding splits Michigan legislature

(The Center Square) – Michigan teachers could get more money for the classroom but it would come at the expense of money dedicated to teachers' retirement.

The Democratic-majority House passed a bill along party lines that would eliminate a 3% teacher's retirement tax, allow unfunded liabilities to grow to as much as 14.56% and transfer $670 million in "excess" funds to buy classroom materials.

Republicans say that breaks a promise to state educators.

“I worked alongside talented and committed educators who dutifully educated future generations for decades,” Rep. Greg Markkanen, R-Hancock, said. “The state promised a robust retirement account educators could rely on when they leave their classrooms for the final time. Democrats just threw that promise in the garbage.”

Rep. Matt Koleszar, D-Plymouth, says the bill does not raid retirement accounts and keeps the money in the classrooms. The bill sponsor also says the Michigan Public School Employees’ Retirement System liabilities will be paid off by 2038.

“Since schools were overpaying into [Other Post-Employment Benefits], it takes that money and puts it directly back into the classroom,” he said. “It also makes it so any public school employer that is paying the 3% no longer has to pay the 3%. The schools absorb that cost, but they also get a big increase in the money that they’ll see because of the rate reduction.”

Rep. Ann Bollin, R-Brighton, expressed concerns over how these details will come about.

“I’ve sat through, as a member of the Appropriations Committee, a lot of the hearings, and I don’t see a whole lot of cuts going on. I see a lot of increases. I mean, at some point, where does the money come from?” she asked.

Gov. Gretchen Whitmer first introduced the idea of diverting retirement funds in February when she introduced her $80.7 billion version of the state budget. Both the House and Senate chambers have passed their own versions of the upcoming budget, but still must debate over final details.

The bill now moves to the Senate.