Article as originally seen on the Detroit Free Press.

Gov. Rick Snyder has signed major changes to retirement benefits for new teachers into law, another contentious battle is on the horizon for the fall when legislators hope to extend those changes to other public employees.

Those affected would include police officers and firefighters, as well as other municipal employees.

The Legislature faced a furious backlash from police officers and firefighters last year when it began to discuss cuts to retiree health care and other retirement benefits for municipal employees during the lame duck session. Lawmakers backed off the proposal, and will likely face a similar battle if the issue is resurrected.

“You’re going to see the quality of officers to continue to be greatly diminished and you’ll have greater difficulty in recruiting quality people for the job,” said Ed Jacques, director of member services for the Police Officers Association of Michigan. “They ought to be looking harder at funding that will attract the most quality people for the most important job that municipalities have, which is public safety.” 

One of the problems for law enforcement is that many retire earlier than age 65 because of the physical demands of the job, increasing the need for good retirement benefits.

“There are not many people who can push a squad car around for more than 25 years,” Jacques said. “Do you want a 64-year-old police veteran on a call? You can’t argue with the experience, but if there’s a physical thing that needs to be done, they might not be able to do it.”

Even with the expected backlash, Senate Majority Leader Arlan Meekhof, R-West Olive, said his top priority for the fall session of the Legislature will be changes to retirement benefits for more public employees of cities, villages, townships and counties.

There also has been talk of forcing all communities to switch employees from a pension type of retirement system to a 401(k) defined contribution plan. Many communities have already done that, but there are some that still have pension systems. The state switched new employees from a pension to a 401(k) plan in 1998.

“We’ve got to figure out if we can give locals better tools to manage that, so they’re not saddled with expenses they can’t afford,”  Meekhof said. The folks who rely on retirement benefits “have got to know that if a municipality goes bankrupt, they are likely to not have any of those things.”

Gideon D’Assandro, spokesman for Speaker of the House Tom Leonard, R-DeWitt, said it’s also an issue the House wants to tackle in the fall after a report from a Snyder-appointed task force on retirement benefits is issued later this summer.

“We’re going to look at the recommendations that come out and see what we can put together,” he said.

Lawmakers are borrowing from the playbook of groups such as the West Michigan Policy Forum, an influential organization of corporate leaders pushing business-friendly policies, including right to work policies and consolidating local governments. The group listed its top priority of 2016 as changing public employees’ retirement benefits, including getting rid of pensions and downsizing retiree health care benefits.

In applauding the Legislature and Snyder for enacting the teacher pension legislation, which the governor signed on Thursday, the group said that “reforming Michigan’s unfunded liabilities will continue to be a top priority as other public pensions and retiree healthcare benefits are addressed.”

Last year in Lansing, that translated into eliminating retiree health benefits for all new employees and replacing them with a contribution of up to 2% of an employee’s pay into a health savings account. As a result, droves of police and firefighters descended on the Capitol to protest the proposal and they’re ready to do it again.

Mark Docherty, president of the Michigan Professional Fire Fighters Union, said a one-size-fits-all mandate from the state will hurt communities and their employees.

“This is a local control issue. There are plenty of cities that aren’t having any problems with pensions or retiree health care,” he said. “We know through bargaining that communities are dealing with this on a local level. They determine what’s right for them and what works for them. And for the Legislature to say they’re gong to fix the problem from a state level, that’s going to harm a lot of other communities.”

Chris Hackbarth, director of state affairs for the Michigan Municipal League, said while many municipal pension systems are in a stronger position than even the state’s remaining pension obligations, the single largest spiraling cost for cities is retiree health care and something needs to be done about it.

“We need good employees because you want someone who is running something like a water system who is highly competent. So you need to offer good pay and benefits,” he said. “But you have to balance that with the reduction in services that have to happen because you’re spending so much on legacy costs.”

The talk of changes to even more public employee retirement benefits comes as Snyder signed controversial legislation to make major changes to the teacher retirement system in order to address a $29.1 billion unfunded liability in the teacher retirement system.

“Modernizing the school employee retirement system means these benefits will be there for retired school employees in the long term, while at the same time protecting taxpayers from escalating liabilities,” Snyder said.

All new teachers and school employees hired after Feb. 1, 2018, would automatically be placed into a defined contribution retirement plan. The plan would have the school district pay 4% of the employee’s salary into a 401(k) plan. The employee could also contribute and the state would match up to 3% of the employee’s contribution.

The state would close the current hybrid system that is a combination of pension and 401(k) and replace it with a new system that would be more costly for the employee. It would be closed by the state if it wasn’t at least 85% funded for two years in a row. The goal of the plan is to make the 401(k) plan so attractive that new employees will automatically want to get into it, instead of a hybrid pension plan.

“Smart, corrective action was required to address a school employee pension system that has an unfunded liability of nearly $30 billion,” said Sen. Phil Pavlov, R-St. Clair, who sponsored the legislation. “This is a sustainable and affordable solution that provides new teachers with a modern retirement that mirrors plans offered to state employees and legislators.”

Article as originally seen on the Detroit Free Press.

13 responses to “Snyder Signs Teacher Pension Changes into Law, Legislature Wants More

Posted by CP

The idea that any entity works toward a promise at the end, and then the promise is reneged, even when the pension that is being paid, does not affect the states budget is crazy.

Most police pensions are self funded. This is not a gift, but a benefit which is paid for and budgeted throughout the career of the person who worked for it.

Just because others feel that they do not have this benefit, does not make it right to take it away from those who earned it.

I entered this field with the idea that the rainbow at the end was a solid pension. The same as a person who is elected governor, or the person who retires from the big 3 understands that at the end, they receive a pension. To rip it out from under me, after I retire is a slap in the face.

We are already in a crisis, where the police departments in Michigan are at critical low levels. We cannot recruit officers to fill positions we have, and the vacancies are quickly becoming unsafe for the working officers, and the communities they serve.

Reducing benefits from a profession, which took years to build up to a profession, whose workers are ridiculed and second guessed daily, is not the most sound way to protect the publics safety. Make the career worth it for professionals to enter, or you are going to get what you pay for, and the safety of our state is what is going to suffer.

Posted on August 14, 2017 at 6:02 PM

Posted by Michael

I have been a LEO with my agency for over 20 years and have less that 5 to go. These folks all wanna change the rules at the end of the game. My pension system is very well funded and is in no danger of collapse. My pension system is more stable and run better that actual city I work for. We keep a close eye on it and our city has no way of touching those funds .

There won’t be any quality of life with the way this state is running collective bargaining rights straight into the ground. The quality of the the personnel in police and fire departments won’t be worth a pile of beans and there won’t be anyone to teach our kids.

Bad enough I have to leave the state when I retire since his grace is now taxing our pensions. Leave us the alone!

Posted on August 8, 2017 at 8:25 PM

Posted by Roger

These police officers, firefighters, nurses, and teachers have bargained through the years with their various State, County and Local Municipalites for the benefits which they currently have and were promised. The government representatives freely bargained with them, and now because of their ineptitude in representing their governmental communities they need to be bailed out (at the expense of those who gave their heart and soul to their communities). How sad is this day that the Republican Govenor and Legislators would do this to hard working men and women. I have always been Republican since Ronald Reagan, but this election cycle has forever changed my view and I will be switching party loyalty starting in the mid terms forward. There has to be a better answer than just cutting off the people that protect us all!

Posted on July 16, 2017 at 5:37 PM

Posted by Christophor Periatt

Public employees deserve the right to strike even if it effects public safety. If governments had that hanging over their heads they would never screw the police and fire employees over during their contracts. Police and Fire need to join forces and go on strike if the politicians want to take their benefits away.

Posted on July 15, 2017 at 12:50 PM

Posted by Bill

Cops, a group with Republican ideals and Democratic needs. SMH

Posted on July 15, 2017 at 9:54 AM

Posted by Dee

The pension plans alliw retirement way to early and also pay to much for the job any of them do. Sorry they knew the job when they hired in.

Posted on July 15, 2017 at 6:47 AM

Posted by Dee

The pension plans alliw retirement way to early and also pay to much for the job any of them do. Sorry they knew the job when they hired in.

Posted on July 15, 2017 at 6:47 AM

Posted by Deborah Leonard

I assume the legislature themselves will have the same changes in their benefits. They are also employees of the state, and this includes our governor. If they aren’t willing to address themselves as well then we the people need to get it on the ballot.

Posted on July 14, 2017 at 8:37 PM

Posted by Roger Standifer

To Whom it may concern :
I worked for a city for 26 years.
One thing that appealed to me was the benefits package offered.
It was bad enough to have my meager pension taxed, now you want to control my health care benefits. No thank you!
The state needs to stay out of local city business.
The city I worked for has a balanced budget and is meeting its commitment to its retired employees.

Posted on July 14, 2017 at 7:40 PM

Posted by Ben Bielecki

Police unions and Officers will still continue to endorse and vote for Republicans even when they attack our pay, pensions, and retiree healthcare. Wake up, my fellow officers and retirees.

Posted on July 14, 2017 at 7:16 PM

Posted by LDzb

the govenor and State senators and house reps should not be paid at all. They should serve for free then they could meet on the weekends and maintain a real profession during the week like every other volunteer does. Then maybe by having to work they would begin to value the rest of us cuts should begin at the top.

Posted on July 14, 2017 at 6:56 PM

Posted by Sue Morris

What about the cities who aren’t in financial trouble, such as Livonia? They have a plan in place that is a model for other cities. Leave our benefits alone!

Posted on July 14, 2017 at 1:55 PM

Posted by Tim

Anyone who supports this legislation is an ENEMY of police officers, firefighters, teachers and all other public servants.

Posted on July 14, 2017 at 1:43 PM

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