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MPSERS-Budget Deal Taking Shape

June 13, 2017

Courtesy MIRS News

Gov. Rick Snyder isn’t sure if he’ll have a Fiscal Year (FY) 2018 budget in June, but it’ll likely be coming sooner rather than later.

Snyder, Senate Majority Leader Arlan Meekhof (R-West Olive) and House Speaker Tom Leonard (R-DeWitt) Thursday morning said they have a “tentative framework” for the FY ’18 budget that includes changing the options for new hires in the teacher’s retirement system. 

The three began seriously exploring a specific Michigan Public Schools Employee Retirement System or MPSERS reform idea on Wednesday. Thursday, they began filling in the details. 

Meekhof said “there’s some fine points to go over yet,” but that they’re close to a consensus on the shape of the plan. He did not offer further details as to what the framework of the new system might look like, or if it has changed from previous meetings. 

“There’s some debate on how much you want to put in the Budget Stabilization Fund, how much more we would pay into the retirement system to pay down the current one, so we’ve haven’t arrived on agreement on those things, yet,” he said. 

Meekhof admitted that could mean some last-minute budgetary changes. Snyder said “we’re going to be working with,” the conference bills. 

This is a rough idea of the concept they are pursuing. The current hybrid pension system currently offered under MPSERS would go away. 

New teachers would be given a better 401(k) option than what they can choose today, one that mirrors what state legislators and state employees receive in which the state kicks in 4 percent of the employee’s salary, local districts kick in 3 percent and the employer can match up to 3 percent. 

However, the new teachers could opt out of that 401(k) and receive a lesser defined benefit product. This new defined benefit plan would need to meet certain performance standards and if those are not met, that, too, would close. Meekhof wouldn’t say whether that kill switch is still there after Thursday’s negotiations. 

Leonard promised that once a plan is unveiled, there will be “adequate hearings” and “these bills will be out there for you all and the public to see.” 

House Minority Leader Sam Singh (D-East Lansing) lamented how Democrats have been sidelined in the deliberations. 

“It is disappointing that on an issue as important as teachers, and it impacts every part of the state, that Republicans would only sit down with each other,” he said. “At this point in time, this is an issue that should be solved by everybody. Everybody should be at the table.” 

Leonard said he’d be willing to include Democrats if they bring forward their own proposal. 

“At the end of the day, this is a problem that we need real solutions for and I have not seen them bring anything to the table on how to fix it,” Leonard said. “The price of admission is having a plan and I have yet to see that they have a plan.” 

All three leaders are not comfortable declaring they have a “deal,” but considering they were in “snailmate” just two days prior, the train appears to be moving out of the roundhouse. 

“We’re working through the details,” of the new plan, Snyder said. “Assuming it all comes together, that’s something I would be supportive of.” 

Leonard said the MPSERS overhaul was his top priority, meaning Snyder’s budgetary aspirations may still rest on a compromise. 

“If this agreement means we have to move the budget back a little further, I’m willing to do that,” he told MIRS. 

Senate Minority Leader Jim Ananich (D-Flint) wasn’t hopeful that he’d like what he sees and he doesn’t want a vote taken until the Senate Fiscal Agency has been given a chance to release a public analysis. 

“I’m afraid that the costs of this plan will be astronomical,” he said. “We must have a Senate Fiscal Analysis on it before any vote is taken. There’s no need to be stealing any plays from the Washington D.C. playbook.”

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