Something that should have happened decades ago, might happen soon.
State Senator Jack Brandenburg posted this on FB today.
Facebook has somehow supplanted blogging and other online information sources. I have a post upcoming for this. In the meantime, I’m passing this along as a public service.
Hundreds of teachers have been emailing and calling my office regarding Senate Bill 102, which changes the teacher retirement plan. It has become very obvious to me that they have been misinformed.
First and foremost, if you are a current or retired educator, your pension benefit will not change one bit. You will not lose one cent. Your pensions are guaranteed and protected by the Michigan State Constitution. Once again, current teacher’s and retiree’s pensions are protected, every single cent.
We must change the structure of the plan because the state and school districts are facing a $26.7 billion dollar unfunded liability in the current pension fund. The current pension is only 60% funded. Each year, $727 dollars per pupil is spent just to play catch-up. This is unacceptable if we do not take action. The crisis we exacerbate today, will short change students and teachers for generations.
What is new, is that every teacher that is hired after June 30th, 2017, will be placed in a 401(k) retirement plan. In short, the reporting unit (school district, community college, or university) would automatically contribute 4% of the employee’s pay into that employee’s defined contribution account. In addition, employees could contribute up to 3% of their pay into their defined contribution account.
If you will, please send this information to your friends on Facebook.
Truthfully, “60% funded” is likely generous.
But in the current system it will become worse. And if the thought of a repeat of last years bail out of the DPS doesn’t freak you out, you must not be paying taxes in any form.