Funding Health Benefits For Retirees

Many of you have read news reports about school retirees’ health care being underfunded by $11 billion. This is not actually “new” news, as the MFT&SRP has been pointing out this shortfall to policymakers for years. The press recently became aware of it because the Office of Retirement was required to report the $11 billion liability in the retiree health plan in order to follow a recommended disclosure policy set up by the Governmental Accounting Standards Board.

To refresh your memory, in 1991 Governor John Engler issued an Executive Order, which abolished pre-funding of retiree health benefits. Pre-funding means setting aside funds for benefits earned in sufficient reserves to cover the current and projected future costs of health care for all retired and currently employed members of the retirement system. The money that had accumulated in that fund was used to balance the State’s budget, which included paying for retirees’ health care.

Litigation ensued and in 1995 the Michigan Supreme Court ruled that the State had a constitutional obligation to pre-fund health benefits. The State asked the Supreme Court to rehear the 1995 decision and it released a revised decision which stated the Legislature was not constitutionally required to pre-fund health benefits under PSERS.

Now we learn the Administration is planning to reverse its own earlier policy and recommend legislation to restore pre-funding (election year politics at work). It is too bad that we have lost nine years of earnings in a “bull” market, which might have prevented the increases in co-payments and deductibles that retirees are now paying.

According to the sketchy details available, Engler’s proposal would break retirement contributions into three accounts, including a new account to allow the eventual pre-funding of health benefits. With the pension fund at or above what is needed to pay future cash benefits, the excess contributions would be diverted to a new Health Care Advance Funding Account that would, when fully funded, help pay for health benefits for retirees. Officials announced that the state would be able to put $765 million in the Account this year, if the legislation passes. At this rate, it would take many, many years to fully pre-fund the account.

The MFT&SRP will oppose any proposal that includes having employers pay a substantial increase into the fund leaving far less for future wage increases, or by reducing benefits. We will keep you informed about these proposals and we will need your help to make sure present and future retirees have good health care coverage.



“Safe Needle” Bills Approved by House Health Policy Committee

Under House Bill 4621, any hospital, clinic, or health practice employing fifteen or more people with occupational exposure to needles must use either needleless systems or needles that have sharps injury protection systems. For two years, pre-filled syringes--those used for common injections, such as tetanus shots--would still be allowed to be used even if they do not have protection against injuries. In addition each facility would have to set up a committee made up of a variety of health care professionals to conduct an evaluation of needleless systems.

House Bill 4780 requires that the Department of Consumer and Industry Services and the Department of Community Health to jointly study practices and procedures in the health care workplace relating to needle safety. The Department of Consumer and Industry Services shall also provide training opportunities to employees on needle safety in the health care workplace through the Department’s safety education training program. Both bills are currently before the full House.


Substitute Teachers Qualifications Revised by House

House Bill 5272 , as approved by the House, would allow individuals with 90 hours of credit from a community college to serve as substitute teachers. Currently, persons with this amount of credit at a university can serve as substitute teachers.

House Bill 5272 now goes to the Senate for consideration. The MFT&SRP maintains it may slightly ease the shortage of substitute teachers across the state, but it could reduce the quality of substitute teachers.


Educational Loan Legislation Introduced in the House

House Bills 5673 and 5674, introduced by Representative Buzz Thomas, would establish and fund an educational loan program for employees of teacher shortage school districts studying to become teachers. The maximum amount of a loan made under this program would be $4,000 per academic year for a total of not more than four academic years in a teacher education program. These bills were prepared at the requested of our PSRP Committee. Both bills were referred to the House Appropriations Committee.


Enhanced Reporting Requirements Passed by House

As approved by the House Education Committee, House Bill 5212 would require intermediate school districts to compile information on local school district budget figures, student achievement, and parental involvement and put the data into a report card that would be available to the public. The bill now goes to the Senate Education Committee for consideration.

New information that would be required in the reports include items such as: graduation rates; the percentage and number of students taking the ACT, SAT, and Work Keys; the percentage of graduating seniors gaining acceptance to post-secondary education; class size; and a breakdown of funds going to direct education, teacher salaries, and administration. School districts already either provide or make available most of this information.

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School Administration of Medications

Representative John Hansen (D-Dexter) is gathering information on employees administering medications to students. His goal is to draft legislation to help us with this growing responsibility. Please take a moment to outline the problem as you see it and suggest possible solutions. Simply fold and staple this form and mail it back to me as soon as possible. Your silence will be interpreted as satisfaction with the current situation and that no changes are needed!

Thank you,

Louise Somalski, Legislative Coordinator

Do you personally dispense medications at school? Yes No

What problems have you experienced or observed?

What suggestions do you have to improve this situation?

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