Sign Up Today: Legislative Education Action Days (LEAD)!
AFT Michigan will host two Legislative Education Action Days (LEAD) this spring. Like last year, we’re going to host one day to focus on higher education issues and another to focus on PreK-12 issues. Members of all constituencies are welcomed at both events. We are still shaping the agenda, which will include issue discussions and meetings with legislators. If you have questions or suggestions for ways to make the events interesting and productive, please email Legislative Mobilization Coordinator Julie Rowe at firstname.lastname@example.org.
Please RSVP below, and encourage your colleagues to attend as well.
Governor Makes Budget Recommendations for Fiscal Year 2016
As the first step in the budget process for Fiscal Year 2016, Governor Snyder presented his budget recommendations to the Legislature last Wednesday. This budget includes an increase of 2 percent to universities, 1.4 percent for community colleges, and an increase from $11.8 billion to $11.9 billion for K-12 education. The next step requires both the House and Senate appropriations committees will review the Governor’s proposals and make it’s own recommendations. After each house passes its own version of the budget, conference committees comprised of members from the House and Senate will hash out any differences between them.
Governor Snyder’s recommended budget for fiscal year 2016 includes an increase from $11.8 billion to $11.9 billion for K-12 state appropriations. This will include $108 million to raise the per-pupil foundation allowance by $75 and increase of $100 million for at-risk funding for students across the state, bringing at-risk funding to a total of $409 million.
The “best practices” funding has been reduced to $30 million, and the criteria have significantly changed. Anti-union measures, including limiting what can be included in collective bargaining agreements and encouraging school boards to outsource support services, have been eliminated.
The budget also includes an additional $1 million for school libraries, specifically for preschool reading programs.
The Governor’s recommended budget for fiscal year 2015 includes a two percent increase to university funding, for a total of $1.544 billion. Of the $28 million increase, $26.8 million would be allocated through the performance based funding system, and the two percent university funding increase will be distributed to universities based on a number of factors, including the number of students receiving Pell grants and the university’s six-year graduation rate.
University funding increases vary from .6 percent to 4 percent, as outlined below:
- Central Michigan University: 3%
- Eastern Michigan University: 2%
- Ferris State University: 3%
- Grand Valley State University: 4%
- Lake Superior State University: 2%
- Michigan State University: 1.9%
- Michigan Technological University: 2.1%
- Northern Michigan University: 2.1%
- Oakland University: 3.4%
- Saginaw Valley State University: 1.8%
- University of Michigan-Ann Arbor: 1.9%
- University of Michigan-Dearborn: 1.9%
- University of Michigan-Flint: 2.5%
- Wayne State University: 0.6%
- Western Michigan University: 1.8%
Universities will only receive an increase if they:
- Restrain undergraduate tuition increases to 2.8 percent or below
- Participate in at least three reverse transfer agreements with community colleges
- Maintain a dual enrollment credit policy that does not consider whether credits were used toward high school graduation
- Actively participate in the Michigan Transfer Network
Community colleges would see an increase of 1.4 percent or $4.3 million for a total of $393.8 million. Half of this would be seen in an across-the-board increase, while the other half of operations funding will also be distributed through a performance-based metric. The increase will be distributed fairly evenly, with several schools seeing the lowest level of 1.2 percent and Washtenaw Community College receiving the largest increase of 1.9 percent.
House and Senate GOP Target MPSERS
After legislation died last year that would have converted the Michigan Public School Employees Retirement System to a 401(k)-style defined contribution plan, both the House and Senate Republicans have issued their legislative action plans for the upcoming session, and both plans include the same attack on school pensions.
The Senate has already introduced legislation – SB 102, sponsored by Senator Phil Pavlov (R-St. Clair) – and the House has had a committee hearing to hear a report on the current status MPSERS. Meanwhile, education “reform” groups like the Great Lakes Education Project are also calling for future public school employees to be shifted into a defined contribution system.
While the legislature examines the school employees system, a national pension research organization has recently completed a study of the Michigan State Employees Retirement System (MSERS). That system was switched from defined benefit to defined contribution in 1997, and all state employees hired since then have only been given the option of a 401(k)-style pension.
The National Institute for Retirement Security (NIRS) released a report in mid-February that took a close look at how that change to MSERS has worked for the state and for state employees. The verdict was grim. The report showed that while the MSERS system was 109% funded in 1997 when the defined benefit plan was closed, the system is now only 60% funded and has accrued over $6 billion in unfunded liabilities. Even more troubling is the fact that state employees in the defined contribution system have only an average balance in their accounts of $50,000. Those nearing retirement age are in dire circumstances, as the average account balance for those aged 60 and up is $123,000. NIRS estimates that this balance would amount to an annual retirement income of $8,200. By comparison, the average annual pension benefit for those in the defined benefit plan is $20,000.
The obvious conclusions from the study is that any cost savings from switching from a defined benefit to a defined contribution plan won’t be realized for decades to come (if at all), and the change amounts to a devastating cut to pension income for future retirees. We are encouraging legislators to take a hard look at the outcome of the change to state employee pensions before rushing headlong to make the same change for school employees.
Bill Seeks to Allow Retirees to Fill Critical Shortage Positions
For several years, the Michigan Public School Retirement Act had a clause that allowed retired members to return to work for MPSERS employers without penalty if they were filling a position of “critical shortage” (as determined by the Michigan Superintendent of Schools). There were other limitations on how much they could earn each year and requirements that the employer offset costs to the retirement system, but for the most part the system worked well.
However, that clause in the law expired in the middle of 2014 and legislation introduced to extend it failed to reach the governor’s desk. In January, Representative Holly Hughes (R-Montague) re-introduced the legislation and it has already been reported from the House Financial Liability Reform Committee. The bill, House Bill 4059, is expected to pass the House as early as next week.
AFT Michigan is actively supporting this bill.