In Press Release

Statement from David Hecker, President, AFT Michigan:

“Once again, Michigan educators have been let down by Michigan courts, which today upheld Gov. Snyder’s attempt to retroactively cut the pensions earned by hard-working school employees. Republicans appear bent on pulling the rug out from under the women and men who have devoted their lives to educating our children, breaking the promises made to them by the state for decades. This just makes it even more clear how badly we need leaders who will promote a secure retirement for Michigan’s working families, not take it away from them.”

In 2010, and 2012, the Michigan legislature made changes in the school employees’ retirement system which AFT Michigan has taken to court to overturn. The 2010 case is the original “3%” case which we have won in two lower courts but is now awaiting a decision from the Michigan Supreme Court. Today the Michigan Court of Appeals issued an opinion regarding the 2012 changes to the Public School Employees Retirement Act. The Court affirmed a decision of the Court of Claims which declined to find that these changes breached a contract with public school employees or unjustly enriched the State of Michigan by the retention of the value of interest earned on healthcare contributions

The arguments raised by AFT Michigan asserted that:

  • The State of Michigan had created a contract with public school employees which PA 300 breached; the State had promised that retirement would be based on a 1.5% “multiplier;” that PA 300 required employees to pay more to keep what the State had promised.
  • The taking of the 3% had previously been found to be unlawful in an earlier decision of the Court of Appeals and PA 300 did not fix the problems noted in that case.
  • Under PA 300 MPSERS could, for decades, keep the 3% contributions of people who never qualified for retiree health care; that the monies would be refunded under terms so unreasonable as to unjustly enrich the State.

The Court did not accept these arguments basing its decision on the conclusion that the Legislature is free to make changes to retirement, no matter who gets harmed; that payment of the 3% is now voluntary, therefore a refund may be made if required without paying the employee the value of interest earned. This only covers the deductions made since 2012.

AFT Michigan is disappointed by the decision and will consider submitting an appeal to the Michigan Supreme Court. We are still waiting for the court to decide the original case from the 2010 changes to the retirement system.

Whatever the financial challenges faced by MPSERS the Michigan Legislature did not consider the impact of these harsh changes on the people who are intended to be protected by that fund. This is another example of the Governor and Legislature breaking the promise made to public school retirees, our families and our students. It is apparent the courts will not be a remedy. The only way to fix this is to focus on the 2014 elections – the Governor, the Legislature, and the courts.

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