News from AFT Michigan
June 7, 2016
MICHIGAN — Today the Michigan Court of Appeals found unconstitutional a 2010 law requiring public school employees to pay 3 percent of their wages for retiree health care without being guaranteed they would receive that benefit. The ruling means educators who paid this 3 percent into the retirement fund from 2010 to 2013 will see the money returned to them with interest if the ruling stands.
The decision adopts arguments presented by AFT Michigan that the Michigan Legislature overreached when it required these payments since no employee is guaranteed health care when they retire.
“The Court of Appeals saw it right. These are hard earned wages and to require payment and not guarantee the benefit is not just unconstitutional, it is not how educators should be treated,” said David Hecker, president of AFT Michigan. “School employees sacrifice each and every day for their students. Today they have received a bit of justice. We ask the state to honor and respect the incredible work performed by our educators and not appeal this decision.”
Background to the Case
In July, 2010, the Michigan Legislature required every public school employee to pay 3% of their compensation to the School Employees Retirement Fund to pay for the post employment retiree health care of persons then retired. While employees were required to pay to fund this benefit for others, they, themselves, had no assurance that they would, in turn be entitled to health care when they retire.
AFT Michigan sued the State of Michigan challenging this involuntary extraction from wages to pay for health care of others without any promise of a similar benefit to those now paying. The Federation won in the Court of Claims and the Court of Appeals and the case moved to the Supreme Court.
While the case was pending, in 2012 the Legislature — anticipating that the 2010 law would be invalidated — adopted a new statute. The new law made contributions to retiree health care voluntary. Other provisions of the law imposed new economic burdens on public school employees but not directly related to retiree health care. The Federation challenged this law, too, but did not prevail.
After the adverse decision on the 2012 statute, the Supreme Court directed the Court of Appeals to reconsider its decision on the 2010 statute. That Court issued its decision today. The decision applies to the forced contributions between July 1, 2010 and January 9, 2013.