From Dave Stafford (MEA Lobbyist): School Employee Benefit Attack - SB 418-421
Some weeks ago we reported to you on SB 418, 419, 420 and 421. These are the bills that call for school districts, and other units of local government, to pool together to self fund health, dental and vision insurance benefits for their employees. The bills also attack the MESSA business model by requiring disclosure of claims data by employer for groups of 100 or more. Finally, they allow these self insurance pools, a structure that is notoriously unreliable, to operate with only minimal regulation and oversight, thereby placing employees at risk if the pools go bankrupt.We have worked with friends in the Senate to amend the bills, is they come up, by changing the disclosure of claims data to be by pool for those insurers that pool many groups and spread the risk. We have also insisted that proper regulation and oversight be in place which would be accomplished by an amendment drafted by the Office of Insurance Services (the agency that regulates insurers).Today the bills were taken up in Senate on "Second Reading of Bills", The amendments we supported (above) were adopted, despite vigorous arm twisting by the Senate Republican leadership. However, when the bill was reported to "Third Reading of Bill" (final passage), the Senate exercised a rarely used bit of parliamentary chicanery and voted to NOT concur in the report from Second Reading of Bills. In effect it did not accept the changes that had been adopted earlier in committee nor did it accept the amendments that it had just adopted on Second Reading. That means that the bill is now before the full Senate on Third Reading, in its original form with no changes.In this form, the package of bills is unworkable and a totally unacceptable attack on school employees and their ability to bargain quality benefits.All of this is an effort by the Senate leadership to play political games with the budget and hold school employees hostage to their manipulations. Skeptics are aware that the Senate Majority Leader has all but declared himself a candidate for Governor in 2010, and these games seem to be designed to help that campaign.The time for us to act is now. Call or e-mail your Senator immediately. Tell him/her to oppose SB 418 and the rest of package (SE 419, SB 420, SB 421) unless the "Kahn/Basham" amendment on providing claims data by pooled area is put back in the bill. Also urge her/him to support the amendments that assure proper oversight and regulation of these self insurance pools if this bill ever becomes law.
From Dave Stafford (MEA Lobbyist): SB 546 and SB 547
The Senate discharged SB 546 and SB 547 this morning, with the apparent intent of passing and sending them to the House. We have not been able to examine the amendment to the bills, but we believe that they are being amended to change the school employees retirement system back into an employee contributory system. That would be accomplished by increasing the MIP contribution rate by some 2.5% to 6.5% with no corresponding increase in retirement benefits for employees.Since the MIP contribution was approved by the IRS to be pre-tax dollars because it pays for a specific set of additional benefits, by increasing the rate with no benefits attached, there is a question of whether such legislation would jeopardize the entire tax status of the pension.Back in the 1970s the Basic Plan was made non-contributory with several years notice to employers and employees that the change was coming. When it was implemented, employees gave up wage increases that correspond to the savings they realized.Please let your Senator know that this is poor legislation and request that s/he oppose it.When we have more detail on what is being considered, we will get that information out to you.
From Dave Stafford (MEA Lobbyist): Attack On School Employee Benefits Moves Forward
Once again the majority leadership of the Michigan Senate has declared war on school employee health benefits and the right to enjoy quality health insurance at relatively stable prices. The latest attack is a four bill package that:Creates multi-employer self funded health insurance pools while requiring providers of health insurance to release claims data by individual employer, SB 418 sponsored by Sen. Mark Jansen (R-Grand Rapids)Amends the School Code to require public schools to follow SB 418 if they provide health, dental or vision benefits to their employees, SB 419 sponsored by Sen. Wayne Kuipers (R-Holland)Amends the Intergovernmental Contract Act to allow any unit of government, including schools, to enter inter-governmental contract with other unit(s) of government to provide health, dental and vision benefits, SB 420 sponsored by Sen. Patricia Birkholz (R-Saugatuck)Amends the Community College Act to require community colleges that provide health, dental or vision benefits to follow the terms of SB 418, SB 421 sponsored by Sen. Cameron Brown (R-Sturgis).Yesterday, Tuesday May 22nd, the Senate Local, Urban and State Affairs Committee held a three and one-half hour hearing on this package of bills at the end of which it made amendments to SB 418 and then reported all four bills to the full Senate with a recommendation that they pass.The major problem with these bills is that they renew the same old attack on the successful business model of MESSA by requiring that claims data be provided on a district basis for any district that has 100 or more employees in the plan. This is the same attack that school management lobbyists have been pushing since at least the early 1980s.The MESSA model is to pool all groups in a given geographic area for purposes of speeding the risk and developing stable price structures. The groups with relatively low risk are pooled with the groups that have relatively high risk and with those that fall in between. That way the risk is spread across a large pool and all of the groups avoid large spikes caused by an increase in claims in their small group. By spreading the risk among thousand of employees, a few high claims in a single district have little impact on the district.Because MESSA provide coverage and premiums to the large pools, it releases claims data on the same large pool basis. If forced to provide the claims data district by district it will open the door to the for profit companies to provide low ball quotes for coverage of the groups with fewer claims and, thereby, "cherry pick" these lower risk groups out of the pool. That would, in turn, leave the higher clams groups in the pool and de-stabilize the entire pool and force rate to spike. Over the course of a few years it would create the same kind of chaos in the Michigan school market that exists in the school market of other states and that exist in the small employer market of nearly all states.The other problem with these bills is that the self-insurance pools that they authorize would be subject to much less stringent oversight by the Office of Financial and Insurance Services (OFIS), the regulatory agency in charge of insurance in Michigan. Right now groups can form self insurance pools under the insurance code. These groups are subject to the insurance code and to stringent oversight by OFIS. This oversight is designed to protect employees and the public from holding the financial bag if poorly run or poorly funded pools become insolvent. SB 418 would exempt the new pools from the Insurance Code and would substantially weaken the ability of OFIS to provide effective oversight of them.In the hearing on the 22nd, the usual cabal of school management lobbyists was joined by the Michigan AFL-CIO, Michigan Federation of Teachers and the SEIU in pushing these bills. These groups want to hurt MESSA while at the same time promoting a vehicle that will allow them to form self-insurance pools that do not have the high level of oversight and accountability required of MESSA and other insurers. Apparently they are not concerned about the fate of school employees who might be subject to such pools when the pool becomes insolvent and claims stop being paid.Please call or write to your Senator and urge him/her to oppose SB 418, SB 419, SB 420 and SB 421 unless these deficiencies are fixed. The bills are on the floor of the Senate and could be taken up at any moment, so time is important.Please urge your members to do the same.In making these contacts, please do not use school e-mail accounts. If you send e-mail, do so from your private account.To find your Senator go to the MEA web page, www.mea.org and follow the links to the section on contacting your legislator which is under the Government Affairs section of the web page.
From Chuck Agerstrand (MEA Retirement Consultant): Attack on School Employee Pensions and Health Benefits
Last week a package of bills was introduced by Democrats and Republicans in the Michigan House of Representatives that attack public school employee pensions and benefits.
While legislators debate endlessly how to find additional sources of revenue to correct the states budget crisis, some legislators are determined to take it out on school employees and retirees by introducing legislation that would gut the current pension plan and health benefits.
These legislators, both Democrats and Republicans, wish to create a graded premium health subsidy based on the years a person is employed; remove the retiree pension exemption from state taxes; suspend all post employment pensions while returning to work in a public school system; and establish a defined contribution pension system. This wholesale attack is unwarranted!
The bills are summarized below, including their sponsors and their office phone numbers.
Rep Melton (Auburn Hills) (D) (phone 517-373-0475) HB4797/4798
Currently MPSERS covers 90% of a retiree's health insurance premium. Under this proposal, a retiree who was employed after June 20, 2007 would receive 90% of the monthly premium for health, dental and vision, if the member has 30 or more years of service credit or 30 or more years of employment with a reporting unit. If a retirant has 10 or more, but less than 30 years of service credit or years of employment, then the retirement system shall pay 3% of the premium for every year short of 30 years of service. Additionally, if a retirant has less than 30 years of service credit and is less than 60 years of age, the retirement system shall reduce the amount payable by the formula used to reduce a retirement allowance equal to 1/2% for each month or fraction of a month, from the effective date of the retirement to the date of the member's 60th birthday. This would only apply to all new retirees who were employed after June 20, 2007.
Reps Ward (Brighton) (R) (phone 517- 373-1784) HB4801
This bill will remove the exemption from state taxes for all school employee pensions. This bill, if adopted, would become effective January 1, 2007.
Rep Wenke (Galesburg) (R) (phone 517-373-1787) HB4799
This bill will suspend the pension for any retiree for the duration of time that the retiree is employed directly or indirectly with a participating employer, following their retirement. This bill includes all post retiree employment including but not limited to critical shortage employment; substituting; independent contracted employment.
Rep Wenke (Galesburg) (R) (phone 517-373-1787) HB4808
This bill will establish a defined contribution pension system for those school employees who are hired after March 31, 2008.
Current employees are under a defined benefit system. Their pension is based on the number of years of service, times the final average compensation, times 1.5 percent. The benefits include health care coverage. These employees would continue under this system unless they chose to join the Defined Contribution (DC) system. That choice would have severe consequences. A Defined Contribution provides no guarantee for future retirement benefits, and health care is based on a graded premium subsidy, whereby the retiree would absorb a significant part of the premium cost for health insurance.
Contact your state representative and urge him/her to vote no on these bills. These bills are an unwarranted attack on public school employees and retirees.
From Dave Stafford (MEA Lobbyist): New Bills Attack Bargaining Rights
Yesterday a package of bills attacking public employee bargaining rights and fringe benefits was introduced in the Michigan House of Representatives. Sponsored by Rep. Lorence Wenke (R-Galesburg), the bills are HB 4803, HB 4804, HB 4805 and HB 4809.The primary bill in the package is HB 4805 which is a bill to amend the Public Employment Relations Act (PERA), the law that sets forth the bargaining rights of public employees in Michigan. The bill would amend Sec. 15 of PERA by adding language that would prohibit any public employer from bargaining health, dental and vision benefits that cost any more than the most expensive benefit package provided by the State Civil Service to a non-represented (non-union) employee of the State. While that may sound innocuous, it is a direct attack on employee bargaining rights and the right to trade salary or other things of value for benefits.HB 4803 amends the school code to prohibit school districts from negotiating a benefit package the costs more than the most expensive non-represented state civil service employee. HB 4809 would impose this same restriction on all local units of government, including community colleges, and all public universities.HB 4804 would require the State Department of Civil Service to make available to all local units of government, including schools, a state health plan. It appears that local units of government could decide whether to buy in to this plan. The bill provides that local units must pay the full cost of any benefits they purchase.Contact your state representative and urge her/him to vote no on these bill. They are an unwarranted attack on public employees and their right to bargain the benefit packages that suit them best.This is part of a broad attack on public school employees that is occurring with the budget debate. Other such attacks include the Consolidation of Service Bill (HB 4592) and the package of bills attacking pension benefits and retiree health More information will be forthcoming in the next few days.House and Senate Addresses:
Call, write or e-mail your legislators today and tell them to approve the revenue increases needed to resolve Michigan’s budget crisis and invest in public education. Use this address template
From Dave Stafford (MEA Lobbyist): Consolidation of Services & School Calendars
This week we have learned that a new version, Draft 3, of HB 4592, sponsored by Rep Tim Melton (D- Auburn Hills) has been prepared for the House Education Committee. Even though the authors have paid lip service to collective bargaining rights, this latest version is probably one of the most anti-union, anti-school employee pieces of legislation seen in Lansing in years, if not decades. Along the way, this draft, like earlier versions of HB 4592, would make the State Superintendent of Public Instruction the Czar of education in Michigan and the intermediate district superintendents barons over what would become their educational service fiefdoms.The latest draft mandates that local school districts prepare a plan for consolidation of a long list of support services and submit the plan to the intermediate school district. The ISD then must consolidate the plans of local districts and devise an ISD plan for consolidation of services which it must submit to the State Superintendent of Public Instruction. This State Superintendent could approve or reject the ISD plan. If rejected, the ISD would have 30 days to revise the plan which would go back to the State Superintendent. If he/she does not approve the revised plan, the State Superintendent can make unlimited changes to the ISD plan, return the plan to the ISD at which point the ISD and all of its constituent districts would be forced to implement this plan.The list of things that must be part of the ISD consolidation of services plan includes:
- A common school calendar
- The use of common computer equipment
- Pupil transportation services
- Human resources administration
- Purchasing of supplies and other resources
- Technology support services
- Professional development
- Accounting and other financial services
- Legal services
- Food and child nutritional services
- Event management
- Production and printing services
- Any other non-instructional services identified by the Superintendent of Public Instruction
In addition, any local plan or ISD plan may address collaboration among school districts in the use of instructional services.
If adopted, this version of HB 4592, or anything close to it, would:
- Have a chilling effect on local collective bargaining by educational support service staff. They would be immediately faced with a mandate from the State that would end, or drastically change, their employment with their school district and any meaningful negotiations would be over.
- Result in bloated bureaucracies in every ISD that would control educational support service. In all likelihood these bureaucracies would act like every other such entity and protect their own existence rather than serve the educators and children for whom they are supposed to exist.
- Make the State Superintendent of Public Instruction a one person Czar over public education in the State. S/he would not be accountable to anyone or anything since the State Board of Education has no role in this new scheme. The State Superintendent would act through the intermediate school district superintendents who would be the dictators within their domains. ISD superintendents are notorious for the lack of control of or oversight of their actions.
- Along with the new bureaucracy created by this version of HB 4592 will go the control of hundreds of millions of dollars of educational funding. In recent years several ISDs and their administrators have come under attack for questionable or downright corrupt financial shenanigans. You may recall that the Oakland ISD superintendent received felony convictions and was sentenced to hard time. Nothing has been done to increase accountability or oversight of ISDs and handing over to them all of the money and power envisioned by this legislation seems to be foolish at best.
Make no mistake, this is an all out assault on educational support personnel. All indications are that this power grab is being orchestrated by the State Superintendent using the smokescreen of "efficiency". When the entire bill is examined, it seems clear that support services are first but that instructional services won't be far behind.
The MEA lobbyists have notified every member of the House Education Committee that the MEA opposes this draft of HB 4592 (as well as all earlier drafts). We need your help, NOW. Contact your representative in the Michigan House of Representatives and urge her/him to oppose HB 4592 and to express this opposition to the leadership of the House.
Labor Voices
Labor Voices columns are written for The News on a rotating basis by United Auto Workers President Ron Gettelfinger, Teamster President James Hoffa, Michigan AFL-CIO President Mark Gaffney and Michigan Education Association President Iris Salters. The News hopes to provide a forum for discussing workplace issues that are critical to a large segment of Michigan's population, whether or not they are union members. Look for Labor Voices every Friday in The News.School retirement system needs review. Make state reforms that sustain benefits; minor changes won't do.
Iris Salters: Labor Voices
Would it surprise you to find out that the president of the state's largest teachers union believes there are problems with the pension system for public school employees and the financial demands it places on local school districts? Or that the Michigan Education Association supports a comprehensive evaluation of the program to ensure that neither school retirees nor state taxpayers are being taken advantage of?
Well, I do. And the MEA does.
School employee scapegoats
Increasingly, the people who work in our public schools -- secretaries, aides who help children with disabilities, classroom teachers, food servers, bus drivers and others -- have become the political whipping post of a sagging state economy.
They've been blamed for the school funding crisis, despite the fact that the Legislature has repeatedly undermined or failed our neighborhood schools by not providing adequate funding for necessary programs, including the people who provide those expert services.
Too much attention and newspaper ink have been wasted, deriding these valuable employees. What we have in Michigan is a loud minority of misinformed critics who think that taking away health insurance or limiting pensions will help kids. A recently introduced package of bills would undermine the retirement system for public school employees to the detriment of our state.
It doesn't help kids to make these cuts. And it won't help our economy, either.
Much of the criticism focuses on the wages and health insurance provided for school employees and on the pensions and health care they'll receive upon retirement.
Some have lost sight of the fact that public education is a people-intensive business. While corporate America may have figured out how to build widgets with fewer (or no) employees, without qualified people, there isn't an effective way to teach all students the skills they need to get jobs or to go to college. Buses can't drive themselves, and most children can't learn advanced math or critical writing without teachers.
Education requires people
Most of the money spent in public education pays the employees who work in the schools, and it should. The money pays people to train our work force. What better economic development is there?
Employment in education is a good source of income for hundreds of thousands of Michigan workers, too, providing them with sufficient money to buy groceries and pay mortgages. Michigan businesses -- from small-town hardware stores to big box corporations -- all benefit when schools pay decent wages and health care and provide retirement benefits.
The portion of money invested to provide pensions and health care for public school employees is significant, no doubt. But school employees don't get rich in retirement. While the average retiree receives under $18,000 a year, about 50,000 retirees -- almost one-third of those currently drawing from the pension system -- receive less than $10,000 a year. Could you live on less than $10,000 a year?
Did you know that many retirees must work to afford their insurance (yes, they pay for it), food and other basic needs?
The Detroit News' recent series about the system raised some important questions, and there are others that need to be addressed, too.
Is a comprehensive review of the retirement system needed? Yes.
Check administrator practice
We need to look at the provision that allows schools to hire administrators as contract employees after they have retired and are collecting pensions and health care coverage.
Perhaps the biggest problem facing the pension system is something called the "unfunded accrued liability," which is an amount school districts must pay to make up for the poor stock market performance following Sept. 11. During the past school year, the unfunded accrued liability cost districts 5.7 percent of payroll, or more than the basic cost of funding a pension for employees, which was 5.49 percent of payroll. The state needs to maximize its investments, and there have been signs that it is trying to do so.
Another significant problem is the fact that Michigan doesn't pre-fund retiree health care costs. We operate on a pay-as-you-go basis, which is unstable by nature.
But, it seems, there isn't enough political courage in Lansing to look at the entire system. Instead, some lawmakers want to pick it apart without supporting data to show how the system may remain viable in quality and cost.
Help retirees and districts
Just last week, three legislators introduced a series of bills attacking public school employee pensions and retiree health care. The proposed legislation falls short of what's needed to protect retirees, school districts and the state from financial hardship.
Schools need solutions that sustain benefits and costs. Switching plans, cutting benefits or making minor changes that affect a few won't work long-term.
Our Legislature needs to work with school employees, taxpayers, parents, business owners and others to ensure Michigan has a public school retirement package that's fair to all. It's time for a comprehensive review of the system to enable us to collectively identify strategies to help schools, retirees and the state economy.
We can do this together -- we just need the commitment from all parties. The MEA stands ready to help.
Labor Voices Iris Salters is president of the Michigan Education Association, a union that represents teachers and education support staff. Mail letters to The Detroit News, Editorial Page, 615 W. Lafayette, Detroit, MI 48226, or fax them to (313) 222-6417 or e-mail them to letters@detnews.com.
