The Governor and the State Legislature are debating proposals to reform state employee retirement funding (including K-12 and university employees). The proposals would save hundreds of millions of dollars and reduce the state budget deficit. Here is a review of the proposals:
Reform proposals
Gov. Jennifer Granholm
Would increase the multiplier used to calculate monthly pension checks from 1.5 percent to 1.6 percent for employees who retire between July 1 and Aug. 31.
Require state employees eligible for defined benefit pensions to contribute 3 percent of their pay; they now pay nothing toward retirement.
Eliminate vision and dental coverage for retirees; those who retire by Aug. 31 would get to keep these benefits.
The House
Plan is identical to the governor's.
The Senate
Would adopt provisions of the governor's plan, but eliminate the incentive of an increased multiplier for those who retire by Aug. 31.
Below is a Detroit News story on the funding options:
State Senate's early-out plan may be dead
The House
The Senate
GOP plans to tweak workers pension bill; Dems say time's up
Karen Bouffard / Detroit News Lansing Bureau
Lansing -- Senate Republicans plan to tweak their state employee early retirement bills during the Legislature's two-week break that starts today -- but some Democrats say it's wasted effort since the reforms are dead.
Gov. Jennifer Granholm called on lawmakers to pass the legislation by April 1 to provide enough time for workers to decide if they want to leave their jobs and implement the rules of the program before the new fiscal year starts Oct. 1. But the Senate bills didn't gain enough support this past week. Lawmakers don't return from break until April 13, meaning they've missed Granholm's target.
The Democratic governor called for the reforms to help fill a $1.7 billion budget gap. Early retirement and new contributions to retirement plans, along with similar efforts to reform the teacher retirement system, would result in combined savings of about $300 million, supporters say.
The early retirement option would benefit the state in more ways than one. Not only would it mildly relieve the educactional budget, but it could allow the state's test scores increase for all children. And since the teacher's unions and other groups will complain about this proposal, they should be happy that the government isn't asking for them to pay for half of all their benefit costs once they do retire.
ReplyDeleteI completly agree with lady j.I feel that the early retirement option would benefit the state in a great many ways. I also feel it would greatly help to eliminate the bad, older teachers who don't teach well (or put as much of an effort into educating students) due to the belief that they have tenure so they don't need to "work to keep their job" as do new teachers. It would also give the opportunity to hire new teachers with fresh ideas while paying them less-which as mentioned above will somewhat relieve the educational budget and increase state test scores.
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