Public education groups are hailing a bill passed Tuesday by the Michigan Senate that cuts the amount of money school districts are required to pay into the state’s teacher retirement system each year.
The bill passed along party lines, with Democrats in favor and Republicans opposed. Currently, school districts must pay 20.96% of their payroll costs to the Michigan Public School Employees’ Retirement System, but the bill would lower that required threshold to 15.21%.
Public school advocates who have been pushing hard for this change say it would permanently free up more than $600 million a year for school districts. It’s also supported by Governor Gretchen Whitmer, who said earlier this year that a fund for teacher retiree health care costs now has a surplus.
“Lowering this rate would permanently reduce the amount of money traditional public schools must pay out of their budgets toward the overall (public school retirement system) debt, allowing them to keep that money in their districts to be spent on additional teachers, support staff and student programming,” said a statement from the K-12 Alliance of Michigan, which has lobbied for the change.
The statement added that “the majority of Michigan’s charter schools are not required to make these same debt payments ... so lowering the rate for traditional public schools also puts their funding closer to a level playing field with their charter school counterparts.”
Republicans, on the other hand, blasted the move, calling it fiscally irresponsible and a raid on the overall teacher pension system.
The state House passed a version of the bill earlier this year, but now needs to vote on the Senate version before it can head to the governor’s desk.
