May 1, 2012 at 1:00 am

Senate's teachers bill spurs backlash

Unions and conservatives slam bid to give retirees less than lawmakers get

Jansen, left, and Kahn )

Lansing — The Michigan Senate passed legislation in October ensuring all but two of the 38 senators in the chamber could get lifetime retiree health insurance at age 55 with 90 percent of premiums paid by taxpayers.

Seven months later, some of those same state senators have drafted major changes to the retirement system for school employees that provide less lucrative health care benefits than what they wrote for themselves, 14 term-limited House members and 226 retired legislators.

A Senate bill proposes requiring school employees to wait five more years than legislators to draw retiree health insurance and pay twice as much in premiums as lawmakers grandfathered into the system, current retirees and up to 62 survivors.

The perceived inequity is drawing the ire from two unlikely allies — labor unions seeking to protect their members' benefits and free-market conservatives who advocate putting public employee fringe benefits more in line with private sector compensation.

"Now that the Legislature is enacting more rational retirement benefits for government employees, it's fair to point out what's good for the goose is good for the gander," said Jack McHugh, senior legislative analyst at the Mackinac Center for Public Policy, a Midland-based free-market think tank.

To justify the retirement age difference, senators note their bill got rid of retiree health care for 98 current legislators with fewer than six years of service while they're considering letting existing school employees keep their benefit, but at an older age.

"If they have already gained and vested, I would say, we're not taking it away from them," said state Sen. Mark Jansen, R-Grand Rapids.

Jansen is chairman of the Senate Reforms, Restructuring and Reinventing Committee that passed changes to legislative retirement last year. He also is chairman of the appropriations subcommittee debating the school employee legislation. After two public hearings, the senators may introduce an amended bill Thursday.

Jansen disagreed with the notion that legislators have written better rules for themselves, but said the health insurance premium could be changed to mirror what public employees are being required to pay.

"I understand we're an easy target, that's fine," Jansen said. "There's probably going to be legislation that looks at that."

Cost concerns spawn reform

Increasing the retirement age to 60 for 236,660 current school, community college and university employees and making 192,435 retirees pay at least 20 percent of their insurance premiums is one of the most controversial proposed changes to the Michigan Public School Employees Retirement System.

Lawmakers are pursuing the changes because the plan has an estimated $27.6 billion in unfunded liability for health care alone. The retirement system has another $17.6 billion in unfunded pension liabilities.

"They're protecting their health care and public employees are not getting the same level of protection," said John Olekszyk, a retired Roseville teacher and chairman of the Coalition for Secure Retirement, a group of retirees and teacher unions opposed to the legislation.

Until last year, lawmakers had been debating the end of retirement health insurance for themselves for more than a decade since constitutional term limits began turning out House members with just six years of service who could qualify, McHugh said.

The Legislature got rid of its pension and went to a 401(k) contribution in the late 1990s. But the insurance remained in place and became a political football as the House sent the Senate bills getting rid of the benefit and the Senate sent the House bills exempting themselves, McHugh said.

A bipartisan coalition of House members accepted the Republican-controlled Senate's changes to the bill last year in an effort to end the decade-long "dance" with the upper chamber over the issue, said state Rep. Joel Johnson, R-Clare.

"I didn't want to see the thing danced around again," said Johnson, sponsor of House Bill 4087. The Senate passed the bill 37-1, with state Sen. Coleman A. Young II, D-Detroit, the lone "no" vote.

Senators point out sacrifices

Some senators, however, are quick to defend the differences in health care compensation, noting they don't get a traditional pension like school employees and have taken pay cuts over the past decade of state budget woes.

"There's been no raise in pay for legislators this century," said state Sen. Roger Kahn, an eight-year legislator and author of the school employee retirement reform bill. "If you want to compare the Legislature to the teachers, then they should take a $10,000 pay cut."

Legislators earn a base pay of $71,685 annually.

Educators and critics of the Senate's school employees retirement bill note the Republican-controlled Legislature passed a law in 2011 mandating all public employees shoulder at least 20 percent of their annual health insurance premium before they made veteran legislators and retired lawmakers pay just 10 percent of the cost — up from the previous rate of 2.9 percent.

"They got caught in their own trap," said Olekszyk, the retired teacher. "Now they've got to use other rationale in terms of defending what they're getting in health care."

State Rep. Barb Byrum, D-Onondaga, is among the 14 House members barred by term limits from running for re-election this year who could get retirement health care at age 55. She said term-limited lawmakers don't deserve better benefits than career teaching professionals.

"It just goes to show how hypocritical this Legislature is," Byrum said.

State Reps. Ken Goike, R-Ray Township, and Andrea LaFontaine, R-Richmond, recently introduced bills seeking to increase out-of-pocket health care costs for retired legislators to 20 percent and require lawmakers who were grandfathered into the retirement system to contribute 5 percent of their pay toward retiree health insurance.

"I just thought it was the fair and right thing to do," Goike said. "It's on the public dime, so why should they be treated any different?"

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