$550 million refund headed to schools on Monday

Jennifer Chambers
The Detroit News

A $550 million refund to former and current Michigan public school employees is headed to school districts across the state on Monday, but recipients shouldn’t expect to see the money anytime soon.

The Michigan Office of Retirement Services is returning the funds as promised on Monday, but individual school districts must still determine how to disburse the funds and follow appropriate tax reporting rules, according to a statement on the ORS website.

“ORS will be returning the funds to the reporting units on January 22. This does not mean that the school districts will disburse those funds on that date. They have important responsibilities for the recording and tax reporting of these refunds. Generally, you might expect your refund to come to you 60-90 days after the school receives the funds,” a message on the ORS website said last week.

Several districts have closed or been dissolved since 2010 and the return of those contributions may be later because a different methodology will be used to transfer those contributions, the ORS said.

The money is a refund to 274,742 former and current teachers and other school employees for retiree health care paycheck deductions deemed unconstitutional by the state Supreme Court last month. It affects employees who worked between July 2010 and September 2012.

Robert Dwan, an associate executive director at the Michigan School Business Officials, said on Friday his organization met earlier this month with school audit firms to discuss the range of taxing issues for districts and employees in an effort to provide guidance to both sides.

“I know districts are working hard with auditors. There are a lot of quirks to this as far as tax reporting. I know districts who are proceeding with caution,” Dwan said.

Earlier this month the ORS sent Michigan school districts lists of former and current public school employees who are entitled to their shares of the refund.

Kurt Weiss, a spokesman for the Michigan Office of Retirement Services, confirmed the money will be dispersed by the state on Monday. The refund will include interest, meaning the state will send roughly $554 million to districts, he said.

Wayne County Regional Educational Service Agency Superintendent Randy Liepa said he met with several superintendents Friday morning for a regularly monthly meeting, during which the refunds and how they should be distributed were discussed.

“Anything this large and complex takes a little time to work out the details. Employees today are not same as those in 2010. Some have left, retired and some are even deceased,” Liepa said.

Liepa said all 33 school districts within Wayne RESA — and thousands of former and current public school employees — are impacted by the refunds in Wayne County. The two to three month timeline offered by ORS is reasonable and should be enough time, he said.

“They are very cognizant of employees wanting their reimbursement. Employees want to know when they are getting the money. This is a very high priority for everyone,” he said.