Court: Forcing state workers to pay into pension valid

Chad Livengood
Detroit News Lansing Bureau

Lansing — The Michigan Supreme Court on Wednesday upheld the constitutionality of a 2011 law that forced 15,000 state workers to contribute 4 percent of their salary to maintain full pension benefits.

The law required about 15,000 state workers in the state government pension system to contribute a 4 percent sum to prevent their pension benefits from being frozen. About $134 million has been collected from employee checks since April 1, 2012, said Kurt Weiss, spokesman for the state budget office.

The Supreme Court’s 6-1 decision reversed a 2013 ruling by a Court of Appeals panel, which found the law unconstitutional. The case was sent back to the Court of Appeals for further proceedings.

A coalition of labor unions challenged the law, arguing that the law infringed on the Michigan Civil Service Commission’s powers to set compensation for state workers.

The majority justices ruled the Legislature has the power to change the terms of future pension benefits, not the four-member bipartisan civil service commission.

“While the commission has considerable constitutional powers to manage the civil service system and to preserve its sphere of constitutional authority, the commission has no legislative powers,” Chief Justice Robert Young Jr. wrote in the majority opinion. “(The commission) may neither enact legislation nor revise an enactment, nor may it dictate that the Legislature repeal or modify an enactment.”

Labor attorneys argued pension benefits are a condition of employment, which is set by the Civil Service Commission.

“We thought it was clear, legally,” union attorney Bill Wertheimer said Wednesday. “We’re disappointed and we think the decision is wrong.”

Labor unions made a similar argument in successfully getting the Court of Appeals to overturn a 2010 law requiring state workers to contribute 3 percent of their pay for retiree health care benefits. The Supreme Court refused to take up an appeal in that case.

Under the 2011 law, state employees who did not contribute 4 percent of their paychecks to the retirement system had their earned pension benefits frozen and were moved to a 401(k)-style defined contribution retirement benefit for the remainder of their state government career.

State employees affected by the law were hired before 1997, when the Legislature closed the state government pension fund to new employees and began offering 401(k) benefits to future workers.

Justices Stephen Markman, Brian Zahra and David Viviano joined Young in the majority opinion. The four justices also were the majority in another major ruling issued Wednesday related to Michigan’s 2012 right-to-work law.

Justices Mary Beth Kelly and Bridget Mary McCormack concurred and dissented in part on the decision. Justice Richard Bernstein dissented entirely.

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