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Teacher Pension Legislation Draws Skepticism from Dearborn Public Schools

Senate Bill 1040 re-envisions how school employee pensions work, but would too much of the burden be pushed onto teachers?

Officials from both the Dearborn Public Schools district and its largest union, the 1,270-member Dearborn Federation of Teachers, had plenty to say about Senate Bill 1040, which would reduce the amount of money the state’s public schools pay for teacher pensions, and shifts those costs to teachers.

The bill, which is sponsored by State Sen. Roger Kahn (R-Saginaw County) is still being debated in the state senate, but in Dearborn, discussion about the potential for the bill to become law has already commenced.

If approved, the law could save the district $3.6 million that would have been paid into the state’s teacher retirement system.

“It would save the schools money; so it would be good for schools,” said DPS Supt. Brian Whiston. “But we have to be mindful of how this will affect our teachers.”

The cost of funding retirements for all districts has been an expensive proposition in a time of continual deficits and funding losses. Whiston said the bill’s passage would cut by about three percent the district’s contribution to teacher pensions. Currently, the district pays 24.46 percent into the pension fund, and Oct. 1, 2012, that amount would increase to 27.37 percent, if the bill does not pass.

However, the bill also puts into place provisions that would put pressure on teachers to make up the difference. Under the bill, teachers who declined to pay for the increase would need to freeze their defined benefit pension and shift to a 401(k) plan.

Active and retired employees would see their health benefits capped, which would mean higher premiums paid by employees. Teachers hired after July 1 would see retirement health benefits disappear in favor of an employer-matched plan.

DFT President Chris Sipperly said the potential changes are the latest round in a protracted battle between public school employees and the Michigan Legislature.

“This would increase the cost of insurance for all retirees and active employees, and we’ve already taken numerous hits,” she said. “I absolutely believe that this is political–and I’m worried about the effect this will have on school employees, and whether people are going to want to go into this line of work under these circumstances.”

Bob Cipriano, the director of business services for Dearborn Schools, said the savings would be significant for the schools.

“We have about $120 million in funded costs,” he said. “Every 1 percent we don’t have to pay to the pension fund helps us–that’s how we arrived at the $3.6 million figure.”

Ken Silfven, a spokesman for Gov. Rick Snyder, said he could not speculate on whether the governor would sign the bill because it’s in committee. However, he said the bill seems like a step the governor would agree with.

“We are happy to assist the legislature in reforms to programs that help taxpayers,” he said. “It’s a step in the right direction.”

John Olekszyk, President of the Coalition for a Secure Retirement, said the new provisions would hit retirees and older people who planned their entire lives around their pensions.

“Michigan seniors have already been hit by a new tax on their pensions,” he said. “Now legislators want to increase what retirees pay for their health insurance, which they should have funded all along.”

“When legislators recently modified state employees’ pension benefits, at least they spared people who have already retired and are living on fixed incomes,” added Olekszyk, who retired as a teacher from the Roseville School District in 2000.

It’s been a rough road for teachers in Michigan, and it’s no different in Dearborn.

In terms of compensation, district teachers accepted 6 to 7 percent in wage cuts for the life of its 3-year collective bargaining agreement. Also, employees who elected to participate in the district’s Preferred Provider Organization insurance plan agreed to pay a $218 per month premium. The union also agreed to administer its own health care plan, which helped the schools pare $22 million from its budget.

The 1,100 member Dearborn Federation of School Employees also inked a 5-year contract that included 5.4 percent in wage reductions unless state per-pupil funding is increased. But wages can also be reduced for the final three years of the contract in an amount not to exceed the 2.1 percent if state funding is decreased.

Dearborn Taxpayer April 03, 2012 at 04:50 PM
Perhaps the plans can be sustained, but then many of the organizations that fund them will not be (hence bankruptcy for many of the companies and public entities that cling to these out-dated retirement plans). The horse and buggy were/are sustainable means of transportation, but we've progressed since then to create new means of transportation over the last 100 years. Same for defined benefit pension and healthcare plans. These types of defined benefit plans may well have been nice to have in their day (post WWII) and could be sustained today if we continue to feed and care for them just like those few who continue with the horse and buggy to get around today. But there's certainly better ways 50+ years later for folks and taxpayers to fund their retirements. The time is now to make the changes needed to bring the public sector into reality with the rest of us. As for unaccountable politicians and candidates who enrich themselves on public funds at the expense of taxpayers and sound fiscal/public policy, I agee it is sick and pathetic. Unfortunately, we have one of the worst examples of this currently leading Wayne County. And our local elected officials and administrators give him hugs and handshakes when he attends our "State of the City." How pathetic is right... P.S. My wife is a public school teacher and I see every day the value she brings regardless of what kind of pension she has...
Frank Lee April 03, 2012 at 08:55 PM
Wayne County is hardly the best or most aggregious example of political cronyism and influence peddling in Michigan. It exists in Dearborn with the rotten deal that stuck taxpayers With millions of dollars in debts and unfounded obligations for the Montogemry Wards building. it exists in Lansing where the state passed a law absolving the chair of the Michigan GOP's brother from a 2.5 million dollar debt from Wells Fargo, it exists in Oakland County where Al Brooks used his position to influence a police officer from arresting him for driving under the influence. Unaccountable politicians using public resources to enrich themselves and their sponsors at the expense of the public treasury are hardly the monopoly of one party, city, or county. Until citizens demand accountability and transparency from their elected leaders over tribalism and resentment nobody is safe in any county or with any party.
Bruce Koldys April 04, 2012 at 12:18 PM
If someone or a group of people (Republicans) believe in an issue or position, then is it too much to ask that they be intellectually honest and take ownership of these positions? When they do not do so and skirt the issues they illuminate the fact that they are not intellectually upfront.Elimination of pension plans, retirement, right to work, eliminate payroll deduction of union dues are all in their hope chest. It is their objective to eliminate or cripple collective bargaining, eliminate any type of retirement plans other than 401ks, reduce and hopefully eliminate all unemployment and public assistance benefits and create the most basic and primal dog eat dog and the rich get richer "free enterprise" system they can. I could have a tad more respect for them if they would just man up and admit it.
Alan Feldman July 14, 2012 at 12:29 PM
Dear Lee--Who are you and what do you know about--teaching--discipline--being taken advantage on the job. Abuse racism lack of respect etc. . .Now you an outsider has all the answers for people who are givers not takers. Give me something Lee--shut up!
Lee Jacobsen July 15, 2012 at 04:11 PM
Alan, who are you , just another outsider? What are your solutions? It's time that folk, including teachers, are responsible for some , if not all , of their investment choices, and 401s are one avenue. Don't like the pension or retirement options the city is offering? 401s give you the freedom to make your own choices. As educators, I am sure they will make wise decisions and do much better in providing for their financial security than anyone else, right? Bruce, regarding ownership of common sense positions, who is eliminating right to work? We all have freedom of choice in the work place, and make choices based on free will. Workers have the free will to quit. Employers have the free will to let folk go. If workers want a union, fine, but they should collect dues, not expect employers to do it. Unions are not charity cases. Do the unions believe in 'freedom of choice' of 'free will' for their members? Come on Bruce, fess up, you don't believe in those 'kind' of freedoms.

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