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2010 Senate Bill 1226: State employee early retirement package

Public Act 185 of 2010

  1. Introduced by Sen. Mark Jansen (R) on March 11, 2010, to increase the pension benefits of state employees who have 30 years of “service credits” and choose to retire between July 1, 2010 and Sept. 30, 2010 by 6.7 percent. Eligible employees who do not retire at this time would lose their post-retirement vision and dental insurance benefit. They would also have to pay an additional 3 percent of their salary into the pension fund, but would accumulate no further pension-increasing “service credits” under it, instead receiving contributions to a 401K-type account (as is the case for state employees hired after 1996).
    • Referred to the Senate Appropriations Committee on March 11, 2010.
      • Reported in the Senate on March 25, 2010, with the recommendation that the substitute (S-5) be adopted and that the bill then pass.
    • Substitute offered in the Senate on April 14, 2010, to replace the previous version of the bill with one that does not include an early retirement pension incentive, does require additional pension contributions from state employees, but also eliminates cost-saving reforms originally proposed by Gov. Granholm, including ending post-retirement dental and vision coverage for those who retire after Sept. 30, 2010. The new 3 percent contribution will save $35 million in the next fiscal year, but comes after failed attempts by Senate Republicans to achieve consensus within their caucus on a substitute with additional reforms that would have saved around $104 million (including cutting the retiree vision and dental benefits). The substitute passed by voice vote in the Senate on April 14, 2010.
  2. Passed 22 to 16 in the Senate on April 14, 2010, to require state employees to pay an additional 3 percent of their salary into their pension fund. This will save some $35 million in the next fiscal year and $304.5 million over 10 years. The measure applied to state employees hired before 1997 who have defined benefit pensions; those hired since have 401K-type defined contribution pensions.
    Who Voted "Yes" and Who Voted "No"

  3. Received in the House on April 15, 2010.
    • Referred to the House Oversight And Investigations Committee on April 15, 2010.
    • Substitute offered by Rep. Mark Meadows (D) on September 22, 2010, to replace the previous version of the bill with one that does not require state employees to contribute an additional 3 percent to the cost of their pension benefits. The substitute passed by voice vote in the House on September 22, 2010.
    • Amendment offered by Rep. George Cushingberry (D) on September 22, 2010, to replace the previous version of the bill with one that does phases in over three years a requirement that state employees contribute an additional 3 percent to the cost of their pension benefits. The amendment passed by voice vote in the House on September 22, 2010.
    • Substitute offered by Rep. George Cushingberry (D) on September 23, 2010, to replace the previous version of the bill with one that does not require state employees to contribute an additional 3 percent to the cost of their pension benefits. The substitute failed by voice vote in the House on September 23, 2010.
    • Amendment offered by Rep. John Espinoza (D) on September 23, 2010, to only require state employees to contribute an additional 3 percent to the cost of their pension benefits for the next three years. The amendment passed by voice vote in the House on September 23, 2010.
    • Substitute offered by Rep. George Cushingberry (D) on September 23, 2010, to replace the previous version of the bill with one that requires state employees to contribute an additional 3 percent to the cost of their pension benefits, but only for the next three years. The substitute passed by voice vote in the House on September 23, 2010.
    • Amendment offered by Rep. George Cushingberry (D) on September 23, 2010, to require state agencies to ensure as much as they can that the 3 percent employee contributions be applied for any tax credits or reductions under provision of the new federal health care law. The amendment passed by voice vote in the House on September 23, 2010.
    • Amendment offered by Rep. Mark Meadows (D) on September 23, 2010, to strip out the provision that requires state employees to contribute an additional 3 percent to the cost of their pension benefits for the next three years. The amendment failed by voice vote in the House on September 23, 2010.
    • Amendment offered by Rep. Mark Meadows (D) on September 23, 2010, to tie-bar the bill to House Bill 6425, meaning this bill cannot become law unless that one does also. HB 6425 would to create a contractual right of state employees to post-retirement health benefits covered by the segregated trust fund created by House Bill 4073, now Public Act 77 of 2010. Although the state and local governments have said over the years that they would pay these benefits, courts have ruled that these are not enforceable obligations in the manner that pensions are, and until HB 4073 became law, no funding was set aside to pay them.
      • Withdrawn by Rep. Mark Meadows (D) on September 23, 2010.
    • Amendment offered by Rep. Mark Meadows (D) on September 23, 2010, to increase by 13.2 percent the cash pension benefits of certain state employees who retire in 2010, rather than by 6.6 percent.
      • Withdrawn by Rep. Mark Meadows (D) on September 23, 2010.
  4. Passed 60 to 45 in the House on September 23, 2010, to increase by 6.7 percent the pension benefits of high-seniority state employees who retire this year. Also, to increase by 3 percent contributions remaining state employees make to their post-retirement benefits, but only for three years. The money would not bolster underfunded pension funds, but go to retiree health benefits. The bill would also prohibit a "double dipping" scheme where "retired" state employees collect pensions and also get paid as a contract employee.
    Who Voted "Yes" and Who Voted "No"

  5. Received in the Senate on September 23, 2010.
  6. Passed 20 to 14 in the Senate on September 23, 2010, to increase by 6.7 percent the pension benefits of high-seniority state employees who retire this year. Also, to increase by 3 percent contributions remaining state employees make to their post-retirement benefits, but only for three years. The money would not bolster underfunded pension funds, but go to retiree health benefits. The bill would also prohibit a "double dipping" scheme where "retired" state employees collect pensions and also get paid as a contract employee.
    Who Voted "Yes" and Who Voted "No"

  7. Signed by Gov. Jennifer Granholm on September 30, 2010.

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