2005 House Bill 4947 (401k type pension for new school employees)

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Introduced by Rep. Brian Palmer (R) on June 15, 2005, to no longer provide the traditional “defined benefit” pension system for new school employees, and replace it with a “defined contribution” plan (401k type plan) that is essentially the same as what is now offered to state employees. Also, to establish a graduated post-retirement health care benefits system for new school employees, in which full benefits would go to those with 30 years of service, and proportionately smaller benefits to those with fewer years. The bill would not apply to current school employees, who would continue with their current retirement systems.
- Referred to the House Education Committee on June 15, 2005.
  - Reported in the House on June 29, 2005, with the recommendation that the substitute (H-1) be adopted and that the bill then pass.
- Substitute offered in the House on December 1, 2005, to replace the previous version of the bill with one that incorporates detail changes resulting from committee testimony and deliberation. This version was subsequently superceded by another substitute with more detail changes. The substitute failed in the House by voice vote on December 1, 2005.
- Substitute offered by Rep. Bruce Caswell (R) on December 1, 2005, to replace the previous version of the bill with one that would establish a "graduated” pension health benefits system for new school employees. School districts would pay 30 percent of the pension health benefit premium for an employee with 10 years on the job, 33 percent after 11 years on the job, etc., until 100 percent coverage was attained with 30 years of service. The substitute failed in the House by voice vote on December 1, 2005.
- Substitute offered by Rep. Tom Pearce (R) on December 1, 2005, to replace the previous version of the bill with one that creates a defined contribution pension system for new school employees, and allows current school employees to transfer into this system. The state would make a deposit into the new system of an amount calculated using actuarial analysis of the value of amount the employee has vested in the defined benefit system. The substitute failed in the House by voice vote on December 1, 2005.
- Substitute offered by Rep. Bruce Caswell (R) on December 1, 2005, to replace the previous version of the bill with one that makes the defined contribution pension system optional for new school employees. The substitute failed in the House by voice vote on December 1, 2005.
- Substitute offered by Rep. Brian Palmer (R) on December 1, 2005, to replace the previous version of the bill with one that revises details but does not change the substance of the bill as previously described. The substitute passed in the House by voice vote on December 1, 2005.
- Amendment offered by Rep. Brian Palmer (R) on December 1, 2005, to establish criteria for selecting the defined contribution, 401(k)-like pension system manager. The amendment passed in the House by voice vote on December 1, 2005.
- Substitute offered by Rep. Richard J. Ball (R) and Rep. Gary Newell (R) on December 1, 2005, to replace the previous version of the bill with one that only includes the graduated health insurance benefits provisions. The substitute passed in the House by voice vote on December 1, 2005.
- Amendment offered by Rep. Richard J. Ball (R) on December 1, 2005, to extend certain provisions of the school employess pension system that allows benefits to still be paid to retired employees who come back to work for a school system to also apply to retirees who come back to work as an independent contractor for the school system. The amendment passed in the House by voice vote on December 1, 2005.
Passed in the House (55 to 52) on December 1, 2005, to establish a graduated post-retirement health care benefits system for new school employees, in which full benefits would go to those with 30 years of service, and proportionately smaller benefits to those with fewer years. The bill would not apply to current school employees, who would continue with their current retirement health insurance system and much more accelerated vesting schedule. [Vote Details and Comments]
Moved to reconsider by Rep. Chris Ward (R) on December 1, 2005, the vote by which the bill was passed. The bill was then "passed (over) for the day," which means the original defined contribution pension proposal can be brought up in the future for another vote at the discretion of the House leadership.

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1) No surprise [by Anonymous Citizen on February 15, 2006]
Just look at who these guys get their campaign funds from. MEA, BCBS, the usual cabal of tied together interest groups. It's no wonder reform never really happens without absolute crisis. The MEA threatens to kill any candidate who does not bow to their demands. All the rhetoric about the "race to the bottom" is smoke and mirrors.
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2) Rep. Cushingberry's "journal statement" [by Admin003 on December 3, 2005]
Rep. Cushingberry, having reserved the right to explain his protest against the passage of the bill, made the following statement:

"Mr. Speaker and members of the House:

I voted no because we should leave the issue of job conditions, benefits, compensation and retirement to the collective bargaining process. The problems of the cost of health care in the public sector are not only a problem for government but all commerce in America. The answer is simple. We need a single payer system of national health care, a modified version of the Canadian system with the opportunity to purchase private upgrades. This would eliminate the costly current system, cover the nearly 50 million Americans who are uninsured, and snatch back the competitive disadvantage American manufacturers suffer with enlightened countries.

Pensions should be left to the collective bargaining process. If people want to forego wage hikes in exchange for a fixed pension they should be allowed to so negotiate. The vagrancies and fluctuations of the securities market would certainly give rise to a desire to level out the payments in later life to insure a sense of security. For us to second guess the collective bargaining process is unwise, unfair , unduly burdensome, and deflects attention to the real economic problem in America today - a misguided war which is draining the life out of our national budget and causes rising interest rates, unconscionable energy prices, and a trade policy which exports good-paying jobs and allows unfair importation of finished goods which is a unfair trade practice under all our international treaties.

We need to concentrate on exposing these unfair activities, point out that we are competitive in the marketplace when there is a level playing field. American workers are productive! If this country does not act to discontinue these measures which allow subsidized foreign imports of manufactured goods and pilfered inferior patent and copyright infringed goods , these stop-gap measures we adopt will mean very little.

This is another example of the race to the bottom currently in vogue by the tax cut, wealth shift from poor and middle class to the rich crowd who seem to want to destroy all we have worked for to demonstrate the American dream. What do they want for our future? A nation of hamburger flippers who depend on foreign welfare to survive?

I continue to state that the key to our future is to educate adults so they can help their children and grandchildren. If we concentrated on shoring up the national pension system, and sanctioning unfair trade Michigan would do so much better.

I further voted no because it was suggested by a member of the house that I had broken a promise to support this bill. Well that is not the truth and I demand an apology from said representative or at least a writing, date and time when I so promised or a simple admission that he was misinformed by a third party, because there was never any promise made to him from my lips."

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3) Rep. Gonzales "journal statement" [by Admin003 on December 3, 2005]
Rep. Gonzales, having reserved the right to explain his protest against the passage of the bill, made the following statement:

"Mr. Speaker and members of the House:

Solving problems together is the best approach to the economic challenges faced by school districts and colleges. Key stakeholders have not provided enough input to this policy debate and we ought to do much better in this House of Representatives when we formulate new policies and systems concerning pensions and health care for school and college employees.

Every child is one of God's children. Each and every one of them should have the same chance to reach his or her full potential where they receive an education that gives them a genuine opportunity to pursue their own dreams. Without question, educators play a key role toward achieving these goals.

It is an outrage that through this bill's passage, you're left wondering why we should treat our educators with such economic injustice. I believe in reinventing government, but not with an unsound approach and a disingenuous methodology."

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