Michigan Votes Forum

Introduced in the House on May 17, 2007, to revise a provision of the school employee pension law that allows an employee to “retire,” start collecting a pension, and then return to work for a school district, collecting a wage or salary while simultaneously collecting pension benefits. However, through 2009 a teacher would be allowed to collect both pension benefits and a salary if he or she was employed by a school district that has a teacher shortage. Note: In many if not most cases, this is currently the reason usually given to justify what has been characterized as “double dipping”

The vote was 58 in favor, 45 opposed and 7 not voting

(House Roll Call 174 at House Journal 53)

Click here to view bill details.

Rep. Caswell, under Rule 31, made the following statement: "Mr. Speaker and members of the House: I did not vote on Roll Call No. 174 because of a possible conflict of interest." Rep. Caul, under Rule 31, made the following statement: "Mr. Speaker and members of the House: I did not vote on Roll Call No. 174 because of a possible conflict of interest." Rep. Clack, under Rule 31, made the following statement: "Mr. Speaker and members of the House: I did not vote on Roll Call No. 174 because of a possible conflict of interest."

Rep. Sheen, 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 against this bill for two reasons, the first is that it was tie barred to HB 4500 which is an income tax hike, and the second because I only had 2 minutes to read the substitute H-1 before I had to vote for it and I will not vote for a bill I do not have time read. No explanation was given when requested."

Michigan's educational time bomb Retire-rehire move costs millions Administrators 'retire' and collect pension and health care, come back as contractors Ron French / The Detroit News May 11, 2007 REDFORD -- James Finn retired two years ago, which may come as a surprise to Thurston High School students. The 60-year-old assistant principal patrols the school hallways, joking with teens and talking on a walkie-talkie, just as he did before his retirement. But on top of his salary, Finn now collects his pension and retiree health care benefits -- a package worth about $50,000 a year. Finn is among an estimated 500 Michigan public school administrators skirting state retirement policies by collecting retirement benefits while staying on the job as contract employees. Encouraged by school superintendents and ignored by state officials, the scenario will cost taxpayers an estimated $25 million this year alone -- enough to hire 500 teachers. An informal survey conducted by the Michigan Education Association found there are about 500 "retired" school administrators who continue to work for public schools. More are joining their ranks each year, as budget-crunched districts search for ways to save money. Individual schools save money through the practice because they don't pay taxes, health insurance or the state's retirement tax on contract employees. But state schools as a whole lose money, because the contract employee is collecting pension and retirement health care benefits, the cost of which is divided among Michigan's school districts. "It's a scam," said MEA retirement consultant Charles Agerstrand. "It's a runaway problem (that) is taxing the retirement system." As the costs of pensions and retiree health care increase, schools search for creative ways to save money. A growing number of schools have latched on to the retire/rehire plan, in which districts take advantage of a loophole in the Michigan Public School Employees Retirement System. State law prevents public school employees from collecting retirement benefits while they're employed by the schools. Retirees, however, can collect those benefits if they work elsewhere. Schools get around the law by encouraging retirement-eligible administrators to retire, then hiring them back through an employment agency. The administrators technically work for the employment agency rather than the schools. "Some people call it a double-dip," Finn said. "But I call it a win-win." From Finn's perspective, South Redford benefits by lowering its expenses and by keeping an experienced administrator on staff; Finn benefits by collecting his salary and his pension at the same time. Bill Weber, the longtime superintendent of South Redford Schools who retired April 30, said the district saves about $20,000 per year by having Finn work as a contract employee. But to get that $20,000 in savings for South Redford, state public schools in general pay $50,000 in retiree benefits. Because those retirement benefits are spread across Michigan's 553 school districts (pro-rated based on payroll), South Redford in effect pays only about $40 per year toward Finn's retirement. "It's an attractive thing for us," Weber said. "Not only do you save the money, but you have people who are skilled in the positions and know the students." The problem is that every other district is paying for Finn's retirement, too. Birmingham is paying $150; Dearborn ponies up about $285, and Detroit, the state's biggest school district, is saddled with an $1,800 tab for the pension and retiree health care of the South Redford contract employee. John Chamberlin, director of the political watchdog group Common Cause of Michigan, calls it a "suspect practice" and "a liberal form of double-dipping." "The incentives are all wrong," Chamberlin said. "It only works because people can bill their neighbors for their actions. This is the same as asking, 'do I throw my garbage in the lake rather than pay someone to pick it up?' You save money, but if everyone does it, pretty soon, the lake is ruined." "Someone in Lansing ought to (study) the impact of this," Chamberlin said. "The education system doesn't need money drained out of it for schemes like this." Any qualms Weber feels about the loophole are outweighed by the value of the programs the savings have helped him keep. South Redford has managed to hold on to programs other districts have cut in recent years. The district has a full-day kindergarten. The high school has 12 Advanced Placement classes. Weber approached three senior administrators several years ago and explained the retire/rehire strategy. "He asked us to retire (and come back to work through an agency)," Finn said. "The saved money could be used to save instructional programs." Retirement costs statewide, now pegged at 17.74 percent of payroll, are projected to increase to 30 percent of payroll by 2020. If that happens, "everything we've worked for will be in jeopardy," Weber said. If using a loophole in the law helps save a kindergarten teacher or a high school counselor, then it's worth it. "As (budgets) get tighter and tighter, it's something more districts look at," Weber said. "I'd venture to say there are a couple hundred districts that either are currently doing this or have done it." Several Michigan companies advertise that they can arrange retire/rehire contracts. One of them is Temporary School Staff Inc., a Dearborn company run by former Dearborn Public Schools Superintendent Tom McLennan. He argues that criticism over rehiring retired administrators misses the point: "It's about kids," he said. "If a district has five people (hired back after retiring) who were making $80,000, and the district is saving 20 percent of their (former) cost, that's enough (savings) to hire two teachers. That means class sizes are kept at a more reasonable level. It's about offering a world-class education, not begrudging people the benefits they've earned." McLennan argues that school districts that encourage the retire/rehire scenario "should be praised, because they're helping kids." As the state-mandated retirement bill grows, more schools consider contracting out their retirement-age administrators to save money, which in turn makes the problem worse across the state. "It's promoted as a strategy to save some dollars," said the MEA's Agerstrand. "But it's a false sense of savings, because you're just shifting the burden to the retirement system." Though the practice costs taxpayers an estimated $25 million each year and is heightening the retirement fund crisis, state government has not considered closing the loophole. No one from the Office of Retirement Services has ever suggested to South Redford's Weber that the retire/rehire loophole is a problem. In fact, Phil Stoddard, executive director of the Office of Retirement Services, said he hadn't heard of the practice. "I am unaware of the specific situation you describe," he said. South Redford's Weber knows some people criticize the practice. But his district is looking at another $2 million in cuts next year. "It was never our intent to privatize our staff," he said. "(But) retirement costs have hurt us dramatically. If we can save money (through contract administrators), we can save programs." Retirement 'rithmetic Pension and retiree health care for a school administrator can cost $50,000 a year. Multiply that by the estimated 500 "retired" administrators who are still working and you get: $25M per year,* enough to hire 500 teachers *Detroit News estimate

Please do not do away with teacher pensions if educators go back to work-they (retirees) serve a very useful purpose as tutors during the school day when teachers are busy helping other students.

Please do not abolish retirees pensions. These retirees work with small groups of students and make a difference in said students academic progress.

My child was helped by one of these retirees. This retired teacher helped Van Zile School in Detroit reach its AYP.

THERE IS ONE ITEM NOT CONSIDERED BY REP. WENKE. AND THAT IS THE RETIREES HAVE PUT IN THE YEARS AND HAVE EARNED THEIR PENSIONS. WHATEVER THEY RECEIVE IN ADDITION IS THEIR PRIVILEGE. THE LAW WAS ENACTED IN THE FIRST PLACE,TO GIVE OUR CHILDREN THE ADVANTAGE OF BEING SERVED BY EXPERIENCED EDUCATORS.

abolish pensions, it will abolish the practice of 'double dipping'.

Retirees can offer a valuable service to school districts. The pay received for services is not equal to a salary thay would have to be paid for the same service from a regular employee. With budget cuts the schools would not have the budget to hire a tutor for the students who had to receive all of the benefits that accompany a regular salaried employee.

a big benefit to businesses all around the state. when it happens in private business, it's called 'double dipping', in other words, THEFT. at the very least it's called FRAUD. so why do schools get a pass on theft and fraud?

How does an inexperienced person get experience when there are 500 quasi-retired experienced administrators doing "the" job. By the way, these inexperienced individuals have paid thousands of dollars and spent hundreds if not thousands of hours for advanced graduate degrees at the State's Colleges. All for the chance to improve their lives and their communities. Retirees, you have had your time, please allow others a chance for theirs.

Why don't you ask your legislators to take a cut in pay and benifits as well as revise their pension. It seems to me they had something to do with the buget problem in michigan. Schools are being held hostage to a mismanaged buget. When schools become creative and find ways to save money within the law, some of the legislators want to change the law. Aren't you doing the same thing, by finding ways to get more money from your tax payers with out calling it a tax?It seems to me spending time trying to change laws , would be better spent on fixing the real problem;How you manage the budget. Again , I ask why haven't you taken a pay cut? If you work for the people why are you doing better than the people?

Senator Schauer, under his constitutional right of protest (Art. 4, Sec. 18), protested against concurrence in the recommendations of the Committee of the Whole relative to House Bill No.4799 and Senate Bill Nos. 511 and 237. Senator Schauer's statement is as follows: I voted "no," as did members of my caucus. That was a party-line vote on approving the report of the Committee of the Whole. The Committee of the Whole just adopted two bills. One bill was 177 pages long that amended the school aid act, full of cuts to a number of school programs that are very critical to the future of our state. Senate Bill No.511 was a 777-page bill. Both of these bills just landed on our desks. That was an omnibus budget bill that, combined with the other bill, provided for $900 million in cuts, colleagues, to our state--cuts which would hurt our future. I was glad to vote "no" because this is clearly the wrong direction for our state. Unfortunately, this does nothing to move this process forward where we are striving for bipartissan agreement.