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2017 House Bill 5355: Tighten school pension underfunding restrictions

Public Act 181 of 2018

Introduced by Rep. Thomas Albert (R) on December 12, 2017
To require the unfunded liabilities accumulated by the state-run school employee pension system be amortized (paid off) by the end of Sept. 2038 using a straight-line amortization formula. This defined benefit pension system was closed by 2017 legislation to new school employees hired starting Feb. 1, 2018.   Official Text and Analysis.
Referred to the House Financial Liability Reform Committee on December 12, 2017
Reported in the House on January 24, 2018
With the recommendation that the substitute (H-2) be adopted and that the bill then pass.
Amendment offered by Rep. Thomas Albert (R) on February 21, 2018
To revise details of the definition of "payroll" in the formula used to calculate annual school pension contributions.
The amendment passed by voice vote in the House on February 21, 2018
Passed 108 to 0 in the House on February 27, 2018.
    See Who Voted "Yes" and Who Voted "No".
To gradually reduce the future payroll growth assumptions in the formula used by school employee pension system managers to determine how much money must be aside amortize the system's unfunded liabilities. Under the bill the formula would no longer assume any future payroll growth starting in 2028. This would eventually result in using level-dollar amortization formula rather than a percent-of-payroll formula, which would pay-off the unfunded pension liability debt more quickly. The bill would also revise details of how "payroll" is defined for these purposes, and the method used to set a minimum annual pension contribution floor for school employers.
Received in the Senate on February 28, 2018
Referred to the Senate Education Committee on February 28, 2018
Reported in the Senate on May 9, 2018
With the recommendation that the bill pass.
Substitute offered by Sen. Phil Pavlov (R) on May 29, 2018
To replace the previous version of the bill with one that revises details but does not change the substance as previously described.
The substitute passed by voice vote in the Senate on May 29, 2018
Passed 36 to 0 in the Senate on May 29, 2018.
    See Who Voted "Yes" and Who Voted "No".
(same description)
To gradually reduce the future payroll growth assumptions in the formula used by school employee pension system managers to determine how much money must be aside amortize the system's unfunded liabilities. Under the bill the formula would no longer assume any future payroll growth starting in 2028. This would eventually result in using level-dollar amortization formula rather than a percent-of-payroll formula, which would pay-off the unfunded pension liability debt more quickly. The bill would also revise details of how "payroll" is defined for these purposes, and the method used to set a minimum annual pension contribution floor for school employers.
Received in the House on May 29, 2018
Passed 106 to 0 in the House on May 30, 2018.
    See Who Voted "Yes" and Who Voted "No".
To concur with the Senate-passed version of the bill.
Signed by Gov. Rick Snyder on June 11, 2018

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