Board Asks For Pension Reform To Dismay of SEA

As the state takes up controversial school employee pension reform, the Saline Area Schools Board of Education voted 5-2 Tuesday to encourage legislators and Gov. Rick Snyder to reform the system.

The board’s action was criticized by Saline Education Association President Juan Lauchu, who said the resolution “reeks” of political agenda.

Trustees Chuck Lesch, Craig Hoeft, Todd Carter and David Zimmer supported the resolution, drafted by Trustee David Holden. Board President Lisa Slawson and Trustee Amy Cattell opposed the motion.

Holden, in speaking to the motion before the vote was taken, said the Michigan Public School Employees Retirement System is increasingly burdensome on the cash strapped school district. He noted that that district’s MPSERS cost has increased from 18 percent of the district’s payroll to over 27 percent this year, and that that cost is scheduled to rise above 30 percent next year.

“We’ve taken a $3 million hit over a short period of time. Everyone recognizes reform has to occur. People have different view points about what that reform looks like,” Holden said.

Holden said his resolution was non-partisan and did not specifically support Democratic or Republican Party solutions, such as Senate Bill 1040 or similar legislation being studied in the House.

Slawson voted against the resolution, saying she needed more clarity and definition from the state. Cattell said she was not ready to support the resolution as she lacked information on what the state is currently considering.

Lauchu, representing the teachers’ union, said he was shocked that Holden and the board would delve into the pension issue when there are so many other issues affecting schools.

“There are so many other laws we could be looking at, such as increasing school funding or increasing school aid as opposed to taking away school aid,” Lauchu said. “Or how about increasing charter school and cyberschool contribution to MPSERS? How about equalized funding? How about equalized funding among our peer districts?”

Lauchu said the Republican-led legislatures have ignored proposals for pension reform as they chart their path.

“The senate and the house choose to follow their political agenda and this support (of the resolution) reeks of political agenda,” Lauchu said.

The senate passed SB 1040, which puts employees hired after July 1, 2012, into a 401k contribution plan. Under the senate plan, retiree health insurance premiums would double.  The House Appropriations Committee took began work on the legislation Monday. The House is favoring a plan that would pre-fund retiree health care benefits using a combination of employer and employee contributions, and state funding.

With millions of dollars potentially in play, school officials are anxious to see what, if any savings, will come from Lansing. By law, the district must approve a budget by July 1.

At the board’s first meeting in May, interim Finance Director Janice Warner noted that the district’s structural deficit would burn through cash reserves by the end of the 2012-13 fiscal year at current rates of spending. The major causes of the ballooning structural deficit are falling enrollment and the increasing cost of employee retirement benefits, Warner reported.

The school district’s contracts with the SEA, support staff and administrators expire at the end of June.