Legislation to permanently end a 3% tax many public school teachers pay into a health care fund for their retirement has been signed into law by Gov. Gretchen Whitmer.

, sponsored by state Rep. Matt Koleszar (D-Plymouth), also permanently reduces the payroll rate for school districts contributing to the Michigan Public School Employee Retirement System (MPSERS) was given last week by the Michigan House and reduces the MPSERS payroll rate by 5.75%, providing school districts with the ability to reallocate funds that would have otherwise gone into retirement system contributions.

“This new law will put funding back into schools and is a direct investment in classrooms in every district across the state,” said Tina Kerr, executive director of the Michigan Association of Superintendents and Administrators (MASA). “School districts will now have more predictable funding, which will benefit students, teachers, and staff alike. We very much appreciate Rep. Koleszar for his leadership in introducing this legislation and navigating it through the process.”

Supporters say the rate reduction will allow districts to reallocate funds back into classrooms, while the end of the 3% health care contribution will also put more money back into the pockets of school employees.

“This legislation returns approximately $600 million back to schools — that’s money going directly into classrooms and back to teachers, where it belongs,” said Koleszar, chair of the House Education Committee. “As a teacher-turned-legislator, I am proud to see my bill put an end to overpayment into our school’s employee retirement system. My fiscally responsible bill will give back funds to schools to put toward their unique needs, because parents deserve to send their kids to schools that are empowered to put their students first.”

The plan to reduce MPSERS payments was first proposed by Whitmer when she rolled out her $80.7 billion budget blueprint in February, allowing the Democratic-led Legislature to redirect $670 million from the system into additional funding for schools.

From the beginning, however, Republicans have decried the move as a “raid” on the teacher’s retirement system, and that opposition remained even as the bill received final passage.

“Democrats aren’t thinking about the long-term implications of this vote,” said state Rep. Luke Meerman (R-Coopersville). “Pillaging public teacher’s retirement accounts to fund frivolous government expansions, and unnecessary programs, is unacceptable. And creates a mess for the next generation to clean-up.”

The dispute over the contributions centers on the fact that the teacher retirement system has two parts; one that funds health care costs, which is fully funded, and the other that covers pension liabilities, which is not.

Whitmer and her fellow Democrats in the Legislature say those are separate funds and the state no longer needs to pay off additional costs, likening it to a homeowner paying off a mortgage early. Republicans have insisted they are both part of the same fund and the savings realized by the health care portion being paid off should be used to pay down the pension liability.

“Interrupting scheduled debt payments to pay for other spending measures is a sign that spending has gotten out of hand and government has gotten too big. It’s flat out irresponsible to gamble with the retirement plans of our hardworking teachers,” said Meerman.

However, school officials disagree, and see the law as a positive change for both school districts and educators.

“By lowering MPSERS costs, districts will be able to prioritize funding that directly impacts student learning,” said Don Wotruba, executive director of the Michigan Association of School Boards (MASB).

Wendy Zdeb, executive director of the Michigan Association of Secondary School Principals (MASSP), said the legislation would help ease the financial burden educators in Michigan had been working under for years.

“Eliminating the 3% employee contribution will make a significant difference in the lives of our school staff, and I’m grateful to the Legislature and Governor Whitmer for supporting public schools in such a meaningful way,” said Zdeb. “This is a practical solution that both reduces costs for schools and increases take-home pay for school staff, something educators will certainly appreciate.”

is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Michigan Advance maintains editorial independence. Contact Editor Susan J. Demas for questions: info@michiganadvance.com. Follow Michigan Advance on and .

Updated September 17

Legislation to permanently eliminate the 3% tax some public school teachers pay into a health care fund for retirement passed through the Michigan Senate along party lines Tuesday.

, sponsored by state Sen. Kevin Hertel (D-St. Clair Shores), already won approval by the House in late June as the Legislature was working to for Fiscal Year 2025.

“This is a large investment in public education,” Hertel told the Michigan Advance on Tuesday. “I would say it’s transformational, and getting this done will allow us to then hopefully continue to build on those per-pupil increases year after year as we go forward.”

That FY 2025 budget, which goes into effect Oct. 1, was the first in nearly a decade that failed to include an increase to the per-pupil allowance for the School Aid Budget, keeping it at $9,608 per student.

However, it did include a decrease in rates paid to the Michigan Public School Employees’ Retirement System (MPSERS), allowing the Democratic-led Legislature to redirect $670 million from the system into additional funding for schools, which Gov. Gretchen Whitmer’s administration originally proposed when she rolled out her $80.7 billion budget blueprint in February.

The bill passed 20-16, with all Democrats in favor and all Republicans who were present voting no. Sens. Rick Outman (R-Six Lakes) and Jim Runstead (R-White Lake) were excused.

Hertel said he was disappointed not to get any support from his Republican colleagues.

“I’m somewhat shocked by that because we’re talking about freeing up $600 million across the state at our school districts,” he said. “And for the teachers that are paying the 3% for the pension portion, you’re talking about putting those dollars back into their paychecks as well. So I was hopeful that we would have some support on the other side of the aisle. This is a game changer. It will fix a structural problem in how we fund our schools.”

The bill was a substitute proposed by Sen. Darrin Camilleri (D-Trenton) which incorporates a sponsored by state Rep. Matt Koleszar (D-Plymouth). It automatically codifies a 5.75% rate reduction in payroll costs starting in FY 2026, which Camilleri said when combined with the FY 2025 budget, will make that savings permanent and “put hundreds of millions of dollars back into the classroom immediately and for the long term.”

That sentiment was echoed by Al Latosz, Superintendent of Algonac Community Schools and President of The K-12 Alliance of Michigan.

“We are grateful to the Michigan Senate for engaging in an ongoing dialogue with educators about the importance of responsibly and permanently reducing these decades-old debt payments that have been forced on our schools and students,” said Latosz. “The passage of SB 911 will free up hundreds of millions of dollars annually that schools across Michigan will be able to invest directly into the programs that support the needs of our students.”

Republicans, as they have been from the outset of the plan, expressed concern about the legislation doing long-term damage by not fully funding future pension debt.

“Failing to pay your obligations has long-term implications,” said Sen. Thomas Albert (R-Lowell). “It makes it harder to fund education in the future, and it makes it harder for us to make sure we can pay our retirees the benefits they earned and are constitutionally protected.”

Senate Minority Leader Aric Nesbitt (Porter Twp.) also expressed his opposition.

“The bill before us is everything that is wrong with government,” he said. “A cynical money grab whose victims won’t notice it until the thieves are long gone out of this building. Another empty win for the tax takers over the taxpayers. A raw deal dressed up to look like a good one. A shameless attempt to fool people, the same people who step up to teach our children. The bill is theft, pure and simple.”

Hertel said he was perplexed by that characterization.

“I actually think you could call it theft if we continue to take 3% out of educators’ paychecks and take this money from school districts and put it into the health care side of the pension fund that is over 140% funded today,” he said.. “I don’t understand why we would continue to plug money into a fund that the experts tell us is properly funded when that money can do the work it needs to do in our classrooms and go back into the paycheck for educators across our state.”

Sen. Dayna Polehanki (D-Livonia), chair of the Senate Education Committee and a former educator for 20 years, shared that point of view from the Senate floor in support of the bill.

“So in this year’s state budget, we reduced MPSERS’s payments instead, directing $600 million more state dollars right back into our schools. This is the average equivalent of approximately a $400 per student increase statewide. We also delivered a 3% pay increase for teachers who hired in before 2012 by removing the requirement of paying into this fully funded system,” she said. “This bill will grant school districts more flexibility in deciding how to use these surplus funds, including but not limited to investing in student mental health, in school safety, paying teachers more, staff more, and specialized academic interventions to meet unique school needs.”

Hertel said the legislation will solidify the savings for school districts in perpetuity.

“They can plan their budgets provided by these savings, and now they know it’s ongoing, so they can use those dollars to plan out year-over-year,” he said.

The legislation now goes back to the House for a final vote, which Hertel expects will be next week. If it passes it will go to Whitmer for her signature.

is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Michigan Advance maintains editorial independence. Contact Editor Susan J. Demas for questions: info@michiganadvance.com. Follow Michigan Advance on and .

TOPEKA — Teachers in the state could move to a retirement plan with better long-term benefits if new legislation is advanced. The change may help stem the state’s increasingly severe teacher shortage.

Timothy Graham, director of government relations and legislative affairs for the Kansas National Education Association, pointed to state vacancies during a Tuesday hearing on the potential change. In fall 2023, the state had an estimated 1,810 teacher vacancies according to the Kansas State Department of Education. In fall 2022, there were 1,650 reported vacancies.

“Educators have accepted lower compensation to follow their passion,” Graham said. “They’ve consistently endured stagnating wages on top of that. They’re facing growing demands from the public and growing disciplinary situations in the classroom. … And now, like many other college graduates, teachers are starting their careers with tremendous student loan debt. Ensuring that they have a dignified and comfortable retirement after years of public service is simply the right thing to do.”

Kansas implemented current tiers for the Kansas Public Employee Retirement System in 2015, following financial strain. KPERS includes all of the state’s public sector workers, such as teachers, lawmakers and firefighters.

These workers fall into three retirement levels: KPERS Tier 1 for people enrolled before July of 2009, KPERS 2 for those entering between July of 2009 to December of 2014, and KPERS Tier 3 for everyone enrolled after January of 2015.

Rather than relying on a formula based on years of service and final average salary, as in the traditional pension plan of Tiers 1 and 2, KPERS Tier 3 ties a member’s lifetime benefit to contributions and interest earned throughout the member’s career in a 401K-like account.

, heard Tuesday in the Senate Committee on Education, would convert Tier 3 members to Tier 2 by January 2025 and allow teachers who become KPERS members in July of 2024 to enter Tier 2. Shorter-term teachers who would receive more benefits under Tier 3 could choose to stay in Tier 3.

KPERS estimated 40,000 teachers are employed in Kansas school districts, about 15,500 of whom are KPERS Tier 3 members.

To showcase the difference in tiers, KPERS executive director Alan Conroy calculated the difference in benefits for a teacher who has been in the profession 30 years and retires at age 60 under the KPERS 2 and KPERS 3 tiers. A KPERS 2 teacher would receive $45,015, while a KPERS 3 teacher could receive between $26,978 to $36,866.

Leah Fliter, assistant executive director of advocacy with the Kansas Association of School Boards, spoke in favor of the change during a March 5 hearing.

Fliter said school board members within their organization felt the change could help attract and keep teachers in Kansas.

“They felt an improved retirement benefit would not only attract young people to the profession but also encourage experienced teachers to remain in the classroom,” Fliter said. “Our members also stated that moving teachers to the improved benefit structure in Tier 2 would demonstrate respect for the profession.”

is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Kansas Reflector maintains editorial independence. Contact Editor Sherman Smith for questions: info@kansasreflector.com. Follow Kansas Reflector on and .

New Jersey Gov. Phil Murphy signed a bill into law Thursday allowing retired teachers to return to classrooms for up to two years without giving up their pensions in a bid to address the state’s shortage of educators.

will allow districts to hire teachers and other staff during the 2023-2024 school year as long as they have been retired for at least 180 days. Districts can hire retired educators for a single year and extend their contracts for one more year.

Retired teachers would receive their pension allowance and a salary during the duration of their contract. Murphy signed a similar law last year.

New Jersey’s shortage of teachers is long-standing and has historically been most severe in special education, science, and instruction for non-native English speakers.

“You’ve always seen a need to try and secure more people into those spaces, and of course that was compounded with COVID,” said Sen. Teresa Ruiz (D-Essex), the bill’s prime sponsor. “A lot of retirees who perhaps would have stayed in districts longer, for personal reasons, went off.”

The state reported shortages of bilingual education, ESL, world language, math, and science teachers in all grade levels and preschool to the U.S. Department of Education for the 2023-2024 school year.

The despite a recent law requiring the state Department of Education to issue annual reports on teacher staffing. The deadline for the department to release this year’s report passed months ago.

After Murphy signed the law last year allowing retired teachers to return to school, delays in forwarding program rules to districts prevented some from hiring retirees in time for the 2022-2023 school year.

Lawmakers are weighing other methods to tackle the shortages, including one that could end, or at least suspend, .

“This is only one answer. We should be truly focused on eliminating the residency requirement. If not forever, at least on a temporary basis,” Ruiz said. “We are missing the opportunity of hiring human power that will help districts that are in shortages that they now cannot even entertain.”

is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. New Jersey Monitor maintains editorial independence. Contact Editor Terrence McDonald for questions: info@newjerseymonitor.com. Follow New Jersey Monitor on and .