Lansing failure could bankrupt schools
School districts in Michigan could pay millions of dollars more in teacher pensions this year after state senators were unable to agree on a reform bill.
The deal lawmakers are considering doubles health insurance premiums for current school retirees. It also eliminates health coverage in retirement for new workers forcing them to put 2% of their paycheck into a 401K plan for their future.
The state faces $45 billion dollars in unfunded liability, and school district contributions are increasing each year.
Take TCAPS for example. The district will pay $12.2 in teacher retirement pensions this year, $13.7 million dollars in 2013, and that number will jump to $15.6 million in 2014. That is all money that could be spent in the classroom.
State Senator Howard Walker, (R)-Traverse City, says, "It's really an unsustainable path. We have to get that system healthy."
Bill Curtis with the Michigan Education Association is against the reform bill. He says it is unfair to both new and retired school employees.
Curtis says, "It would be pretty devastating to someone who retired years ago and had been promised they would pay 10% and now pay 20%."
Senate Majority Leader Randy Richardville, (R)- Monroe, is confident the state will see reform when it comes to teacher pensions. He has scheduled a mid-August session, and said a deal will be ready by then.
Senator Richardville says, "It is a tough issue, but if we don't do it, it is going to get worst. We have to revise the system. It's that or watch the next generation fail because they don't have money to pay teachers."
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