Michigan lawmakers search for common ground on school retirement incentive plan

Lawmakers seek compromise on school retiree plan

LANSING, Mich. — Michigan lawmakers said Tuesday they will quickly try to forge a compromise aimed at coaxing thousands of public school employees into retirement.

The plan would be aimed at saving schools money as they struggle with budget woes. The Democrat-led House and Republican-controlled Senate have passed different versions of a retirement incentive plan, and negotiators from both sides will try to reach a compromise within the next few days.

“I think we can find common ground,” said Senate Majority Leader Mike Bishop, a Republican from Rochester.

Rep. Mark Meadows, D-East Lansing, said a plan should be wrapped up this week to give employees time to retire and school districts time to replace them headed into the next academic year.

Schools might be able to trim payroll costs or avoid layoffs by encouraging older, higher-paid employees to step aside voluntarily — but that depends on how the final plan is crafted.

Democrats who run the House passed their version of the school retirement plan by a 59-45 vote Tuesday, mostly along party lines. The House did not vote on a similar plan for state employees, leaving that debate for later.

More than 50,000 school employees across Michigan would be eligible for the House retirement incentive package, more than the 39,000 originally proposed by Democratic Gov. Jennifer Granholm. The House plan would cover employees whose age and years of service combined equals at least 80, while the original proposal covered those at least 55 years old with a minimum of 30 years of experience.

The House plan uses a formula that would provide better pension benefits for retiring school employees compared to the Senate plan. Republicans say that eventually would make the plan too expensive and ineffective in dealing with long-term budget problems.

The House plan might save schools statewide more than $730 million in the state fiscal year starting Oct. 1. But the plan’s money-saving power would evaporate and could cost more than $1 billion combined from 2012 through 2016, according to the nonpartisan House Fiscal Agency.

Most school employees who remain on the job would have to pay 3 percent of their salaries into a retiree health care fund or a pension plan, depending on the version of legislation. That could help schools offset potential funding cuts from the state.

The school retirement plan bill is Senate Bill 1227.