<Home
Attorney General’s office sides with Rep. Albert on school retirement funding
RELEASE|February 4, 2020

State Rep. Thomas Albert today said the Michigan attorney general’s office has agreed with his assertion that the state is required to move more quickly to implement changes improving the financial health of the state’s school employee retirement fund.

Albert, of Lowell, led reforms to lower the payroll growth assumption used in the Michigan Public School Employees Retirement System. Lowering the payroll growth assumption will help make the teacher retirement system more financially secure and free up more money for classrooms in the future.

“The Whitmer administration would have caused billions in losses to the pension fund from lost contributions and investment returns,” Albert said. “This all would have been required to have been paid later by our kids and taken significant resources out of the classroom.”

In May 2018, both the MPSERS Retirement Board and the state Department of Technology, Management and Budget adopted a lower payroll growth assumption as recommended in a required experience study, setting it at 2.75%.  But the Office of Retirement Services claimed it did not yet have to lower the payroll growth assumption from its current 3.5% because of Public Act 181 of 2018, a law sponsored by Albert.

Albert – who wants the payroll growth assumption lowered quickly – says ORS was not following state law by claiming rates can’t be lowered until they are automatically mandated to do so in 2022. In a response to Albert’s request for an evaluation, the attorney general’s office agreed with him. The attorney general response says the payroll growth assumption rate set in May 2018 – 2.75% – stands unless it’s changed again.

“The Office of Retirement Services’ failure to follow state law would have resulted in chronic underfunding of the retirement system,” Albert said. “Failing to address a broken pension system is no different than robbing the next generation of its wealth and spending it today.  This is both unsustainable and unfair to our kids who will eventually foot the bill.”

MPSERS-reported payroll has actually been steadily declining by an average annual rate of more than 2% for more than a decade, so the lowered assumption should be incorporated right away, Albert said. The main drivers of lower payroll are declining K-12 enrollment and substantial payment increases into the pension system.  The House Fiscal Agency estimates lowering the payroll growth assumption to 2.75% will result in the annual payment for the retirement system increasing by about $166 million. Encompassing all required MPSERS changes, HFA estimates an additional annual payment of $372.5 million for the upcoming fiscal year.

 

#####

 

Michigan House Republicans

© 2009 - 2024 Michigan House Republicans. All Rights Reserved.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.