After months of negotiations, the Legislature finally passed major reform to the Michigan Public School Employees Retirement System during a single session day on Wednesday. Without any Senate member speaking on the bill, last month’s failed vote on Senate Bill 1040 was reconsidered and the measure was amended and passed to the House on a 21-16 vote. Republican Senators Rick Jones (R-Grand Ledge), Mike Nofs (R-Battle Creek), Phil Pavlov (R-St. Clair) and John Proos (R-St. Joseph) joined Democrats in opposition. Senator Jack Brandenburg (R-Harrison Township) was not present.

Republicans in both the House and Senate described the measure as likely the most important issue they will address during the term.

The new version of the reform requires a study to address whether new hires should be sent into a defined contribution plan rather than requiring the move. Many members of the Senate had been pushing for the absolute switch, which Governor Rick Snyder’s Administration claimed would actually cost more than moving to a hybrid system.

The study will also examine the calculation school districts’ contribute to the system. The House has proposed to have the contribution calculated based on the district’s current operating expenses where currently the contributions are calculated based on payroll.

Retiree health insurance for newly hired employees is also eliminated under the legislation and replaced with a 457 or 401(k) plan that includes an employer match and lump-sum payment.

The House followed the Senate’s action and concurred with the changes on a 57-48 vote; however, not without considerably more debate and floor speeches.

In the end, policy makers agreed that the assumptions involved in making many of the decisions were too complex and that an objective and thorough study would best determine the most effective path.