Michigan Supreme Court Weighs in on State Teacher Retirement

On Wednesday, the Court issued an opinion saying the Michigan legislature did not violate the Constitution when they required teachers and other public school employees to contribute to their retiree health care costs.

In a 6-0 opinion, Justice Stephen Markman wrote in the decision AFT Michigan v. Michigan that because the law, PA 300 of 2012, has a provision that permits teachers and public school workers to opt out of the retirement health care system. Those in the system must contribute 3 percent of their health care costs and that would not be considered a taking.

This Public Act, which was the center of the controversy, made significant changes to the state's teacher pension and retiree health care system. It allowed teachers and other affected workers to opt out of retiree health care, but if they elected to remain in the system, they would have to pay 3 percent of the total premium.

The act also required teachers to contribute more to their pensions, requiring they contribute 4 percent to that system's basic plan if they wished to see benefits accrue at current rates. The teachers could decide not to contribute to the system and still have benefits accrue, but at a lower rate.

Justice Markman said in the opinion that government cannot "attach conditions to governmental benefits that effectively coerce individuals into relinquishing their constitutional rights.” However, the options provided to teachers in the act were a primary reason the act is constitutional.

Justice Markman further wrote in the opinion that the requirement does not meet the definition of an unconstitutional taking because it does seize a person's property for a public purpose without providing just compensation.

Parties to this suit brought before the Michigan Supreme Court have asserted that the 2012 law impairs their contracts, which is a violation of the Constitution.

The Court said the teachers and other unionized workers do not have a contract between themselves and the state. Their contract is with their employers. Nor were they ever given an express guarantee by the state's Office of Retirement Services that their original benefits would never change.

posted by PAA Online , Friday, April 10, 2015 11:00 AM
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