The teaching profession is once again under attack as legislation that would prevent new teachers in Michigan from receiving a retirement pension has advanced to a full Senate vote. If approved by the Senate, teachers entering the public school system on or after July 1, 2017 will be forced into a 401 (k)-style retirement plan. This would mark a significant change from the hybrid pension plans granted to teachers entering in 2010 or later and the more comprehensive pension plans for those who began teaching before 2010. Opposed by Michigan Democrats as well as Republican Governor Rick Snyder, this shift to a 401(k) retirement plan is expected to cost anywhere from $1.6 billion to $3.8 billion in the first five years of implementation. Opponents of the legislation argue that the hybrid plan enacted in 2010 is working as intended and that upfront costs for the new plan will take funding from classrooms. Meanwhile, organizations such as the Michigan Freedom Fund support putting an end to teacher pensions in Michigan. It comes as no surprise that the DeVos family provides substantial funding for the Michigan Freedom Fund and that one of their employees runs the organization.
Michigan’s Current Teacher Retirement Plan is Ranked Fourth in the Nation…
According to the National Center on Teacher Quality (NCTQ), Michigan’s current retirement system is performing fairly well. NCTQ assigned report card grades to states’ retirement systems and Michigan’s current hybrid system is ranked fourth in the nation, behind only Alaska, South Dakota, and Florida. NCTQ rates Michigan favorably due to the fair accrual of benefits, the degree of choice granted to teachers, and the portability of the plan. The state falls short, however, because the system is underfunded, requires teachers to work 10 years to become vested, and prevents teachers from taking any portion of their employer’s contribution if they leave the system early. However, relative to some of the lowest performing states in NCTQ’s report, things are looking pretty good in Michigan. The lowest ranked states – Missouri, Vermont, and Mississippi – met essentially none of the goals set forth by NCTQ.
… So Why Destroy It?
Michigan teachers may soon have to deal with a broken retirement system.
Photo courtesy of Ken Teegardin.
Michigan’s retirement system is certainly not perfect. However, replacing it with a 401(k) system would be a gigantic step backwards. As it is, Michigan teachers report that they are underpaid and worry about being able to retire comfortably. Eliminating the security of a pension upon retirement is only going to further contribute to those anxieties. Teachers take on substantial student loan debt to earn their degrees, and they are underpaid relative to others with similar education levels. To remove the incentive of a pension upon retirement would be yet another attack on the profession. Michigan legislators need to look for ways to strengthen the current system rather than entirely lock prospective teachers out of the possibility of receiving a pension. This legislation appears to corporatize education, and it is likely that policy will continue to head this direction under President-elect Donald Trump and future Secretary of Education Betsy DeVos. Let’s hope that Michigan lawmakers make a decision that will encourage individuals to enter the teaching profession rather than drive them away.
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