Teacher pension system has Michigan budget on hold

Teacher pension system has Michigan budget on hold. (File - WWMT)

LANSING, Mich. (SINCLAIR BROADCAST GROUP) - Tonight in conference committee, the Michigan legislature approved spending increases to higher education and community colleges in conference committee on Tuesday, but the overall state budget is in a stand still between Republican Gov. Rick Snyder and the Republican controlled legislature.

Political Reporter Nick Minock reports in Lansing with what is holding up the budget.

A disagreement on what do with the state's teacher pension system, which serves more than 400,000 people, is holding up the budget and Republican leaders in the House and Senate have iced out Gov. Rick Snyder in budget talks.

Last week, House and Senate Republicans agreed on target spending without the Republican Governor. Partly to do with the House and Senate's plan to reform Michigan's public school employee retirement plan.

The current system is creating huge debt, according to the Republican Speaker.

Republican House Speaker State Rep. Tom Leonard said, “This is a $30 billion debt and liability on the backs of our children and the backs of our hard working taxpayers. This pension fund is eating up 36 percent of our local school's payroll, so we have to stand firm, we've got to get this situation resolved."

Leonard wants to move new public school employees into a 401k-only retirement plan and said it will save money in the long run.

Snyder said, "There are a lot of possibilities here."

Snyder doesn't agree with Leonard's plan because of high transition costs.

Snyder said, “I encourage them to work hard on getting something promptly and well."

The Governor wants a budget done by the end of June.

He said, "Our school districts and municipalities start their fiscal year on July 1. So getting the budget done in June actually gives them much more certainty."

House Republicans said Gov. Snyder should back their retirement reforms if the Governor wants a budget done by the end of June.

"The constitution says we only have to do it [the budget] by October 1st, so if the Governor wants to see movement on the budget, I'm hopeful he will be willing to talk about fixing the teacher pension system."

Meanwhile, Democrat's said Republican should stop holding the budget hostage.

State Sen. Jim Ananich, D-Flint, said, "The average pension is $14,000 a year, so I don't think that is crushing Michigan's budget. I think the bigger problem is the terrible decisions they've made the last six years. I think the sensible thing to do is to put this terrible plan away."

Snyder proposed reforms to the school employee retirement system, but Senate and House Republicans are standing their ground on their proposal.

One Republican lawmaker called the Governor's proposal a bandage on a bullet wound and there is a lot of work to be done before a deal is reached.

close video ad
Unmutetoggle ad audio on off