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K-12 education leaders ask lawmakers to keep excess teacher retirement funds in the classroom


K-12 education leaders ask lawmakers to keep excess teacher retirement funds in the classroom

Jun 13, 2024 | 1:47 pm ET
By Lucy Valeski
K-12 education leaders ask lawmakers to keep excess teacher retirement funds in the classroom
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Educational organizations called on state lawmakers to reduce school district contributions to teacher retirement and use excess money from the fund to supplement classroom needs. 

Members from associations in Michigan’s education sector joined a call Wednesday to voice support for SB 911, sponsored by state Sen. Kevin Hertel (D-St. Clair Shores), and HB 5803, sponsored by state Rep. Matt Koleszar (D-Plymouth). Additional K-12 education organizations signed a letter addressed to Gov. Gretchen Whitmer supporting the bills. 

The bills are working alongside the state Fiscal Year 2025 budget, which doesn’t begin until Oct. 1, although legislative leaders hope to have it completed by July 1 so they can go on summer break, Both the House and the Senate have passed their own versions of the budget, and lawmakers are currently negotiating with Whitmer for a final plan. 

A lack of funding for education and teacher salaries impacts the quality of learning for students, participants said Wednesday. Therefore, they asked for fewer financial obligations from school districts and teachers in funding retirement and healthcare in the state. 

Tina Kerr, the executive director of the Michigan Association of Superintendents and Administrators, said there is an excess of $670 million in the state retirement fund for public school employees, paid for by teachers and school districts. It will be important to reduce contributions from these entities and use the available money for school districts. 

“It’s not the state’s money to use,” Kerr said. “It’s public schools’ money to keep. This savings have only been achieved because of the significant sacrifice of our educators and Michigan Public Schools.”

Some public school teachers pay a 3% tax on their income that goes into a health care fund for retirement. The proposed bills would eliminate this tax, allowing teachers to save money annually. Eliminating the tax would help with attracting new people to the profession and retaining current teachers, Terrence Martin, the president of educator and school health care worker union AFT-Michigan, said.

“Many of us experience having to pay the 3%,” Martin said. “Many of us are experiencing the lack of teacher service in schools all across this state, and we know that this will help to stabilize our school districts all across the state of Michigan.”

Participants also asked lawmakers to reduce taxes on school districts’ payroll from about 21% to 14%. Chandra Madafferi, the president of the Michigan Education Association, said this tax ate into teachers’ salaries and exacerbated the educator shortage.

Madafferi, along with other participants, said the removal of these taxes would not eat into the retirement fund.

They also wanted to make sure that the excess money from the state retirement fund is used specifically for school aid, rather than other economic development plans. 

Peter Spadafore, the executive director of the Michigan Alliance for Student Opportunity, said some school aid dollars were rerouted to other economic development plans, rather than the general fund budget. 

“Our proposal and the legislation introduced this week from Representative Koleszar and Senator Hertel, presents an opportunity for lawmakers to reverse the decades-long trend of using taxpayer dollars set aside for our K-12 students to balance the state’s budget,” Spadafore said.