MPSERS Reform to Become Law

Bob Kefgen's picture
Submitted by Bob Kefgen on Wed, 08/15/2012 - 2:42pm

The MPSERS reform saga ended Wednesday when the House concurred in the Senate-amended version of the MPSERS reform legislation, SB 1040 (H-3) as amended. The bill passed 57-48. The bill now goes to Governor Snyder’s desk for his signature. For MASSP's full analysis of this bill, please click here.

If you're looking for quick facts on today's major changes to past versions, keep reading:

  • For current employees, this bill is largely unchanged from earlier versions. The language limiting retiree health coverage to those 60 and older and retroactively applying graded health insurance premiums to all employees has been removed.

  • Employees will be required to choose whether to accept higher contributions to maintain the current 1.5% multiplier, accept a lower multiplier, or opt for a 401k. The amendments made in the final version of the bill push the implementation timeline out further into the future. As the bill passed today, employees will have until October 26, 2012 to make their election and the implementation date of the bill have been moved back to December 1, 2012.

  • The bill also still contains language that will drop the retiree health insurance subsidy for both current and future retirees from 90% down to 80%. However, the bill adds a provision that anyone who is 65-years-old and retired as of January 1, 2013 will receive a 90% subsidy instead of 80%.

  • Additionally, the final bill removed all changes to final average compensation (FAC). This means all incomes currently counted toward FAC will still be counted and there will not be a cap on the amount.

  • Finally, the bill calls for using the 3% employee contributions that MPSERS members are currently paying to pre-fund the retiree health care system. This would help the state reduce the unfunded liability in the MPSERS system, which is currently $45.2 billion.

  • For districts, the bill locks in the MPSERS rate moving forward at the equivalent of 24.46%. The compromise also maintains the current system of the MPSERS payments being based on payroll rather than on current operating expenses (as was originally proposed by the House).

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