What We Know To Date on 3% Refunds

Bob Kefgen's picture

Now that the Michigan Supreme Court has ruled that the state needs to refund school employees their 3% contributions, many folks are anxious to know when they will be getting their money back, how much to expect, and a myriad of other details. Below, we’ve broken down the best information we have to date on these and other questions. However, if you read nothing else, make sure you read this: to make sure you get your refund in a timely fashion, every MPSERS member should log into miAccount (the State's online retirement management system) and make sure their contact information is up to date.

Here’s the rest of what we know (including an explanation of why updating your address is miAccount is important)…

When will I get my money back?

We don't know, but we’re likely talking months, not weeks and not years. The Office of Retirement Services (ORS) has said that it is going to refund the 3% contributions to local districts and those local districts will then send the money out to the people who paid it, but that plan is subject to court approval. Additionally, before those refunds can be processed, someone has to make sure that tax withholdings were properly handled (since the money is now income), that all the appropriate reporting is done, and other similar responsibilities. There are many questions that are still unanswered about exactly what districts need to be able to do to be in compliance with state and federal regulations and requirements. To their credit, ORS has been working proactively with school business officials, auditors, legal firms, and others since well before December’s court ruling to make the process as smooth as it can be, but that doesn’t mean any of this is going to happen quickly.

How much will I get back?

We know for sure that the 3% contributions will be repaid plus a small amount of interest. But even if ORS were to publish the list of contribution amounts and interest for each employee, that doesn’t account for things like taxes and FICA which have to be paid on all income. Different districts handled the initial withholdings different ways, which is to be expected since there is no playbook for how to handle it when the legislature suddenly mandates an unconstitutional pay deduction. We are hopeful that MPSERS members will at least have a way to look up at least their contribution amounts and interest, but even if that became available tomorrow it is not likely to be the final word for most folks.

Is there anything I can do to speed things up?

YES! Every MPSERS member should log into miAccount (that’s the online system that MPSERS members use to track their pension contributions, file for retirement, etc.) and make sure their contact information is up to date and accurate. Assuming local districts will be the ones processing the refunds (or even if it ends up being someone else), they are almost certainly going to rely on the contact information that ORS has when they process refunds. Especially if you have moved since 2010, are no longer with the same district you were then, have changed your name, or anything similar you’ll want to make sure ORS has your most up-to-date information.

Other Issues

As was mentioned above, the details of the refund process are subject to the supervision of Court of Claims Judge Stephen L. Borrello who has not yet held a hearing on the distribution plan. He may approve the ORS plan, but he may not. So even the little bit we think we know is subject to change.

Additionally, the list of technical details involved in processing $550 million in refunds is long enough to make a school business official go cross-eyed. Does the district have to re-issue W-2s? How do you handle employees who were on long-term disability or receiving workers compensation at the time? What about employees who are now deceased?

Why should a Principal care about any of these things? Because getting these details right is what is going to make this process take time. While it may mean some delay in getting checks processed, it would be worse for everyone if districts were rushed to get the money out the door and made mistakes that lead to incorrect payments, or employees finding out after the fact that they owe taxes they weren’t expecting to pay.