Update: School employee lawsuit over pension change.
A Michigan judge issued a preliminary injunction in a lawsuit filed by five MEA members against the Michigan Public School Employees Retirement System (MPSERS). The state will have to escrow the additional three percent MPSERS contribution that school employees must make beginning July 1, and it cannot use the money for any purpose until further order of the court.
Five MEA members recently filed the lawsuit in the Michigan Court of Claims against MPSERS, challenging the legality of Public Act 75 that requires all school employees to pay an extra 3 percent of their compensation into a fund for retiree health insurance with no guarantee that the benefits will be available to them upon retirement.
Michigan Court of Claims Judge James Giddings’ preliminary injunction has the effect of requiring the state to escrow the additional three percent MPSERS contribution beginning July 1. MPSERS cannot use those funds for any purpose until further order of the court. Giddings found that the MEA members who brought the suit raised important issues that need to be addressed prior to the state spending the money.
The case will proceed while the additional revenue that is collected is protected, in case it ultimately needs to be refunded to school employees. It is unclear whether the state will appeal Giddings’ ruling.
The three-count lawsuit alleges that Public Act 75 violates school employees’ federal and state constitutional rights and asks the court to place new retirement contributions in an interest-bearing escrow fund until the matter is decided by the court.
The complaint maintains that Public Act 75: violates the contract formed when the Michigan Public School Employees Retirement System was set up in 1980; causes the Legislature to impair an existing contract; and unlawfully abridges the pension system’s financial liabilities.
The five members who filed the suit are: Deborah McMillan, a Lansing teacher; Thomas Brenner, a Novi teacher; Theresa Dudley, a Grand Rapids head secretary; Katherine Daniels, a Tuscola Intermediate School District school psychologist; and, Corey Cramb, a Huron teacher.
