May 21, 2010
May 21, 2010
In radio address, governor says reforms help resolve structural deficit in School Aid Fund
LANSING - In her weekly radio address, Governor Jennifer M. Granholm today said that the public school employee retirement reforms she signed into law May 19 will help K-12 education over the long term to be funded at the level needed for Michigan children to succeed in a global economy.
"We've had difficulty in adequately funding K-12 schools in Michigan partly because of a structural deficit in the state School Aid Fund," Granholm said. "Back in January, I proposed 29 reforms to Michigan government that included changes to pension and health-care benefits for public school employees. These pension and health-care reforms would help to resolve the structural deficit in the School Aid Fund, and they were included in my state budget recommendation that I presented to the Legislature in February."
"For school districts, the retirement costs for new school employees who are hired on or after July 1 this year will be less," Granholm said. "That's because these employees will be placed into a new, lower-cost retirement plan that's a combination of both a defined benefit and a defined contribution plan. Also beginning July 1, all employees who are members of the Michigan Public School Employees' Retirement System will contribute 3 percent of their pay to an irrevocable health- care trust."
"Together, reforms to the public school employees retirement system will save school districts nearly $680 million in the next school year," Granholm said. "Over the next 10 years, the savings will grow to more than $3 billion."
"In the short term, the money saved by these reforms, combined with favorable revenue projections for the School Aid Fund, means that we will not have to cut K-12 funding in the upcoming fiscal year," Granholm said. "And over the long term, these reforms will help us fund education at the level needed for our children to succeed in a global economy."
The governor's weekly radio address is released each Friday and may be heard on broadcast stations across the state. The address is available for download on the governor's Web site at www.michigan.gov/gov together with a clip of the quote above. The radio address also is available as a podcast on the Web site as well as on iTunes and via RSS feed for general distribution to personal MP3 players and home computers. Links to the audio files and text of today's address follow.
Governor Jennifer M. Granholm
Radio Address - Retirement Reforms
Full: http://www.michigan.gov/documents/gov/Gov250Full_321898_7.mp3
Edited: http://www.michigan.gov/documents/gov/Gov250Edit_321899_7.mp3
Quote: http://www.michigan.gov/documents/gov/Gov250Quote_321900_7.mp3
Hello, this is Governor Jennifer Granholm.
A key component of our ongoing efforts to transform Michigan's economy is educating our children so they can compete with anyone else in the world. Education is the most important, long-term strategy for diversifying Michigan's economy and for fostering entrepreneurship and creating jobs.
We've had difficulty in adequately funding K-12 schools in Michigan partly because of a structural deficit in the state School Aid Fund. A structural deficit is when costs continue to outpace revenues.
Back in January, I proposed 29 reforms to Michigan government that included changes to pension and health-care benefits for public school employees. These pension and health-care reforms would help to resolve the structural deficit in the School Aid Fund, and they were included in my state budget recommendation that I presented to the Legislature in February.
Earlier this week, I signed into law two bills that implement these reforms. And they accomplish several things.
First, public school employees who choose to retire between July 1 and September 1 of this year will receive a slightly enhanced pension. About 56,000 school employees are eligible to retire between those dates.
It's estimated that about half of those employees - about 28,000 - will choose to retire. And this will create thousands of job opportunities for new college graduates who are eager to teach in Michigan.
For school districts, the retirement costs for new school employees who are hired on or after July 1 this year will be less. That's because these employees will be placed into a new, lower-cost retirement plan that's a combination of both a defined benefit and a defined contribution plan.
Also beginning July 1, all employees who are members of the Michigan Public School Employees' Retirement System will contribute 3 percent of their pay to an irrevocable health-care trust.
Together, reforms to the public school employees retirement system will save school districts nearly $680 million in the next school year. Over the next 10 years, the savings will grow to more than $3 billion.
In the short term, the money saved by these reforms, combined with favorable revenue projections for the School Aid Fund, means that we will not have to cut K-12 funding in the upcoming fiscal year. And over the long term, these reforms will help us fund education at the level needed for our children to succeed in a global economy.
Thank you for listening.
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