LANSING, Mich. (AP) — Republican legislative leaders canceled budget talks with Gov. Rick Snyder’s administration due to their dispute with him over making newly hired school employees eligible only for a 401(k) and no longer a traditional pension, leading Snyder to say there is still time to resolve differences.
The move — which nixed a meeting scheduled for Friday — left in doubt the status of future discussions and could put at risk a timely resolution of the next state budget, which Snyder and the GOP-led Legislature like to finish in early June. They often boast of enacting the budget months before it takes effect in the fall.
The Republican governor is resisting a legislative push to close the Michigan Public School Employees Retirement System’s hybrid pension/401(k) plan to new hires, saying the pension is working as is and citing large upfront transition costs that would extend beyond just the 2017-18 spending plan. GOP lawmakers say the state must stop piling up debt. They have trimmed Snyder’s budget proposal by hundreds of millions of dollars to make room for initial transition costs.
Snyder said of the delay in budget negotiations: “You can have issues come up. I appreciate that the retirement system issues are big issues and important issues. It’s important we get a budget done. … There’s still time to hopefully work through all these issues in a thoughtful fashion.”
Senate Majority Leader Arlan Meekhof and House Speaker Tom Leonard “have identified reform of MPSERS as a top priority. It would be counterproductive to set budget targets without a clear forward path on MPSERS reform,” Meekhof spokesman Amber McCann said.
“We have a great opportunity to finally fix this important problem that is hurting our teachers, our schools and our state,” Leonard spokesman Gideon D’Assandro said. “We have to get it right.”
The legislative leaders, Snyder and their top aides met Thursday in his office at the Capitol building — a day after economists settled on revised tax revenue estimates. Snyder proposed other changes to the school retirement system, related to health care and also offering incentives to teachers to voluntarily take a 401(k) that would be more generous than now.
But Meekhof and Leonard want to make the more sweeping change, like was done in 1997 when new state employees were no longer eligible for a pension.
After speaking at a recycling summit in East Lansing on Friday, Snyder told reporters that he is concerned not only with “major” transitional costs but also worries that a new defined-contribution system could cost more on an ongoing basis than the hybrid plan or a revised version.
Democrats who are outnumbered in the Capitol oppose closing the pension system to new hires, characterizing it as an attack on teachers’ livelihoods.
The leaders of the House and Senate budget committees had been scheduled to meet Friday with state budget director Al Pscholka to work on “targets.” The high-level spending decisions for areas of the budget are typically set before legislators hash out their differences over individual department budgets.
