The Michigan Supreme Court hears “3 percent” case

Print More

In an issue that has been going on since 2010, teachers are still embattled against the state for the right to their $554 million in escrow monies held by the state.

In 2010, the Michigan legislature passed Public Act 75 of 2010, which stipulated teachers pay 3 percent of their wages to cover rising health-care costs in the Michigan Public School Employees Retirement System.

The law was immediately challenged by the unions, and any of the money collected was put into an escrow account until the dispute was resolved.

Courts have already sided with the unions, saying that the PA 75 was unconstitutional. It violated three clauses: The takings clause, due process clause and the contracts clause.

To address those issues, the legislature passed Public Act 300 in 2012, which allowed school employees to opt out of retiree health care. This means they didn’t have to pay that 3 percent. It also allowed those who paid in but didn’t qualify for the benefits to get that money back.

But that $554 million in escrow is still locked away, and that’s what the lawyers are fighting in the Michigan Supreme Court.

Last year, the Michigan’s Attorney General Bill Schuette washed his hands of this case after the Court of Appeals sided with the teachers again in 2016. However, Gov. Rick Snyder still decided to pursue it.

He hired Gary Gordon of the Dykema Gosset firm of Lansing, who represents the state.  

In early November, there was another hearing in front of the Supreme Court, with judges hammering Gordon and the state’s arguments hard.

“Isn’t paying the money back the only remedy?” said Justice Richard Bernstein during the hearing.

Gordon’s argument according to court documents is that the funds collected under the 2010 law should now be treated as though they were collected under the 2012 law.

Those who opted in will get the benefit of those payments and those who didn’t can get refunds, he argued.

Gordon continued by saying the plaintiffs were “justly compensated” by the healthcare in retirement or the refund.

Mark Cousens, who represents the American Federation of Teachers, is arguing that the money needs to be returned immediately.

He argues that the 2012 law never said anything about the money taken under the 2010 law and wasn’t retroactive.

“No amount of window dressing or contentions that the end justifies the means can make this look like something other than it is,” Cousens said in his brief on the case, filed in 2017.

David Crim, spokesman of the Michigan Education Association, said that this is one of the biggest issues that their union members face.

“We have racked up major legal bills on this, but it is worth it if we can get that half a billion back in their pockets,” said Crim.

While their legal bills aren’t of a concern, Crim said the one that the state is costing taxpayers should be.

“The taxpayers are now paying this outside law firm up to $250,000 to continue to argue to not return the money, so in the end this is costing taxpayers as well as these school employees.”

The Supreme Court will continue to debate this issue.

Comments are closed.