Judge rules cut in school worker pay unconstitutional

LANSING (AP) -- A judge has ruled unconstitutional a state law forcing K-12 and community college employees to pay 3 percent of their salary toward retiree health care, saying they were paying into a system from which they were guaranteed no benefit.

The state has not yet decided whether to appeal the opinion, a spokeswoman for Attorney General Bill Schuette told The Associated Press on Monday.

"The ruling still is under review by the attorney general's office and we will make a decision whenever that review is complete," Joy Yearout said.

Retired Ingham County Circuit Judge James Giddings, who was hearing the case before he stepped down and returned to finish the job, wrote in his ruling last Friday that school employees are paying into a system that may not ultimately benefit them.

"What is beyond speculation is the undisputed fact that the Legislature has the unfettered power to change or eliminate all benefits," Giddings wrote.

The law applies to teachers, librarians, bus drivers, secretaries and other employees in the school retirement plan. It was passed in June and was estimated to bring in more than $300 million each year over the next decade.

"The judge was clear. The law was arbitrary and unreasonable," said David Hecker, president of the American Federation of Teachers-Michigan. "You cannot have current employees pay for a benefit that current retirees receive -- when those current employees are not guaranteed receiving the same benefits.

"Pensions are guaranteed; health care is not. We would hope the state does not appeal."

A similar 3 percent salary provision for state employees was ruled unconstitutional in February by Ingham County Circuit Judge William Collette.

The Michigan Court of Appeals later ruled that the state can continue to withhold the 3 percent from state employees. That legislation was passed in September, with the money going into an escrow account pending the case's outcome.

Published: Wed, Apr 6, 2011