The state legislature is sending Governor Snyder a package of bills that will change retirement benefits for teachers.
Vicki Barnett, the former Mayor of Farmington Hills and a former Democratic legislator, says the switch to a defined contribution retirement model for new public school employees increases costs for local school districts.
“I have no problem with the concept of what they’re trying to do. It’s the underlying reason they’re doing it which will again lead to failure of the system,” Barnett said.
Barnett says public school employees are being removed from the current retirement system through privatization and the advent of charter schools in Michigan. Switching to a defined-contribution retirement plan, she says, still does not account for the loss of people who contribute to the system.
Ken Sikkema, Senior Policy Fellow with Public Sector Consultants and the former Republican majority leader in the state Senate, says a defined contribution system is a “pay as you go system” which helps keep the cost to government agencies in check.
“If you’re going to create a public retirement system today, or a private retirement system, it’s going to be a defined-contribution system," Sikkema said.
Some economists are raising concerns about the trend toward private and public retirement plans that are defined contribution 401(k)-style plans because they are less lucrative. Those economists say that could lead to generations of poorer retirees.
Barnett says other economic concerns are already tightening the belts of the middle class, and defined contribution plans could end up taking more money out of people’s pockets.
“It doesn’t just impact teachers. It impacts our whole economy down the line.” Barnett said.
Sikkema agrees that defined contribution plans are less lucrative, but he says concerns about impoverished retirees are “a bit of a stretch.”
Focusing on changes to teacher pensions in particular, Sikkema points out that public retirement systems are taxpayer-funded and defined contribution systems are less costly.
“These defined benefit systems are just largely unaffordable,” Sikkema said.
On the charges announced by Attorney General Schuette related to the investigation into the Flint water crisis, Barnett says she thinks the involuntary manslaughter charges against five state officials will be difficult to prove.
“But I’m glad that somebody’s finally looking into the accountability of the delay in actually reporting the situation on the ground in Flint,” Barnett said. “When there’s a critical outbreak of a disease…the duty of our department of health folks is to let people know…that was not done.”
Sikkema co-chaired the Flint Water Advisory Task Force, which issued its report on the Flint water crisis more than a year ago. Sikkema said he wouldn’t comment on specific charges.
“I support all and any investigations in Flint, including the one conducted by the Attorney General,” Sikkema said. “We can’t have a situation where we leave some issue on the table.”
Listen to the entire conversation with Vicki Barnett and Ken Sikkema above.
Ken Sikkema and Vicki Barnett join Stateside every Friday to break down the week’s political news.