Education

State Journal: Union feuding over opting out

October 30, 1991 2 min read
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Caught in the middle of a bitter feud between the state’s two teachers’ unions, the Michigan legislature has come down on the side that was able to mobilize more lobbying clout.

Faced with a decision on school-employee pensions, lawmakers recently picked a plan backed by the 120,000-member Michigan Education Association plan over one proposed by the 24,000-member Michigan Federation of Teachers, which also had the support of the state A.F.L.-C.I.O.

The state school-employee pension system had been thrown into financial peril this spring, when the U.S. Internal Revenue Service faulted a provision that allowed workers to “opt out” of a second, and higher, tier of pension benefits after three years and then collect their out-of-pocket contributions--3.9 percent of gross pay--in six months.

If the system was not brought into compliance, Michigan could have been forced to pay $1.5 billion to the I.R.S.

Alarmed, lawmakers and labor lobbyists went to work to amend the pension law. While committed to keeping the three-year opt-out provision, most lobbyists were willing to satisfy the I.R.S. by requiring workers to wait until they retired, left their jobs, became disabled, or died before getting their money.

But the M.E.A. balked, preferring a mandatory second-tier pension system.

Under the M.E.A.-backed plan, employees would be vested after 10 years, at which time they would gain the right to take their own contributions, as well as those of the district and state, when they left or retired. If they stayed less than 10 years, however, they would forfeit the district and state shares.

The House retirement panel voted 6 to 4 for the opt-out plan. But the M.E.A. plan prevailed on the House floor by a 58-to41 vote.

“I have never seen such a lobbying effort,” Eleanor Dillon, legislative coordinator for the M.F.T., said of the rival union. Along with its own lobbyists, she said, the M.E.A. employed outside firms to lobby.

Ms. Dillon contended that dropping the opt-out provision was unfair to bus drivers and other school workers who might not be able to afford the required contributions. ‘We represent a lot of the working poor,” said Ms. Dillon.

But M.E.A. officials said their lobbying efforts were nothing out of the ordinary, and maintained that they had offered a variety of compromises that the M.F.T. had refused.

The M.E.A. wanted to make sure that the legislature did not jeopardize the pension system, said Allan Short, the union’s director of government affairs.

‘We represent the same kind of people they do,” he said. --K.D.

A version of this article appeared in the October 30, 1991 edition of Education Week as State Journal: Union feuding over opting out

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