Marty Knollenberg on Benefit Reform

Representative Marty Knollenberg is proving himself to be a responsible legislator. He has spoken out on trying to implement needed reforms in health care and retirement benefits for educators AND legislators.

His plans would still provide reasonable protection and benefits, but do so in a way that more closely resembles the benefits provided to taxpayers in the private sector.

He shares some thoughts in this opinion piece:

Detroit News: Get more money in classroom by reforming health benefits (06/29/07)

There’s a passage in his article that warrants further discussion:

“Unfortunately, in a recent House Education Committee hearing on reforming school employee retirement health care, some of my colleagues actually argued that if we passed much-needed reforms on retiree health care, we would no longer have anyone willing to work in public schools. I almost fell out of my chair.”

Reasonable and informed debate will always lead to better laws, but in this case this particular claim by the defenders of the status quo has no basis in fact, and shows a complete lack of understanding about free-market principals.

I have been told on several occasions that when Rochester Schools posts a general education teaching position, the district will frequently receive over one thousand applicants. Based on the top-notch hires made lately, it’s clear there is an abundance of talented people entering the profession.

It’s absurd to suggest that these relatively minor tweaks to the retirement system are going to suddenly and drastically reduce – or eliminate – the number of highly qualified teachers seeking employment in Michigan.

First of all, these doomsday hyperbolic claims are based on the assumption that teachers are money-grubbers that only chose the profession because of the benefits offered to teachers. Most teachers I’ve come in contact with are dedicated professionals who teach because they love to teach. Money is certainly important, but as is the case with most professions, money is not the primary motivating factor.

Secondly, it assumes that these changes will make Michigan’s retirement system so far below average that teaching in Michigan will become the career of last resort for teachers, when they cannot find work anywhere else. It appears to me that even after these tweaks, Michigan’s retirement plan will STILL be one of the most desirable around.

But perhaps most importantly, these changes will eventually save money, and will also provide an incentive for teachers to stay on the job, rather than leave their careers early. Creating a 30-year vesting period may help to keep talented teachers on the job longer. There is a lot of knowledge that leaves the profession each year... perhaps too much.

The packages introduced by Senator Kuipers and Representative Melton will not cause the sky to fall, but will actually help to improve things.

One final note: the real reform needed for this system is a move from a defined benefit program to a defined contribution program. Private sector employers began the move from pension plans to 401(k) style programs 30 years, and it’s time for the government to catch up.

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In case the link doesn’t work, I’ve provided the full text of his article below:

Get more money in classroom by reforming health benefits

Rep. Marty Knollenberg

Michigan ranks 48th in the nation in the amount of school operation dollars actually getting into the classroom. With an average of more than 17 percent of each school district's payroll being spent on retirement, Michigan needs to overhaul the system with the state's best interest in mind.

Under the current retirement system, the state could pay 100 percent of retiree health-care premiums after as few as five years of employment. Imagine a part-time employee drawing lifetime health care coverage after five years on the job.

Our education system is broken. We fight to get enough funding into classrooms while our schools face skyrocketing health care and retirement costs. It is clear, and has been for some time, that we can no longer wait to fix this structural problem. We must take action on necessary reforms now.

Unfortunately, in a recent House Education Committee hearing on reforming school employee retirement health care, some of my colleagues actually argued that if we passed much-needed reforms on retiree health care, we would no longer have anyone willing to work in public schools. I almost fell out of my chair.

While House Democrats were busy talking, the Republican-led Senate approved a legislative package sponsored by Sen. Wayne Kuipers, R-Holland, that phases in eligibility for retiree health care, closes some of the more egregious loopholes and caps the state's cost at 90 percent of retiree health-care premiums. House Education Chairman Tim Melton, D-Pontiac, introduced this package in the House.

Under the Senate plan and similar House proposals, if you became fully vested after only working 10 years, you would get 30 percent of your health care cost paid for by the state. If you worked 30 years, you could qualify for 90 percent of the premium paid for by the state.

It is time to change retiree health-care benefits for school employees. The common sense reforms reward employees for service much like what the private sector has done.

This is a move state employees made long ago, and one that would save millions of dollars each year. The nonpartisan House Fiscal Agency reported that nearly $300 million would have been saved in 2006 alone if this legislation had been enacted 40 years ago.

Unfortunately, savings wouldn't occur immediately in this legislation because it would affect only new employees hired after the legislation takes effect. It would not affect any current teachers, custodians, food service personnel or bus drivers. This type of long-term thinking will help eliminate future budget crises rather than accounting gimmicks and quick fixes.

The intent of this plan is not to single out school employees. I have introduced similar legislation to reform another lucrative retirement system -- lifetime benefits for lawmakers.

It is simply absurd for the taxpayers to fund lifetime benefits for myself and my colleagues after six short years in the Legislature, the same way it is absurd for the taxpayers to pay for lifetime benefits for school bus drivers after only five years of work. I hope my House colleagues agree with me and support this legislation.