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LANSING UPDATE

From: Ellen Hoekstra
Legislative Update
Date: January 28, 2008

School Employee Pension Issues

MPSERS health care changes:
The MPSERS Board approved a number of health care changes before the end of 2007. Although a number of the changes that were approved were consistent with those proposed by AFT-Michigan, two of the most important changes we recommended were not made, despite efforts by John Olekszyk to amend the proposals. The two provisions that we wanted changed were: including hospitalization in the co-insurance and moving fairly immediately from a co-insurance of $500 for a single member and $750 for a family to $500 to each member and his or her dependent. We were successful in adding requirements to inform members of drug interchanges in advance, assuring members that persons involved in monitoring members' medication usage are health professionals recognized under the Public Health Code, and reminding members of their rights to appeal.

Prefunding/lottery
The new House Committee on Retiree Health Care Reforms has shown a great deal of interest in the concept of returning to prefunding school retiree health care. We do not think, however, that the concept of using Lottery proceeds to do so has very much traction.

Restoring MPSERS obligations
Representative Alma Wheeler Smith (D-Ypsilanti) is spearheading an effort to restore the majority of MPSERS obligations to the State of Michigan, rather than forcing local districts and community colleges to assume these costs. This would be very helpful in reducing the pressure from the educational management sector to lessen retiree benefits. She has set up a work group meeting on this issue for early February.

Divestment bills
A large package of bills that speak to divestiture of public pension funds from five different countries has passed the Senate. The principal bill is SB 846, Senator Cameron Brown, (R-Fawn River Township), which along with companion legislation, together make up the "Divestment from Terror Act." These bills are tie-barred to two bills that have passed the House (HB 4854 and 4903) and deal only with divestiture from Sudan and Iran. It is entirely possible that once the House-passed bills pass the Senate, the House will attempt to remove any linkage among these bills and send their bills to the Governor. Divestiture from Sudan and Iran is far less costly to pension funds than divestiture from these additional countries would be, largely because there are pre-existing networks that can identify companies involved in them for the Sudan and Iran.

Senate Hearings
The Senate Appropriations Retirement Subcommittee is beginning hearings this week on all the state-operated pension systems. They are beginning with the SERS (State Employees Retirement System). We will be monitoring these hearings closely.