Judge rules 3 percent wage hit for teachers' retirement health care is unlawful

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O.K., Now here is a new spin on the pension thing coming out of Michigan.

By Peter Luke

As Gov. Rick Snyder and lawmakers seek to require state and school employees to contribute more for their health care, last year’s efforts to require contributions for retiree health care has hit another judicial road block.

Ingham Circuit Judge James Giddings has ruled that requiring Michigan school employees to pay 3 percent of their wages for health-care coverage in retirement is unconstitutional since the health benefit isn’t guaranteed.
The decision follows a February ruling that found a separate contribution requirement for state employees was also unconstitutional. The Michigan Court of Appeals stayed that decision on March 18, which means the state can continue to deduct the 3 percent from wages. The money is being held in escrow during the litigation.

Gov. Jennifer Granholm, a Democratic-run House and the GOP-controlled Senate approved both measures last May.
The school employee deduction is estimated to generate more than $300 million annually, or more than $3 billion through fiscal 2020. But Giddings on Friday ruled that unlike pensions, retiree health benefits can be reduced or even scrapped by a future Legislature. Therefore, employees are being asked to pay for a benefit they might never receive
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He said school employees “have been given no assurance that they will ever benefit. What is beyond speculation is the undisputed fact that the Legislature has the unfettered power to change or eliminate all benefits.”

“Consider the reason for the current legislation - the state has failed to make adequate provision for its promised health-care benefits - not to mention future beneficiaries,” Giddings wrote.

http://www.mlive.com/politics/index.ssf/2011/04/judge_rules_3_percent_wage_hit.html