Late Tuesday, the Michigan Court of Claims approved a final settlement agreement in our long-standing lawsuit against the Office of Retirement Services (ORS). As you know, the case – originally filed in 2019 – has been before the courts multiple times to challenge ORS’ implementation of state law, which significantly impacted public school employees’ pension contributions and the calculation of their final average compensation (FAC).
The settlement divides affected retirees into two groups, each with different potential remedies:
- Group A – Plaintiffs and “similarly situated retirants” who retired on or after January 1, 2015, through July 1, 2021 will have the right to request a review of their FAC increases to determine if they improperly exceeded the NSI threshold, which for this Group is the relevant limit.
- Group B – For Individuals retiring on or after July 1, 2021, the settlement sets a limit of an 8% average annual increase in compensation for use in FAC calculations. That 8% must be compounded and averaged across the period. If that threshold is exceeded, these individuals have the right to request an ORS review to determine whether their compensation increases should still be credited.
It’s important to note that the settlement also allows for factors to be considered when ORS reviews an increase. Specifically for Group B, if a “Board of Control” passes a certified resolution stating that an individual’s compensation was not paid for the purpose of spiking, ORS may still count those earnings toward retirement calculations. The settlement also requires both sides to continue working collaboratively to resolve any remaining issues.
We are thoroughly reviewing the court’s order and actively working with our legal team, partners, and ORS to determine the next steps and ensure that there is a permanent, long-term solution for how retirees are treated moving forward.
Our deepest thanks go out to our attorney, Bob Schindler, and the outstanding legal team at Miller Johnson; to all of our partners who have dedicated countless hours and resources toward helping us reach this point; and, of course, to you – our members – for your unwavering perseverance, commitment, and leadership.
While there’s still work to do and details to shake out, we are confident that this settlement is a significant step forward in delivering the clarity, certainty, and fairness that you – and all impacted public school employees – deserve.