State Issues | Michigan Association of Superintendents & Administrators

The MASA Government Relations Department closely follows state policy developments within Michigan.  We work closely with members to ensure the values of school administrators throughout the state are represented through effective and responsible state legislation.  As advocates, we partner with a number of other education organizations as well as state officials to effect meaningful change, proactively addressing the concerns of our members and Michigan students.

On this page, you will find links to weekly updates produced by the Government Relations staff, policy briefs designed to inform and engage our members, and constantly updated information regarding certain “Hot Topic” state issues.  Additionally, we have provided up-to-date monitoring of Michigan’s FY 18 Budget process.

MPSERS 3% Refund

The Michigan Supreme Court ruled on December 20, 2017, in a 6-0 decision that the state must return over $554 million to public school employees. The order, AFT v. Public School Employees’ Retirement System, settles a debate over a 2010 law that deducted 3% from teachers’ and other public school employees’ salaries for retirement healthcare. This ruling upholds a Michigan Court of Appeals verdict in 2016 that found funds collected from 2010 to 2013 from teachers was unconstitutional. The $554 million has remained in an escrow account since 2013.

MASA members are likely to have many questions, personally and from your staffs. At this time, we know that districts will receive the refunds in the January 22 State Aid payment, and districts will be responsible for disbursing the refunds to employees and retirees. Below is an FAQ from the Office of Retirement Services.

How much money will be refunded to me?

ORS will notify members of their refund amount soon. Please continue to check the What’s New section at ORS for more information as it becomes available.

When will I receive my refund?

ORS provided information to the individual reporting units on January 9 and will be returning the funds to them on January 22. This does not mean that the school districts will disburse those funds on that date. They have important responsibilities for the recording and tax reporting of these refunds. Generally, you might expect your refund to come to you 60-90 days after the school receives the funds. There are several districts that have closed or dissolved since 2010. The return of those contributions may be later because a different methodology will be used to transfer those contributions.

What if I'm retired?

If you worked anytime during July 2010 until September 2012, your 3% healthcare contributions during that period will be returned.

What if I’ve moved/left the school I worked for?

This money will be refunded through your school district. It is important to update your address with the school where you worked during July 2010 until September 2012. If you worked for more than one school district during that period, be sure your address is current with each school district. If you are retired, update your mailing address in miAccount and we will provide it to your school district.

What if my district/school closed?

Some districts merged into others. If that is the case, the money will be refunded through the merged school district. If your district/school closed, ORS is working on the plan to refund your contributions to you.

Do we get interest on these funds?

Yes, interest will be included in the refund you receive. The courts directed the administration to maintain the funds in a capital preservation escrow account, which accrues a very minimal amount of interest.

What about state employees?

Court cases regarding state employees have already been resolved. This is only for public school employees who worked during July 2010 until September 2012 and contributed 3% toward retiree healthcare

Why can’t you send this directly to us instead of sending it to our employers?

There are taxation rules for these payments that can only be implemented by the employers.

How is the money refunded if the contributing member is deceased?

The school districts will issue the refunds. Each district will determine how to distribute the refund in this situation.

How will this impact my taxes?

The school districts will issue the refunds. ORS can’t speak to the tax implications.

Will the 3% refund be considered additional income, and will that cause my pension to be re-calculated?

No. Your Final Average Compensation (FAC) is calculated using gross wages. The 3% healthcare contribution was deducted from gross wages, so that deduction won’t change the FAC calculation at all, regardless of when you retire (or retired).

Can I use my refund to pay off my Tax-Deferred Payment (TDP) agreement?

ORS is required to return the money to the employer(s) for whom you worked between July 2010 and September 2012. They will issue the refund to you. Once you have been refunded the money, you may use it for anything you wish. However, the normal rules still apply for paying off a TDP agreement.