The retirement litigation here is MSPERS. Faculty members in the ORP (TIAA/CREF) will not be affected by this ruling.
1. What changes happened in 2010 to the Michigan Public School Employees Retirement Act (MPSERA)?
On May 19, 2010, the Michigan Legislature enacted Public Act 75 (PA 75) which amended the MPSERA. The amendments, in part, required public school districts and other reporting units to withhold 3% of each employee’s wages and remit the amount to Michigan Public School Employees Retirement System (MPSERS) which were classified as “employer contributions” to the trust that funds retiree health care benefits.
2. What did MEA do?
MEA and AFT filed suit on behalf of their members challenging the constitutionality of PA 75.
3. What happened in the courts regarding PA 75?
July 13, 2010. The trial court issued a preliminary injunction providing that the 3% levy from wages of all applicable MPSERS members pursuant to PA 75 would be held in a separate interest-bearing account (escrow) until the trial court issued its ruling.
April 1, 2011. The trial court issued its opinion finding that PA 75 was unconstitutional. The state appealed that decision to the Michigan Court of Appeals.
August 16, 2012. The Michigan Court of Appeals held that PA 75 violated multiple constitutional provisions set forth in the Michigan and U.S. Constitutions, and therefore PA 75 was unconstitutional.
September 27, 2012. The state filed an application for leave to appeal with the Michigan Supreme Court. The Supreme Court took no action on the application for nearly two years.
July 1, 2015. The Michigan Supreme Court vacated the Court of Appeals August 16, 2012 ruling and remanded the case to the Michigan Court of Appeals to reconsider its prior ruling based on the Michigan Supreme Court’s April 8, 2015 decision regarding 2012 Public Act 300 (discussed below).
June 7, 2016. The Court of Appeals issued its second decision regarding the constitutionality of PA 75. The Court of Appeals again found PA 75 unconstitutional, as the Act violated multiple constitutional provisions set forth in the Michigan and U.S. Constitutions.
4. What happened in 2012 to the MPSERA?
On September 4, 2012 and in response to the Michigan Court of Appeals’ August 16, 2012 decision regarding PA 75, the Michigan Legislature enacted Public Act 300 (PA 300) which amended the MPSERA. Public Act 300 required all actively employed members of MPSERS to make certain elections regarding their pensions and retiree benefits.
5. What did MEA do?
MEA and AFT filed suit on behalf of their members challenging the constitutionality of PA 300.
6. What happened in the courts regarding PA 300?
November 29, 2012. The trial court issued a ruling dismissing MEA’s and AFT’s lawsuits. The parties appealed to the Michigan Court of Appeals.
January 14, 2014. The Michigan Court of Appeals issued its decision affirming the trial court ruling finding PA 300 constitutional. The Court of Appeals reasoned that the voluntary nature of the contributions under PA 300 remedied the constitutional defects found in PA 75. An application for leave to appeal was filed with the Michigan Supreme Court.
May 22, 2014. The Supreme Court granted the application.
April 8, 2015. The Supreme Court issued its decision regarding PA 300. The Court found PA 300 constitutional. In that decision, the Court noted “we emphasize that we address in this case only 2012 PA 300 and do not decide whether the Court of Appeals correctly held that 2010 PA 75 violated those same provisions.”
7. Can the state appeal the June 7, 2016 decision of the Michigan Court of Appeals in the PA 75 case?
Yes. The state can file an application for leave to appeal with the Michigan Supreme Court within 42 days of the Court of Appeals’ decision. There is no time period specified in the Court Rules for the Supreme Court to act on an application for leave to appeal. If the application is denied, the Court of Appeals’ decision dated June 7, 2016 becomes the final appellate decision in the case. If the application is granted, there will be additional briefs filed and oral argument in the Supreme Court. Thereafter, the Supreme Court will issue its decision.
8. What time period does the decision apply to?
The Court of Appeals concluded that PA 75 was unconstitutional “as it existed from its effective date until the effective date of 2012 PA 300.” If you chose retiree health benefits under PA 300, any payments under that Act are lawful and not subject to this lawsuit. See above regarding PA 300.
9. When will I get a refund?
That depends on whether the state appeals. Further, if the state does appeal, it will depend on the actions/decisions of the Michigan Supreme Court. If the state does not appeal, the case will be remanded back to the trial court “which shall direct the return of the subject funds, with interest, to the relevant employees.” Any disputes regarding eligibility, payment, and methodology will be decided in the trial court. MEA Legal will continue to advocate for our members to receive the quickest and highest possible refund consistent with the court decisions.
10. What happens if you’ve retired?
It is MEA’s position that all members that had monies taken out of their checks under PA 75 are owed a refund plus interest based on the actual amount taken. Different members may have had different amounts taken based on individual circumstances such as retirement dates, leave of absences, etc. We will also advocate for a full accounting by the state in the trial court.
11. Where is the money?
As noted above, the trial court ordered the money at issue to be placed in an interest-bearing escrow account. The account has a balance of more than $550,000,000. The money is still being held in that account.
12. Was this case supported by dues dollars?
Absolutely. Five years of complex litigation is costly. This case is just one of many examples of your dues dollars in action. We are stronger when we are together.
13. What if this FAQ doesn’t answer my question?
We know this case is of great interest to the membership. We will continue to update this FAQ when we have additional information to share. We ask for your patience as we continue to advocate on your behalf. If you do have additional questions, please submit those to webmaster@mea.org.