The Michigan Supreme Court has ruled the state must repay more than $550 million collected from school employees.
Governor Jennifer Granholm signed a law in 2010 requiring public school employees to pay 3 percent of their salaries toward healthcare they might receive after retirement.
David Hecker is the president of the American Federation of Teachers Michigan chapter. He says the state was taking money for something workers might never get.
“A pension is guaranteed under the constitution but retiree healthcare is not,” Hecker said. “So, the state was taking 3 percent out of people’s pay – you didn’t have a choice. It was taken out and when you retire, maybe there will be retiree healthcare, maybe there won’t be.”
About 275-thousand school employees paid into the plan during the two years the law was in place.
“The state has illegally held this money that belongs to the women and men who educate our children,” Hecker said. “Be they teachers in the classroom, faculty at a community college or the bus driver that drives the kids to school.”
The money was collected for two years before the law was changed by Governor Snyder. But Snyder fought lower court rulings that found the money should be returned to school employees. The funds – including interest — have been held in escrow. Repayments will not affect the state budget.