GRAND RAPIDS, Mich. — A Michigan Education Association lawsuit over retiree health care is one reason schools aren't hiring new teachers, school leaders in west Michigan told The Grand Rapids Press.

The MEA is challenging a new state law that requires school employees to pay 3 percent of their base salaries toward school retiree medical benefits, The Press reported. A judge has ordered those payments to be put in escrow until the lawsuit is settled, the report said. In the meantime, school districts have to make up the difference.

That means districts must send an amount equal to 20.66 percent of payroll — the highest level ever — to the statewide school employee retirement fund, The Press reported. The amount could drop to about 17 percent if the MEA loses in court.

The higher retirement payments will eat up some of the federal "Edujobs" money that districts anticipate receiving this year; those funds have been held up due to a snafu in the distribution plan, according to The Press.

Even when money becomes available, school districts said they likely won't hire new teachers because the money may not be provided again next year, The Press reported.

"It's an easy-come, easy-go world for us right now," Grandville Superintendent Ron Caniff said. "Even a brand new teacher costs about $65,000 when you include everything. And if the funding isn't there and you have to lay them off, there are unemployment costs."

SOURCE:
The Grand Rapids Press, "Michigan education retirement costs hit new high: Schools will pay 20 percent surcharge on payroll," Oct. 14, 2010

FURTHER READING:
Michigan Education Digest, "Teachers sue over retirement contributions," June 16, 2010

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