LANSING, Mich. — The state can collect money from school employees for retiree health care, but can't spend it until a lawsuit over the new system is resolved, Ingham County Circuit Judge James Giddings ruled Thursday, according to The Detroit News.

The new system deducts 3 percent of employees' wages for a retiree health care fund; it is expected to generate about $300 million annually, The News reported. Giddings said that the state would not be harmed if the money is reserved until a case brought by the Michigan Education Association is decided, according to The News.

The MEA lawsuit charges that the new law violates the state's contract with school employees and is unconstitutional, The News reported.

Giddings will decide the case after reviewing motions and hearing oral arguments, according to The News.

The Detroit News, "Judge: Michigan can't tap school pension contributions until suit is resolved," June 28, 2010

Mackinac Center for Public Policy, "Gutted school pension 'reform' could come back to bite schools," June 28, 2010