HB 4059 Introduced in the Michigan House

Feb 12, 2015

HB 4059, introduced by Rep Hughes would amend the Public School Employees Retirement Act to allow retirees to retain their retirement allowances and health benefit subsidy while providing certain services to schools in an identified critical shortage discipline or as a substitute teacher, instructional coach, or school improvement facilitator.   

Previously, Public Act (PA) 464 of 2012 (House Bill 5261) amended the Act to allow retirees to retain their retirement benefits while providing services in each of the circumstances described below; however, that bill sunset each of the provisions as of July 1, 2014.  House Bill 4059 would delete the sunsets, thus restoring the PA 464 provisions.  Please Email your legislator by

Currently, the Act reduces either pension or retiree health benefits or both while a Michigan Public School Employees' Retirement System (MPSERS) retiree returns to work in a reporting unit, with varying reductions depending on the retirement date and the circumstances of the new employment.  Under the Act, the term "reporting unit" means a public school district, intermediate school district, public school academy, tax-supported community or junior college or university, or an agency having employees on its payroll who are members of the retirement system.

One of the features of this legislation is that the bill would exempt from the current retiree benefit reductions, a retiree employed by a reporting unit that has a situation that necessitates the hiring of a retiree in an area designated as a critical shortage discipline.  The Act currently requires the State Superintendent of Public Instruction to compile and annually update a list ob critical shortage disciplines.

The critical shortage provision would apply under the following circumstances:

• The retiree has been retired for at least 12 months before being reemployed.
• The retiree is employed for no more than a total of 3 years.
• The retiree is not eligible to use any of the service or compensation earned for a recomputation of his or her pension.
• The reporting unit pays to the MPSERS system 100% of the contribution rate for the unfunded actuarial accrued liability (UAAL) for the pension and for the UAAL for retiree health care.

Substitute Teachers, Instructional Coaches, and School Improvement Facilitators

It’s important to note that this bill would also exempt, from the current benefit reductions, a retiree retired after July 1, 2010 who subsequently is employed by or works in a reporting unit as a substitute teacher, instructional coach, or school improvement facilitator.  This provision would apply under the following circumstances:

• The retiree has been retired for at least 1 month before being reemployed.
• The retiree earns no more than 1/3 of his or her final average compensation in a calendar year.
• The retiree is not eligible to use any of the service or compensation earned for a recomputation of the pension.
• The reporting unit pays to the MPSERS system 100% of the contribution rate for the UAAL for the pension and for the UAAL for retiree health care.  (The Act requires that a reporting unit provide the Department of Technology, Management, and Budget - Office of Retirement Services quarterly with the names and total compensation paid under this provision.  If the retiree works through a third party, the Act requires the reporting unit to obtain from the third party a list of all the retirees employed and total earnings for each quarterly period.)

MEA lobbyists continue to work for the passage of this legislation.  The bill is currently before the House Liability Reform Committee.