New MPSERS Reform Plan Unveiled and School Aid Conference Committee Approves Budget

Jennifer Smith

By Jennifer Smith, MASB Director of Government Relations

DashBoard, June 14, 2017

The budget approved last week by the School Aid Conference Committee includes a $495 million MPSERS Reform Reserve Fund made up of $200 million in General Funds and $295 million in School Aid Funds. This is set aside to address the first year of costs of closing the hybrid system under Senate Bill 401 and House Bill 4647.

However, the Governor and legislative leaders announced yesterday they had reached an agreement on the budget and MPSERS. While we are still reviewing the official language that was released late last night, we have been told it will not close the hybrid system. Therefore, the $495 million will not be needed. It will instead be divided up between infrastructure, the Budget Stabilization Fund and MPSERS.

The MPSERS agreement would create a new 401k-style plan that would include a 4% employer contribution and an additional match up to 3%. This would go into effect on Oct. 1, 2017, for all employees currently in the defined contribution plan. If a person hired on Feb. 1, 2018, does not make an election for either the hybrid or DC plan, the person will default to the DC plan.

The hybrid option for employees hired on or after Feb. 1, 2018, will include new risks for the employee. If the system becomes underfunded there would be sharing of costs between the employer and employee. We have a lot of questions about how this would work and how it would actually affect employees and districts.

It also includes a trigger where, if the new hybrid system is funded at 85% or less for two consecutive years, the Legislature would have 12 months to fund it at 85% or it will close to any new hires. Any closure of the system brings back the costs we’ve been talking about all along, except with not knowing exactly when it will close, it’s impossible to know what the costs would be.

Both the Senate and House Education Committees started hearings this morning that are expected to continue into the afternoon. The actual bill language wasn't made available until 10 p.m. last night. It is the goal of House and Senate leadership to have each chamber pass its bill by the end of the week.

We believe acting this fast is reckless and irresponsible with so many outstanding questions. Call you legislator and let them know there is no reason to rush this through without proper hearings and discussion. You can also still access our most recent MPSERS alert on the introduced bills.

School Aid Conference Committee Approves Budget

On Thursday afternoon, the Conference Committee on School Aid met and approved an agreement on HB 4235 by a vote of 4-0 with the two Democrats passing on the vote. We have updated our budget comparison sheet to reflect the conference report on some of the bigger issues in the budget.

The conference report includes a $60-120 increase in the per-pupil foundation allowance that will be distributed through the 2x formula. It also increases at-risk funding by $120 million, and expands eligibility to economically disadvantaged students and all districts. However, hold harmless and out-of-formula districts would receive 30% of the amount otherwise calculated. This would be an estimated total of $777 per eligible pupil and newly eligible districts would receive an estimated $233 per eligible pupil.

The budget also includes $6 million for bilingual education grants to districts that use the WIDA Access and WIDA Alternative Access assessments. It allocates $620 per pupil with a score between 1 and 1.9 and $410 for those with scores between 2 and 2.9. It does roll up the funding for the third grade reading law requirements into a single line item and then distributes those funds on a per-pupil basis in an amount of $210 per first grader. It also increases the matching funds for hiring literacy coaches in ISDs to $75,000.

The budget does not include additional funding for high school students or a prorated per-pupil allowance for cyber schools. A full analysis from the House Fiscal Agency, as well as a district-by-district impact are available for your review. 

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