ORS reports on all community colleges
Published on 10/16/2018
As required in the July 2018 clarification of the law, the Office of Retirement Services has reported to the state legislature what the agency believes each of the 28 Michigan community colleges owes in back payments to MPSERS. The discrepancies arose due to lack of clarity and inconsistent direction as to how contributions for part-time student workers should be collected. Of the $7.5 million state total reported by the ORS, Southwestern Michigan College’s share would be approximately $257,569, far less than the $388,600 to $10.4 million previously asserted by an OAG audit.
Governor signs SB 888 clarifying the law
Published on 7/2/2018
Governor Rick Snyder signed Senate Bill 888 on June 28, clarifying the law that part-time workers whose predominant relationship is a “student” should NOT be included in the state teachers’ retirement system. The clarification is effective as of July 2, 2018.
Legislature acts: Students NOT to be part of teachers’ retirement system
Published on 6/13/2018
After passing the Senate unanimously (37-0) in May, legislation clarifying that part-time student workers should NOT be included in the teachers’ retirement system passed the Michigan House of Representatives on Tuesday afternoon by a vote of 107-2. Since the House slightly amended the bill, the Senate voted again and concurred with the House version with another unanimous vote (36-0) on Tuesday evening. The overwhelming support of the legislature indicates what SMC and the majority of community colleges have said all along: that it is not the intent of the legislature for part-time students who work on campus to be enrolled in the state teachers’ retirement system. See the Gongwer article here.
Bill passes Senate unanimously
Published on 5/24/2018
The Michigan Senate has unanimously (37-0) passed a bill clarifying that part-time student workers should not be included in the teachers' state retirement system. See the Gongwer article here.
Education committee sends bill to full Senate
Published on 5/2/2018
On Tuesday, the Senate Committee on Education voted unanimously to send Bill 888 to the full Senate with a recommendation to approve with immediate effect, showing bipartisan support to provide clarity to colleges statewide that part-time workers whose predominant relationship is a “student” should NOT be included in the teachers’ retirement system. Furthermore, Bill 888 will require the ORS to complete within 60 days a comprehensive report of contributions for part-time students for each Michigan community college for the last 10 years. See the Gongwer article on the matter here.
Attorney General Schuette supports clarifying legislation
Published on 5/2/2018
Michigan Attorney General Bill Schuette supports legislation clarifying that part-time students should not be enrolled in the teacher's retirement system. He is quoted as saying, "Our community colleges have been operating in good conscience since the beginning...". See the Attorney General's news release here.
Community colleges react
Published on 4/27/2018
In a Dowagiac Daily News article from April 26, LMC President Trevor Kubatzke confirmed that the OAG's position on the inclusion of part-time student workers into MPSERS was a surprise to his administration. Oakland Community College agreed with SMC's interpretation and does not plan to change its practice. The ORS confirmed that audits regarding what colleges (including SMC) may owe are not yet completed. See the full article here.
Court of Appeals case continues
Published on 4/24/2018
In a procedural matter in SMC’s lawsuit against the State of Michigan disputing the Office of the Auditor General’s jurisdiction to audit community colleges, the Court of Appeals declined to send the case back down (or remand it) to the judge in the lower Court of Claims. This means the appeals process will continue with the Court of Appeals now able to consider the full scope of evidence in the case.
The Office of Retirement Services, the official state agency on retirement matters, still has not indicated that SMC owes any unpaid contributions to MPSERS from prior years.
President addresses concerns
Published on 4/20/2018
Leader Publications published an article this week about President Mathews addressing questions from the college community. Read the full article here.
Statewide college report
Published on 4/18/2018
The Senate Fiscal Agency analysis mentioned by Senator Proos shows that after the instruction change of 2015, the majority of community colleges (16), including the two largest (Macomb and Oakland) and Lake Michigan College, evaluated the conflicting guidance and continued with their existing practice. A copy of the report can be found here.
President answers questions
Published on 4/17/2018
SMC president Dr. David Mathews provided answers to common questions regarding the MSPERS issue in a letter to employees on April 16. Read the letter here.
Setting the record straight at SMC
Published on 4/16/2018
The OAG report and newspaper coverage fail to include critical facts that explain why SMC has challenged the OAG’s opinion, and why most colleges follow the same practice as SMC. President Mathews sets the record straight in a letter to the editor published in the Herald Palladium on April 11. View the full letter here.
Heading toward clarification
Published on 4/3/2018
Since the Office of Retirement Services has given different guidance to different colleges, Sen. Proos' and Rep. Miller's legislation will provide clarity and benefit student workers. Read the Dowagiac Daily News' story here.
Story on MPSERS confusion from ABC57 (South Bend)
Published on 3/29/2018
All student workers will be treated equally by the state teachers' retirement system under legislation proposed by Senator Proos. The legislation will provide clarity for community colleges statewide, including SMC and Lake Michigan College. Watch ABC57's coverage of the legislation here.
Legislation will clarify issue
Published on 3/27/2018
Current law is mute on the subject of enrolling part-time student employees in MPSERS, which has led to different interpretations by various state agencies. More than half of Michigan's community colleges (including SMC) do not currently contribute for part-time or full-time students, but confusion persists. Sen. John Proos and Rep. Aaron Miller are co-sponsoring legislation to emphasize that student workers do NOT need to be enrolled. Read the news release about the legislation from Senator Proos' office here.
Board treasurer offers clarity
Published on 3/9/2018
Becky Moore, treasurer of the board of trustees, also wrote a letter to the editor to clarify how the college has been handling student workers' pay. The article was published in the Dowagiac Daily News on March 8. A copy of the letter can be viewed here.
SMC board chair provides answers for tax payers
Published on 3/5/2018
Board of trustees chairman Tom Jerdon wrote a letter to the editor regarding student workers' pay which was published in the Dowagiac Daily News and the Niles Daily Star on March 5. A copy of the letter as published in the Dowagiac Daily News can be viewed here.
Student workers and the state teachers' retirement system
Published on 2/23/2018
Early this week, the Michigan Office of the Auditor General (OAG) released a report condemning Southwestern Michigan College (SMC) for not enrolling part-time students who work on campus into the teachers’ retirement system.
Of course, SMC does not enroll student workers into the teachers’ retirement system. This determination has been made based on direct guidance from the Office of Retirement Services (ORS) and common practice among other community colleges.
It is also consistent with the state and federal mandates that these workers NOT be enrolled in the unemployment insurance system or the Social Security withholding system.
Misrepresentation in the OAG’s report and questions from the media make it necessary for Southwestern Michigan College (SMC) to set straight the factual record in this matter, as follows:
- The ORS was specifically advised in 2011 of the College’s practices regarding part-time student workers. The ORS advised the College that it was acting in compliance with the retirement statute. This is documented in an affidavit from the former human resources director. With respect to the question of whether SMC officials were aware of our reporting practices, College officials were aware of the ORS’ prior advice detailed in that affidavit.
- ORS itself conducted an audit during the period from June to November 2016 of the 2014 - 2015 payroll records, which included ORS review of payroll data that reported employees for whom retirement contributions/deductions were not being made. The ORS issued no audit finding of noncompliance for these employees.
- Other Michigan community colleges have similarly excluded student workers from the teachers’ retirement system. During the audit interviews, the OAG was advised of this fact and rejected it. This fact did not match the OAG’s predetermined narrative.
- Every payroll record, financial report, e-mail and conversation cited in the OAG’s report were voluntarily disclosed to the OAG by the College and its administrators. Nothing had to be subpoenaed. Given this and past reporting to the ORS, there is no basis for claims of fraud or concealment.
- The College has reviewed the OAG’s claim regarding potential liability and finds no basis for a total claim more than 25 times the amount of the claimed actual contribution amount. The OAG provided no responsible accounting to back up this intentionally inflammatory claim.
For all of the reasons above, the College has filed a lawsuit against the OAG in the Michigan Court of Appeals. If you have any questions, feel free to contact SMC President Dr. David Mathews.
SMC files appeal in Auditor General suit
Published on 2/22/2018
On Wednesday, Southwestern Michigan College filed in the Michigan Court of Appeals the second stage of its suit against the Michigan Auditor General’s unconstitutional conduct of a free-wheeling, unauthorized investigation of the College’s practice of not making retirement system payroll deductions and contributions for part-time student workers who will never vest in the system or collect benefits.
The College’s practice was based on 2011 guidance from Michigan’s Office of Retirement Services (ORS) that non-contribution for part-time student workers was correct. Regulations published by the public school employees’ retirement system state that retirement service credit will not be given to students in a reporting unit. Moreover, the College’s biweekly payroll reports released to the ORS since 2010 clearly disclosed to the ORS that SMC was not making retirement deductions or contributions for part-time student workers.
In August 2017, SMC was forced to sue the state in response to a mandate that required the Dowagiac-based College to enroll its part-time student workers in the state teacher’s retirement system. That mandate, said SMC President Dr. David Mathews, “is the most egregious over-reach of state government” that he had ever seen. SMC objected to the mandate because not only does enrolling part-time student employees into a system designed for teachers not make sense, but doing so would violate federal laws prohibiting colleges from withholding taxes for retirement benefits from federally-funded student employees’ pay.
“We try to provide students with a way to make money on campus that will help them afford to stay in school,” Mathews said at the time. “For us to take money out of their paychecks and place it into a system they will never see benefits from is wrong and not consistent with what other institutions are doing.” He also noted that full-time student employees are not required to participate in the teachers’ system, while employees in other job classifications have additional options for retirement savings.
In January, a Michigan Court of Claims judge dismissed SMC’s challenge to the OAG’s constitutional authority to conduct an open-ended investigation under the guise of a so-called investigatory audit. In its arguments before the Court of Claims, the OAG stated it was not investigating SMC specifically, but examining an issue related to its audit of the Michigan Public School Employees Retirement System. However, the OAG’s recently published report focused solely on SMC and neglected to include all of the facts provided to the OAG during its investigation.
“The Court of Appeals exists for this purpose – to reconcile differing opinions from separate state agencies as to jurisdiction and interpretations of state law,” Mathews said. “We certainly disagree with the OAG findings of violations, so we will continue litigation and look to the appellate courts to review the case and assess the issues. This case is not about depriving students of benefits (for which they will never vest). This case is about helping part-time students to pay for their educations, not having them work to prop up a bankrupt, mismanaged retirement system at the cost of educational opportunity."