DOWAGIAC — New legislation signed by Gov. Rick Snyder late last week has vindicated Southwestern Michigan College in its fight against the state over state teacher retirement pension contributions for part-time student workers, SMC President David Mathews said Wednesday.
The new legislation exempts colleges and student workers from having to pay into the retirement system, now and in the future. The law also addresses what colleges must pay for past amounts that were not contributed, as well as gives former student workers a way to contribute, if they wish.
Mathews said SMC has already paid the amount identified in September by the Office of Retirement Services for contributions not made for 2015-18. The ORS said SMC owed $257,569, including penalties and late fees, and the college has paid that, he said. Mathews noted that Lake Michigan College has also already paid its past due amount of $116,922.
Mathews said the new legislation also made it clear that community colleges do not owe any further penalties for years priors to 2015. “This brings the issue of what to do looking backward to its final conclusion,” he said.
As for the section in the new law giving former student workers the chance to contribute, he doesn’t believe the number will be that big, but said the college will pay its share for whoever does enroll. “We anticipate that this will be a very small number of people,” he said.
Since 2017 SMC has been part of the controversy over whether part-time student workers must pay into the Michigan Public School Employees Retirement System. The Office of Auditor General audited the college that year and found that SMC failed to pay $388,600 from 2011-17, and could owe up to $10 million, with interest and penalties.
SMC disputed the OAG’s findings, including their authority to conduct an audit, and sued the OAG in the Michigan Court of Claims, and then the Michigan Court of Appeals. The Court of Claims ruled against SMC. The Court of Appeals has not ruled, and Mathews said Wednesday that the college is in the process of withdrawing its lawsuit.
Mathews said the lawsuit was “absolutely essential” to ultimately get the state to recognize that SMC was following statewide precedent and practice in which most other community colleges were also not contributing to MPSERS for part-time student workers.
“Remember, the OAG told SMC that all other community colleges were enrolling part-time student workers into the retirement system,” he said. “The OAG ignored every bit of factual information that SMC had provided them. There was no recourse other than the legal route.”
He said that the college’s lawsuit against OAG cost the college around $152,000 and was worth it. “This is what it took to raise the visibility of this issue to the point where the legislature passed two laws to fix the problem statewide,” he said.
“Because (the new law) brings this statewide issue to conclusion, and provides certainty to SMC and adequate relief from the flawed interpretation of the OAG report, SMC has begun the process of withdrawing the College’s lawsuit against the OAG so that we can focus entirely on our mission of providing affordable access to high-quality education to the community,” Mathews said.
He said while the college still believes that the OAG acted outside of their authority, they are not “going to try to fix state government by continuing the expense of a lawsuit.” He noted that as the OAG had asserted that SMC could owe $10.4 million, “the legal route was the best choice we had, and certainly paid off financially.”