State appears to settle for less in SMC controversy

 

DOWAGIAC — The state tally regarding Southwestern Michigan College’s unpaid retirement contributions is well below what the college most feared.

However, it’s not certain how much the state will demand and whether SMC will pay it.

The Michigan Office of Retirement Services has released its report on how much community colleges owe for missed retirement contributions for part-time student workers. It says SMC owes over $257,500 for 322 student workers not reported or reported incorrectly over several years.

There were concerns the total, with interest and fines, could reach $388,600. A worst-case scenario once feared was $10.4 million with fines and interest.

Meanwhile, ORS says Lake Michigan Colleges owes just under $117,000.

But it’s SMC where the missed contributions have been a controversy and inspired Cass County’s state senator and representative to introduce legislative fixes. Gov. Rick Snyder this summer signed the bill to exempt part-time student workers from having to contribute to the Michigan Public School Employee Retirement System (MPSERS).

The law further requires community colleges and the ORS to prepare reports on how much is owed from the past.

As reported last month, LMC and SMC were among the community colleges submitting reports by the Aug. 31 deadline. The ORS then had 30 days to compile its final report. That report was released Sept. 28.

“This report contains calculations of contributions due as well as late fees and interest as required under MCL 38.1342 based on the data provided by the community colleges for the study period,” ORS Director Kerrie Vanden Bosch reported.

“The late fees and interest are calculated to make the retirement system whole for the time that the contributions were not invested in the market. ... Please note that this report is not an invoice or bill to a community college and should not be treated as such at this point.”

As outlined in the report, LMC owes just under $117,000, including interest and late fees for the years 2015-2018 for 182 student workers either not reported or reported incorrectly. Similarly, SMC owes over $257,500 for 322 student workers not reported or reported incorrectly for those years.

The whole part-time student worker MPSERS issue arose after an audit of SMC records by the state Office of Auditor General. The OAG audited SMC records to 2010 and concluded that the college owed $388,600 to MPSERS.

SMC has taken the OAG to court, disputing its authority to audit the college. That suit is pending before the Michigan Court of Appeals.

“This report shows clearly that this is not an SMC issue, but a statewide issue affecting all 28 of Michigan’s community colleges,” SMC President David Mathews said last week. “This report, created by the ORS, shows only the ORS position that part-time students should have been enrolled in the state teachers’ retirement system.”

He said SMC continues to go by the “predominant relationship” standard, that is if student workers’ primary reason for being on campus is to be a student rather than an employee, they should not be enrolled in MPSERS.

Mathews said SMC only submitted a list of all student workers, their hours worked and the number of hours enrolled in classes and not a total of how much believed to be owed. He said the $388,600 figure cited by the OAG was for a longer period than this ORS report.

LMC officials said they were pleasantly surprised by the ORS report. They had estimated that 214 students had been incorrectly excluded from retirement benefits and they would owe about $164,000.

“We calculated our internal estimate using the most conservative assumptions of potential eligibility and also factored in students’ contributions,” LMC spokesman Candice Elders said. “A cautious estimate helped us to ensure we are allocating sufficient resources to cover any outstanding deficit.

“We are pleased to see a proposed resolution and look forward to doing whatever is necessary to comply with the law and fulfill any outstanding obligation to our students.”

ORS spokesman Caleb Buhs said that while the ORS has the authority to send an invoice to community colleges, they are currently waiting for a legislative response before taking any new steps.

In another wrinkle to the issue, state Rep. Scott VanSingel, R-Grant, has introduced legislation to allow former part-time student workers to apply for and be credited with for retirement benefits they earned but their employers didn’t report or contribute.