DALLAS — Michigan Gov. Rick Snyder says a state Supreme Court ruling ordering it to return $554 million collected from teachers from 2010 to 2012 to cover health-care costs won't impact state finances because the money has been held in escrow.
An order issued by the state’s high court on Wednesday affirmed a 2016 Court of Appeals decision that the money had been collected unconstitutionally. The court also ruled that a 2012 law did not retroactively apply to the money collected before its enactment. The amended law passed in 2012 — Public Act 300 -- allows school employees to opt in or opt out of the contribution.
"Because 2010 Public Act 75 is unconstitutional, the funds collected pursuant to that act before the effective date of 2012 Public Act 300 must be refunded to the plaintiffs in accordance with the Court of Appeals judgment," wrote the court.
Snyder said the state will return the money immediately to teachers.
"This law dates back to 2010, and I am pleased that taxpayers will have resolution," Snyder said in a statement. "The funding has been held in escrow, so Michigan will continue to have a balanced budget. We will not need to raise new revenue or remove funding from other priorities to refund the money that was collected for retirement health care."
Snyder had appealed the 2016 decision that ruled the money was unconstitutionally seized for retirement health care benefits school employees were not guaranteed to receive. He had argued against returning the money to teachers.
In 2010, the Michigan legislature passed Public Act 75 of 2010, which stipulated teachers pay 3% of their wages to cover rising health-care costs in the Michigan Public School Employees Retirement System.
Teachers and the Michigan Education Association challenged the law when they retired.