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LANSING (AP) - Tens of thousands of senior Michigan teachers will have to decide this summer if a bill aimed at luring them into retirement is a good deal.

Gov. Jennifer Granholm has said she will sign the bill, which passed during an overnight session that ended early Friday.

The Democratic governor proposed the idea earlier this year, saying it was a way to stretch school funding further. However, passage of the bill was largely due to backing by Republicans.

The measure passed the Republican-led Senate early Friday, mostly along party lines.

In the Democrat-led House, Tim Melton, D-Auburn Hills, was among 16 Democrats who joined 40 House Republicans to vote in favor of the new bill.

"I believe there will be serious savings long-term," Melton said. "We're projecting $3.1 billion over the next 10 years. Next year there will be $685 million in savings at the local level."

Melton said had nothing been done, teacher layoffs were a certainty. "This was paramount to keeping teachers in the classroom."

The idea is to get older, higher-paid employees to leave to avoid layoffs and open the door for younger employees needing jobs in Michigan's sluggish economy. Melton believes school districts will replace nine of 10 teachers who leave.

The plan will slightly increase pension benefits for eligible school employees who retire between July 1 and Sept. 1. More than 57,000 school employees statewide will be eligible.

Remaining school employees will have to pay an additional 3 percent of their salaries toward retiree health plans starting July 1. New teachers will be put in a retirement plan that combines traditional pension benefits with a defined contribution plan.

"We are changing the way we do retirement," Melton said. "We did this to protect the retirement benefits for people who retire."

Supporters of the plan say it could save schools more than $670 million in the next fiscal year and about $3 billion over the course of a decade, based on analysis from nonpartisan legislative fiscal agencies.

"The agreement on the public school employee retirement plan marks an important milestone in our effort to resolve the structural deficit in the school aid fund by saving billions of dollars over the next 10 years," Granholm said. "Just as importantly, by encouraging veteran teachers to retire, this plan will create thousands of new jobs in our state."

The plan was fiercely opposed by the Michigan Education Association, the state's largest teachers union, and the Michigan chapter of the American Federation of Teachers. The MEA said the plan would cost school employees far more than the slightly sweetened retirement benefits are worth and won't help school districts save money.

"Dozens of legislators violated their 'no tax' pledge by enacting a 3 percent tax on current employees to pay for this, effectively forcing them to take an additional pay cut at a time when they have already accepted concessions that have saved the state over a billion dollars in the past three years," MEA President Iris Salters said in a statement.

Some school administrator groups also didn't like portions of the compromise plan, forged after several weeks of give-and-take between lawmakers and the Granholm administration.

But their opposition wasn't enough to kill the bill,

The bill's passage "means that thousands of young teachers are going to have an opportunity to get a job in the state of Michigan," said Democratic House Speaker Andy Dillon of Wayne County's Redford Township.

School districts still are likely to see a cut of more than $200 per student when the new state budget takes effect Oct. 1. But those cuts are expected to be offset from savings as older teachers are replaced with younger ones who are paid less and as remaining teachers kick in 3 percent toward retiree health plans.

"We've just taken a major step in the right direction to provide support for schools around the state," said Republican Senate Majority Leader Mike Bishop of Rochester.

The savings, especially in the first year, will depend on how many teachers choose to retire. Backers of the plan based their savings estimates on about half of those eligible accepting the deal.

Many Democrats and the MEA said the savings were calculated on a false premise.

"I do not believe we're going to get the number of people to retire we think we're going to get," said Rep. Steven Lindberg of Marquette, one of several Democrats to vote against the bill.

The current multiplier used to calculate school pension benefits is 1.5 percent. The plan increases the multiplier to 1.6 percent for those already eligible for retirement and leaving this summer. A smaller pension boost - using a 1.55 multiplier - will go to younger retirees whose age and years of service add up to at least 80. Those employees become eligible for retirement under the plan.

Charter schools will not have to have their staffs join the retirement system.

By Tim Martin 
     The Oakland Press