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Court says Michigan can keep deducting 3 percent
Withholding for retiree health costs to continue until next appellate ruling
There may be a big pot of money waiting for thousands of Michigan state employees at the end of a lawsuit over wages winding through the appellate courts.
Or there may be nothing.The Michigan Court of Appeals has ruled the state can continue to withhold 3 percent of the salary of state employees for retiree health care as the court reviews a Feb. 22 lower court ruling that declared the practice unconstitutional.
The administration of Gov. Rick Snyder is appealing the lower court ruling by Ingham County Circuit Judge William Collette. He ordered the state to stop collecting the wages from several state employee unions representing about 28,000 employees.
"We were disappointed," said Ray Holman, spokesman for United Auto Workers Local 6000, which represents 17,000 state social service caseworkers, administrative employees and other workers. "We still believe that we should be getting a full check, and we're looking forward to getting that money returned."
Meanwhile, the state also is continuing to deduct the 3 percent from 13,000 nonunion state employee paychecks despite a similar ruling in February by the Michigan Civil Service Commission to end the practice. The state also is appealing that ruling.
The appellate court ruling, issued March 18, was the latest chapter involving controversial early retirement legislation passed in September to reduce state costs. As part of the law, state employees were to contribute 3 percent of their salary for retiree health care for three years.
That money - amounting to about $60 million annually - is now being funneled into an escrow account pending the outcome of the case. If the state loses the appeals, it would have to repay that money to employees.
Attorneys for state employees have argued lawmakers violated their contracts by reducing their salary as part of the retirement legislation. Attorneys for the state have said lawmakers have full power over setting retirement policy.
Collette eventually ruled the Legislature circumvented the state's constitution as a way to nullify a 3 percent wage increase this year that unionized employees negotiated.
Last year, then-Gov. Jennifer Granholm proposed the salary contributions along with retirement incentives as a reform designed to save millions annually.


