PA 75: ReFUND Information
The Michigan Supreme Court ruled in a 6-0 decision in December that the state must return over $554 million dollars to public school employees. The order, AFT v. Public School Employees' Retirement System, settles a debate over a 2010 law that deducted 3% from teachers' and other public school employees' salaries for retirement health care.
This ruling upholds a Michigan Court of Appeals verdict in 2016 that found funds collected from 2010 to 2013 from teachers was unconstitutional. The $554 million has remained in an escrow account since 2013. The Office of Retirement Services (ORS) will be tasked with issuing refunds.
If you are a former employee or retiree of Eastpointe/East Detroit, update your contact information here.
The Michigan Office of Retirement Services will send an important email to you on or before January 22, 2018. This email will tell you about the amount you contributed, the amount of accrued interest, and the total amount of your refund for each of the school districts you worked in during that period. If you have not been receiving communications from the ORS, you may need to update your information with them.
ECS (formerly EDPS) PA 75 and 3% Healthcare Refund FAQs
What is this refund?
PA 75 of 2010, which was in effect from July 2010 until September 2012 and mandated that members contribute 3% of their compensation to the Retiree Healthcare Fund. This contribution was ruled unconstitutional by the Supreme Court. The member contributions (held in escrow) were ordered by the court to be refunded to members.
Will I get a refund?
If you worked for a public school any time between July 2010 and September 2012 and made the required 3% contributions, you will receive a refund of those contributions.
How much money will be refunded to me?
According to the ORS website, ORS will notify members of their refund amount prior to January 22, 2018.
Where will my refund come from?
This money will be refunded through the school district where you were employed between July 2010 and September 2012. Therefore, you will only receive a refund from Eastpointe Community Schools if you worked for East Detroit Public Schools between July 2010 and September 2012.
If you worked someplace other than EDPS between July 2010 and September 2012, it is important to update your address with that district. If you worked for more than one school district during that period, be sure your address is current with each school district.
If you are retired, update your mailing address in miAccount and ORS will provide it to your school district.
When will I receive my refund?
Our goal at ECS (formerly EDPS) is to refund the employee contributions as quickly as possible.
ORS sent essential data regarding the refunded contributions and interest to school districts on January 9, 2018. ORS is exepcted to transfer the contributions and interest funds with the January 22, 2018 school aid payment. However, any distribution plans that are developed are subject to the supervision and approval of Court of Claims Judge, Stephen L. Borrello who has not yet held a hearing on this. This step in the process was required by the State Supreme Court in their decision to return the monies and even though it is possible that the Judge could agree 100% with the plan that is being put together, he could also disagree with some/all of the plan and of course, that could further delay the refund. A hearing date has not yet been announced and we are all waiting for this to occur because until Judge Borrello weighs in on this matter, it is our understanding that the money cannot and will not be released.
The district is already working on a plan for processing the refunds. Once the district receives the money from the State of Michigan, the district will require an additional amount of time to verify and process the refunds. Currently, ECS is anticipating issuing refunds before the end of February 2018 but this may be delayed depending on Judge Borrello's approval.
How will I get my refund?
Current employees who worked between July 2010 and September 2012 for EDPS will receive the refund through direct deposit to the account currently set up in the payroll system. The refund will be a separate deposit from the normal payroll deposit.
Those contributors that worked for EDPS between July 2010 and September 2012 but are no longer employed by the district will receive a paper check for their refunds.
How will this refund impact my taxes?
The tax implications will vary based on your individual situation. You are encouraged to consult with a tax professional to understand how this refund will impact your individual situation.
The money being refunded is earned income (from 2010 through 2012) and was deducted ‘pre-tax’ when the contributions were made. Therefore, the refund is subject to State and Federal taxes and is reportable to the IRS on your 2018 W-2. The tax rates will vary based on your individual situation.
Will the 3% refund be considered additional income for retirement purposes, and will that cause my pension to be re-calculated?
No. Your Final Average Compensation (FAC) is calculated using gross wages. The 3% healthcare contribution was deducted from gross wages, so that deduction won’t change the FAC calculation at all, regardless of when you retire (or retired).
Do we get interest on these funds?
Yes, you will receive a refund of the interest earned on your contributions. The courts directed the administration to maintain the funds in a capital preservation escrow account, which accrues a very minimal amount of interest.
What if I no longer work for ECS (or EDPS) or the contributing member is deceased?
Eastpointe Community Schools (formerly EDPS) is going to issue refunds to anyone that was employed with us between July 2010 and September 2012.
If you worked for EDPS any time between July 2010 and September 2012 and made the required 3% contributions, you will receive a refund of those contributions. It is important to update your address with our Human Resource department in order to receive your refund. Click here to update your information.
If you are retired, update your mailing address in miAccount and ORS will provide it to us.
We are currently working on a process for contributing members who are deceased. “Next of kin” of deceased members should contact our Human Resource department in order to update contact information. Click here to update your information.