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Southwestern Michigan College takes on state over retirement funding

DOWAGIAC, Mich. -- Should part-time community college students in Michigan, who work part-time on campus, be giving a portion of their paycheck to the state’s teacher retirement plan? The president of Southwestern Michigan College says ‘no,’ and he’s taking the state to court over it.

“We did not want to mandatorily make them reduce their wages to pay into a pension fund that they’ll never vest in,” said Dr. David Mathews, the president of SMC.

Mathews is leading the charge to say his institution is not doing anything wrong.

A February 2018 report by the Michigan Auditor General accuses the Cass County community college of “intentionally excluding approximately 500 part-time student employees from enrollment into MPSERS [the Michigan Public School Employees’ Retirement System]” between July 2010 and April 2017.

The report says SMC owes the Michigan Office of Retirement Services close to $400,000 from that period of time.

But the report also says the college could now face a bill of over $10 million when you add up late fees and interest.

This all focuses on whether or not part-time community college students, who work part-time on campus, should be giving a portion of their paycheck to the retirement fund.

According to the Public School Employees Retirement Act of 1979, full-time students who work on campus are exempt from this, but not part-time students.

“It was never discussed or thought of when the bill was drafted long ago that exempted full-time students,” said John Proos, a Michigan state senator who represents the 21st District. “It was just moot. It didn’t speak about the part-time students at all.”

Proos introduced a bill last week, along with Michigan State Representative Aaron Miller, that would clarify the law and treat all student employees equally.

Mathews said the entire situation confuses him because SMC has done the same thing – exempting part-time student workers, just like full-time student workers – for over 30 years and the office of retirement services has never flagged them.

He said SMC makes sure that any full-time employee of the college, who might be taking a class or two on the side, is entered into the retirement system. But he doesn’t think any student, who is maintaining a job on campus to make extra money, should have to be put in.

Some part-time students caught in the middle said it’s frustrating.

“To me, I feel like it’s unfair for them to say that because I’m not going into education, so I’ll never see that money, even though I’m working for it,” said Dylan Armstrong, a part-time SMC student who works part-time on campus. “And by the college helping us – the student workers – out, then that’s money that I can use toward tuition, books and housing.”

“I think that’s how I see it – is they’re taking money from me and it’s not going to benefit me,” said Abby Breden, a part-time student who also works part-time on campus.

16 of Michigan’s community colleges, including SMC and Lake Michigan College in Berrien County, do not require part-time student workers to pay into the retirement fund.

Because of that large number, Mathews said he hopes this issue between SMC and the auditor general will shed light on a statewide problem.

In January, a judge ruled the auditor general had a right to conduct the investigation into SMC.

Mathews said he’s now taking the fight to appeals court. 

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