SOUTHWESTERN MICHIGAN COLLEGE VS. OFFICE OF THE AUDITOR GENERAL

By DEBRA HAIGHT

BCR Correspondent

DOWAGIAC – News came last week about Southwestern Michigan college’s case against the Office of the Auditor General as well as proposed state legislation clarifying the question of whether part-time student workers must pay into the state teacher retirement pension system.

The legislation proposed by State Sen. John Proos and State Rep. Aaron Miller would exempt part-time student workers from having to contribute to the Michigan Public School Employees Retirement System (MPSERS). Full-time student workers are already exempt.

The legislation is designed to clarify that part-time student workers do not have to contribute to the Michigan Public School Employees Retirement System. SMC has maintained that neither part-time student workers nor community colleges should have to contribute to MPSERS.

Last week, SMC President David Mathews and SMC attorney Matthew Derby

reported that the State Senate passed the proposed legislation unanimously May 16. The legislation has now been introduced in the State House. If the House approves the Senate version, it could be on the Governor’s desk sometime this summer.

Mathews said it is very unusual to have the senate vote unanimously and said it shows that legislators realize that it has been a confusing issue for all community colleges. He said legislators are also looking at possible solutions to solve the situation retroactively.

Whether SMC has to contribute to MPSERS on behalf of their part-time student workers has been a point of contention with the OAG over the last year. The OAG conducted an audit of SMC records last year and found that the college had not paid in $388,600 to MPSERS, an amount that could mushroom to $10.4 million with interest and penalties.

SMC filed suit against the OAG last year and the Michigan Court of Claims ruled against the college in January, agreeing with the OAG that it has the right and authority to audit the college. SMC has appealed that decision to the Michigan Court of Appeals.

Derby told SMC board members last week that the college’s case against the Office of Auditor General is strong. The college continues to question the OAG’s constitutional authority to conduct an audit. He said the OAG only has authority to audit local governmental agencies as an extension of an ongoing audit of a department of state government.

Derby said that while the Court of Appeals denied the college’s motion to send the case back to the Court of Claims, they did take “judicial notice” of the college’s claims. He said the Court of Claims made reversible errors and based its decision on unsupported OAG claims.

As for the part-time student worker MPSERS issue, he noted that MPSERS exempted full-time workers in the past but did not specifically mention part-time student workers. He added that the retirement board’s own published administrative rules exclude student workers from MPSERS and supersedes any Office of Retirement Services rules and regulations.

Derby went on to point out that an analysis of the new legislation done by the State Senate Fiscal Agency earlier this spring showed that a majority of community colleges are in the same position as SMC and do not report part-time workers to MPSERS.

That position was reinforced by Michigan Attorney General Bill Schuette May 1, Derby said. “Our community colleges have been operating in good conscience since the beginning,” Schuette wrote in a press release where he came out in support of the Proos-Miller legislation.

Critics of how Mathews and the SMC board have handled the OAG matter have questioned what they see as a cover-up of past actions. They’ve noted that it’s not a matter of saving money for part-time workers since ORS rules allow them to not pay into the system.

While Mathews has claimed that the college did not enroll student workers into the teacher retirement system after getting “direct guidance” from the ORS, the OAG report said SMC officials knew by 2015 that they were not complying with state law and decided to continue anyway.

Former SMC Dean Tom Buszek is the spokesman for Citizens Concerned about Southwestern Michigan College. He has spoken out over the last few months including at last week’s monthly board meeting.

“It doesn’t matter if the OAG had the constitutional right to audit SMC,” he said. “The results of the audit will not go away. It doesn’t matter if new legislation is passed to address future administration of MPSERS requirements, the results of the audit … will not go away.”