The Michigan Supreme Court says the state must return more than $550 million to school employees who had money deducted for retiree health care.
The court ruled 6-0 Wednesday.
School employees had 3 percent of their pay deducted for about two years under a law signed by Gov. Jennifer Granholm in 2010, but the law was declared unconstitutional. Governor Snyder in 2012 signed a similar and new law that has survived court challenges.
The Supreme Court says the 2010 law violated the contract clauses of the federal and state constitutions, and the state failed to show it was reasonable and necessary to further a legitimate public purpose.
Gov. Rick Snyder, who wanted to keep the money, says he's "pleased that taxpayers will have resolution." The money's in escrow, so the decision won't affect the budget.
Snyder added, "We will not need to raise new revenue or remove funding from other priorities to refund the money that was collected for retirement health care."
In a joint statement, the Michigan Education Association and the AFT Michigan teachers union called the decision "a major victory for Michigan school employees."
“I cannot imagine a better pre-holiday gift to Michigan’s school employees than getting their hard-earned money returned to them,” said MEA President Paula Herbart. AFT Michigan President David Hecker said he hopes the governor and attorney general will work with the union, "as opposed to their years of fighting us," to ensure the money is distributed in a timely manner.