In late December 2017, the Michigan Supreme Court ruled that health care deductions withheld from public school employees between July 1, 2010 and Sept. 3, 2012, were unconstitutional. In the decision, the justices agreed that a 2010 Michigan law violated contract clauses of the state and federal constitutions by involuntarily reducing pay for teachers and other school employees by 3 percent to fund retiree health care benefits.
The Office of Retirement Services (ORS) will be refunding the $550 million plus interest back to the districts from which the original 3% percent was withheld. It is up to the individual districts to pay these amounts back to affected employees current and past.
FORMER EMPLOYEES ONLY: Char-Em ISD Business Office will strive to verify direct deposit information for former employees on file to ensure payments are deposited into the correct bank account. Please verify your payroll direct deposit information with our Human Resources Department at (231) 547-9947 or email email@example.com. Char-Em ISD needs current bank information, mailing address, email and phone number. This information is requested no later than Wednesday January 18, 2018 to ensure you will receive payment scheduled to be released by the end of January.
Charlevoix-Emmet ISD Background Information on Employee ORS 3% Healthcare Deductions
For Char-Em specifically, the original ORS 3% healthcare deduction was withheld from employees with the same guidance as all other ORS employee deductions. The deduction was taxed for Social Security and Medicare (FICA), but excluded from federal and state taxes.
Consequently, as these amounts are refunded back to the employees, the amount is taxable income in 2018 for federal and state purposes only. The refunds will be paid back through payroll to allow federal and state taxes to be calculated on the taxable income. These amounts will be included in your 2018 W-2 as taxable income.
Office of Retirement Services is scheduled to send districts official refund information for all employees by Jan. 22, 2018. Human Resources and Payroll teams are working together to ensure refunds are issued to staff before the end of January through the payroll process. For all current and former employees that have verified personal information, Char-Em ISD will be issuing separate direct deposits.
January is a busy time for the business office as staff processes regular payroll and issues 2017 W-2s, as well as the ORS 3% refunds. We appreciate your patience and understanding as we wait to get official figures and information from ORS. Our hope is to get the refunds paid as soon as we can.
Lisa Krosnicki, Chief Financial Officer, Char-Em ISD