SMC estimated to owe more than $257,000

Published 9:48 am Tuesday, October 16, 2018

DOWAGIAC — A report from the Michigan Office of Retirement Services estimates that Southwestern Michigan College may owe more than $250,000 to the state.

The ORS recently released a report estimating funds owed by community colleges for missed contributions to the Michigan Public School Employees’ Retirement System for part-time student employees. According to the report, SMC owes $257,569 for 322 student workers not reported or reported incorrectly since 2015. It is currently unclear whether SMC will have to pay the total amount estimated.

The estimate for SMC is less than previously feared. A February audit by the Auditor General stated the college could owe between $388,600 and $10.4 million with fines and interest.

According to the report, SMC is one of 28 Michigan community colleges listed as owing funds into MPSERS, totaling a statewide deficit in contributions of more than $7.5 million.

However, it is SMC’s involvement in failed contributions into MPSERS for part-time students that has sparked controversy, community outrage and a lawsuit against the Auditor General. The controversy resulted in legislation being passed to exempt part-time students from having to contribute to MPSERS in the future, a pending bill that would allow part-time student employees to apply for and be credited with service for retirement benefits they earned, but for which their employers did not report or contribute into MPSERS, as well as a mandate that community colleges submit reports on how much money they owed into MPSERS during a four-year period. 

The ORS report stating estimated funds owed was compiled from the data community colleges provided in those reports.

The report contains calculations of contributions due as well as late fees and interest as required under the law. In the report, the ORS stated that the report is not an invoice or bill to a community college and should not be treated as such at this point.

“With the release of this report, the Office of Retirement Services invites feedback, input, questions and ideas to address the reporting issues highlighted in the report,” said ORS Director Kerrie Vanden Bosch in a letter released with the report. “We look forward to working with interested parties in developing a fair and meaningful approach to resolve the issues surrounding the reporting and contribution gaps highlighted in the report.”

SMC President David Mathews said he and the college plan to continue to act in good faith and continue discussions with both the ORS and the state to resolve the issue of missing contributions in MSPERS. He added that SMC is prepared to pay the total estimate of $257,569, but that he believes there is much more discussion to be had before a final agreement is reached with the state.

“This is a starting point,” he said. “Even though the law was unclear and even though the ORS told us what we are doing is correct, we will [pay the funds owed] if that is what is agreed upon, though there is still much discussion to be had. … We have been talking not just with the ORS, but the state and the attorney general for over a year, and that will continue until this is resolved.”