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Southwestern Michigan College sues State of Michigan

Southwestern Michigan College (SMC) on Thursday filed a lawsuit against the State of Michigan to prevent what President Dr. David Mathews described as “the most egregious over-reach of state government” that he has ever seen. SMC was informed recently by members of the Office of the Auditor General (OAG) that the college MUST enroll part-time students who are working on campus into the state teacher’s retirement system.

Of course, SMC does not, nor has it ever, enrolled part-time student workers into this defined benefit retirement system. 

It is the position of the college that federal financial aid regulations prohibit reducing the wages of work study students (who are already earning at or near minimum wage) which would be required if they were to be enrolled into the state teacher’s retirement program. 

Doing so would not only violate federal regulations, but, according to President Mathews, “is downright crazy.  These students are working on campus to try to help pay for the cost of their education. They will NEVER vest in the state teacher’s retirement system.  To force them into a retirement program designed for teachers is insane.”

According to the college, in addition to the retirement issue, the OAG simply does not have the legal authority to conduct investigative audits of political subdivisions in Michigan, be they cities, townships, villages, road commissions or community colleges.  

According to Mathews, “The reason that this is important is that not a single one of the members of the OAG who have been looking into this issue at SMC have any federal financial aid experience. This is clearly a matter of over-reach by a unit of state government and is clearly in violation of the law. In the past, the OAG has had to be challenged by other political subdivisions in Michigan to establish this fact. This is a continuation of that story.”

President Mathews continued, “We have previously provided the Office of Retirement Services (ORS) with all of the data clearly showing that we do NOT enroll part-time students in the teacher’s retirement program. They have NEVER objected to this. Moreover, we have documented communication with the ORS where the college raised this very issue with ORS staff and was told that we are using the proper interpretation of the myriad rules and regulations concerning this issue. Additionally, our annual financial audit has never indicated any incorrect financial reporting of retirement.”

The lawsuit filed in the Court of Claims seeks to prevent the state from forcing the college to reduce the wages of part-time student employees by enrolling them into the teacher’s retirement system.