Capitol News
March 2012
In February the political news hole in Michigan was almost totally consumed by the February 28 presidential primary. There was great national media exposure about the Detroit Three’s resurgence from near bankruptcy and our slowly recovering Michigan economy. The unemployment rate dipped again in January down to 9 percent, nearly two full percentage points lower than the January 2011 rate and the lowest the state has seen since 2008.
Mitt Romney, son of former Michigan Governor George Romney, eked out a win based on good showings in southeastern, southcentral, and northern Michigan counties. Rick Santorum did well in western Michigan.
Meanwhile the Secretary of State decided to put a question about citizenship on the ballot application. A citizenship question is asked at the time of voter registration so it is unnecessary to ask it again. For the first time in many years, voters had to reveal to election officials which party’s ballot they wanted. That information will be available to the public in the next several months. It has the effect of discouraging cross-over voting and for some people, voting at all.
Special elections were held in two House districts to fill vacant seats. Both were filled with people from the same party, thus keeping the same party split in the House.
Emergency Manager Law
The passage of the Emergency Manager Law in early 2011 and its use in several mostly African-American municipalities and the Detroit School District has culminated in a petition drive to put repeal of the law on the November ballot. Organizers filed 226,637 petition signatures on February 29. With the filing of the signatures, a sixty-day clock begins during which the Secretary of State’s Elections Bureau will review the names to determine if the threshold of 161,305 names has been reached. If sufficient signatures are certified as voters, the law will go on hold. An EPIC/MRA poll conducted in January has voters spilt on the issue.
Right to Bargain Amendment
On March 6, a coalition of unions announced the intention to invest $10 - $15 million on passing an amendment to the Michigan Constitution to guarantee workers the right to bargain with public or private employers.
The proposal is in response to over 80 bills, some of which have been signed into law, slashing the rights of workers and/or unions, the organizers contend. And there are many legislators who have expressed interest in passing “right-to-work” legislation banning agency shop provisions in union contracts.
Agency shop provisions require all members of the bargaining unit to pay union dues (or service fees) as a condition of employment. These provisions serve to eliminate free riders who might benefit from the collective bargaining agreement but not pay for the costs of collective bargaining and contract administration. Opponents of agency shop provisions argue that union membership should be a voluntary decision of each employee.
Right To Bargain for State Employees
The proposed Right to Bargain Amendment would give all state employees some of the same collective bargaining rights that the Michigan State Police Troopers and Sergeants obtained in a constitutional amendment passed by the voters in 1978. Here is the proposed paragraph that would be added to Article XI, Section 5 of the Michigan Constitution concerning the Civil Service Commission and its powers:
Classified state civil service employees shall, through their exclusive representative, have the right to bargain collectively with their employer concerning conditions of their employment, compensation, hours, working conditions, retirement, pensions, and other aspects of employment except promotions, which will be determined by competitive examination and performance on the basis of merit, efficiency and fitness.
Right To Bargain Over Retirement
The current collective bargaining agreement for the Michigan State Police Troopers and Sergeants Association contains a 13-page article on their pension plan. The bargaining agreements with all other state employee unions contain no article on retirement. If a Right to Bargain Amendment were to make the ballot and be approved by voters, it would mean that all other state employee unions could bargain over retirement issues in a manner similar to the MSPTSA. It should be noted that there is a statute governing trooper retirement, PA 182 of 1986, that is referenced in the MSPTSA collective bargaining agreement and still governs the state police retirement system.
Nearly 323,000 valid signatures will be needed by July 9 to get the amendment on the November ballot. The Right to Bargain ballot proposal joins other petitions circulating to legalize marijuana, require utilities to obtain at least 25% of their electricity from clean renewable energy sources, authorize 7 more casinos, establish a campaign finance constitutional amendment, and recall of the Governor. For more information on the Right to Bargain Amendment see www.protectourjobs.com.
Retaliation?
The day after the union coalition popped the Right To Bargain Amendment idea, the House and Senate majority suspended the rules and moved quickly to approve HB 4929, legislation that would bar public schools from deducting union dues from school employee paychecks. Rep. Joe Haveman (R-Holland) stated that if school workers want to pay their union dues they “should take their checkbook out”and pay the union separately. Additionally the majority tagged on an appropriation amendment, thus making the law referendum proof. Democrats and organized labor spokespersons claimed the move was payback for the Right To Bargain Amendment ballot drive.
Pre-funding Retiree Health Care
Currently the state has funded the costs of retiree health benefits on a pay-as-you-go basis. In FY 2010-11, the state spent $388.2 million on state employee retiree health benefits for 49,171 retirees who signed up for the benefits. Governor Snyder and the legislature agreed last year to pre-funding and $420 million has already been appropriated for FY 2012.
An additional $297 million is contained in a supplemental appropriation for FY 2012 (Senate Bill 683) introduced last fall and considered in February. If finally approved, the supplemental appropriation will reduce the calculated future unfunded liabilities for retiree health benefits from $14.7 billion to $9.1 billion.
The next challenge will be to protect these funds from raiding that has traditionally occurred when the Governor or legislature considered other spending priorities more important than pre-funding retiree health care.
4% Contribution Challenged
PA 264 of 2011, the reform of the state employee retirement system signed into law December 15, 2011, was recently challenged in Ingham County Circuit Court. The Coalition of State Employee Unions (AFSCME Council 25, UAW International and UAW Local 6000, MSEA, MCO, and SEIU 517M) has filed a class action lawsuit on behalf of their 34,000 members challenging the constitutionality of the requirement for defined benefit active employees to contribute 4% of their pay to the pension fund or face expulsion from the defined benefit program and assignment to the 401(k) defined contribution retirement program. The Michigan Association of Governmental Employees filed a similar lawsuit on behalf of non-exclusively represented employees.
The lawsuits argue that the Legislature bypassed the Civil Service Commission in violation of Article XI, Section 5 just as the Legislature tried to do with the 3% mandatory contribution to retiree health care beginning in the fall of 2010. The courts found the 3% mandatory contribution unconstitutional and the money was returned to affected employees and former employees.
The administration argues that the 4% contribution is different than the 3% contribution because there is a choice. According to an analysis by the House Fiscal Agency, it would save the state about $300 to $350 million over the next 15 to 20 years, which means that the employees will lose that same amount from their paychecks.
Pension Tax Update
SERA has asked those who filed amicus briefs with the Michigan Supreme Court last fall opposing the pension tax whether they are interested in taking the challenge to federal court. Some retired attorneys have been approached about the possibility of taking the case on a pro bono basis if retiree organizations paid costs. So far we have had no volunteers come forward. There is no deadline for filing such a lawsuit.
As expected, many Michigan retirees were shocked when their pension administrators withheld 4.35% in taxes from their January pension check. Complaints were apparently so numerous that some Democratic lawmakers are having “Senior Tax” town hall meetings as a re-election strategy. The Governor’s office recently sent robo calls to senior taxpayers and created a special Web page at www.michigan.gov/getanswers with our CPA Governor explaining the pension tax in a video. A special Frequently Asked Questions flyer created by the Executive Office of the Governor was installed on the Web page along with a toll-free hotline (855-440-6424). The pension tax continues to be controversial and a political hotcake.
News of the Day
If you are a SERA member, you are eligible to receive News of the Day, a periodic e-mail about breaking news and media stories of interest to state employees and retirees. Write to michigansera@comcast.net giving your name and chapter.
Editor’s note: Mary Pollock is the newly appointed Lansing SERA Chapter and SERA Council’s Legislative Representative. She may be contacted at 1200 Prescott Drive, East Lansing, MI 48823-2446; Phone 517-351-7292; E-mail michigansera@comcast.net.
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