Capitol News
October 2012
The Legislature met only 7 days in September and on several of those days, no floor action occurred. However there were a few hearings on bills and other judicial and political activity of interest to SERA members.
State Employees Win First Round on 4% Contribution Challenge
Ingham County Circuit Judge Joyce Draganchuk recently found unconstitutional that part of PA 264 of 2011 requiring state employees in the defined benefit pension system to contribute 4 percent of their salary to remain in the DB pension plan. The Coalition of State Employee Unions had challenged the change, arguing that like an earlier 3 percent contribution for state employee retiree health care, the 4 percent contribution violated Article XI, Section 5 of the Michigan Constitution. The latter gives the authority for setting state employee wages and benefits to the CSC. The state’s attorneys said the new law differs from the prior law struck down by the courts because it gives employees a choice between staying in DB and paying 4% or switching to the defined contribution (401(k)) retirement plan.
“By mandating that members contribute 4 percent of their compensation to the employees’ savings fund, the Legislature reduced the compensation of classified civil servants - an act that is within the sphere of authority vested in the CSC,” Judge Draganchuk wrote in her opinion. “In order to ’elect’ to keep the benefit, the member must agree to pay for it. A mandatory deduction to retain a fringe benefit is not comparable to a voluntary election to purchase service credit.”
The Office of Retirement Services estimated the 4 percent contribution, if 100 percent of eligible employees opted to pay it instead of switching to the defined contribution system, would generate $56 million in the first full year of implementation with that amount dwindling each year as more workers retired and stopped paying the 4 percent. It is estimated that employee contributions will save the state $5.6 billion the state would have otherwise had to pay into the state pension system.
Ray Holman of United Auto Workers Local 6000, was quoted as saying about the election that DB employees had to make last spring, “That’s not a choice. That’s like being asked do you want to be hit in the head with a brick or do you want to be hit in the head with a stick.”
The state will likely appeal the decision to the Michigan Court of Appeals where it will likely end up before the Michigan Supreme Court. The composition of the MSC will be determined at the November 6 election.
Ballot Proposal 2012- 2
Michigan SERA has endorsed Proposal 2012-2 on the November 6 non-partisan section of the ballot. Proposal 2 not only assures public and private sector employees the right to collective bargaining, it would add this provision to Article XI, Section 5 of the Michigan Constitution:
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. (Emphasis added.)
This new provision would give state employee unions the right to bargain current employees’ future pensions and retirement benefits, taking unilateral authority for pensions and benefits away from the Legislature and the Governor for the 70% of state workers in unions. With additional scrutiny on state pensions and benefits by the state unions, it is hoped that fewer “reforms” that shift costs to state retirees will occur.
When I wrote the last issue of Capitol News, the Board of State Canvassers had not yet approved the 100-word description for Proposal 2012 -2. The 100-word descriptions are negotiated between the proponents and opponents of a ballot proposal, approved by the Board, and then printed on the ballot. Proposal 2 was so contentious that the parties could not agree on language until the last hour of the last day that language had to be chosen and approved by the Board. Here it is:
PROPOSAL 2012-2
A PROPOSAL TO AMEND THE STATE CONSTITUTION
REGARDING COLLECTIVE BARGAINING
This proposal would:
- Grant public and private employees the constitutional right to organize and bargain collectively through labor unions.
- Invalidate existing or future state or local laws that limit the ability to join unions and bargain collectively, and to negotiate and enforce collective bargaining agreements, including employees’ financial support of their labor unions. Laws may be enacted to prohibit public employees from striking.
- Override state laws that regulate hours and conditions of employment to the extent that those laws conflict with collective bargaining agreements.
- Define “employer” as a person or entity employing one or more employees.
Should this proposal be approved?
Opponents of Proposal 2, Protecting Michigan Taxpayers, have filled the airwaves with ads saying it would put students’ safety in danger as a result of nullifying state law setting minimum qualifications for school bus drivers and enabling teachers with criminal records to stay on the job. The Center for Michigan’s Truth Squad has investigated these claims and found them false. Protect Working Families, the lead backers of Proposal 2, have launched a rebuttal ad that features four prominent law enforcement figures denouncing the claims and insisting collective bargaining enhances student safety. Likely there will be more claims and counter-claims about the proposal as over $10 million is expected to be spent by both sides.
Some resources for non-partisan analysis of all the ballot proposals are on the Web sites of the League of Women Voters of Michigan, Michigan Citizens Research Council, and the MSU Agriculture Extension.
Legislative Activity
Two bills, House Bill 4981 and Senate Bill 990, would amend the General Property Tax Act to allow a homeowner to retain the principal residence exemption after moving into a nursing home or assisted living facility, under certain circumstances that keeps the property maintained but unoccupied.
Senate Bill 1053 would allow some state employees to come back to work for the state after being retired for a year while still receiving a pension. PA 95 of 2007 prohibited state retirees to work for or contract with the state or a contractor of the state unless they suspend their pension. Since that time, several state departments have asked for exceptions to PA 95 for retirees with special expertise. The Department of Corrections is hoping to save $10 million this fiscal year by re-employing former corrections personnel, for instance, and House Bill 5881 has been introduced to permit it. The Senate Appropriations Committee heard from several witnesses but decided to delay action on the bills. Michigan SERA supported the bill.
Senate Bill 797 passed 104 to 1 in the House on September 19 and is on its way to the Governor. It would cap municipal pension board spending on board members travel and training; proposes specific public pension system transparency requirements; restricts investments in entities whose principles made large political contributions; increases limits on how much can be invested in real estate, “private equity” and global equities; and allows more pension investments in Michigan businesses. Michigan SERA supported the bill in both Senate and House hearings.
Recent Appointments
Governor Rick Snyder recently made two appointments to the State Employee Retirement System Board that oversees the defined benefit pension system for state employee retirees:
Ruth Duquette, of Holt, who is director of payroll and tax reporting for the Michigan Department of Technology, Management and Budget, was appointed as an employee representative. Previously, she served as a manager and senior manager with Andrews Hooper & Pavlik, as an auditor with the Office of the Auditor General, and held various positions with the Michigan Departments of Management and Budget, Environmental Quality and Treasury. She will serve the remainder of a three-year term that expires July 31, 2014.
Matt Fedorchuk, of Okemos, who is director of the Michigan Civil Service Commission’s Office of Classification, Selection and Compensation, was appointed as an employee representative. He is reappointed to serve a three-year term ending July 31, 2015.
The Civil Service Commission has appointed Marie Waalkes to succeed Richard Warner, who resigned after 13 years on the CSC’s Employment Relations Board, for a term expiring May 1, 2014. Waalkes worked for the Michigan State Police from 1977 until 2002, when she retired at the rank of Major as the Commander of the Office of Organizational Development, which included the Human Resources Division, Training Division, Michigan Commission on Law Enforcement Standards, and Office of Psychological Services. She received her BS from Michigan State University and her JD from Thomas M. Cooley Law School. William Braman was reappointed for a term expiring May 1, 2013; and Susan Zurvalec, current chair of the Board, was reappointed for a term expiring May 1, 2015. The Board considers state employee appeals of grievances, serves as an impasse panel for collective bargaining disputes, and recommends pay for non-bargainers.
Noted
Michigan Citizen Action unveiled a new study showing that the 2011 repeal of the item pricing requirement did not save consumers money, and the prices in the state stayed consistently higher and grew faster than the national average. It also found that retailers cut workers’ hours, which led to workers’ wages dropping. It said that in the fourth quarter of 2011, total wages in grocery stores dropped from $346 million to $334 million when compared to fourth quarter 2010. James Hallan, president and CEO of the Michigan Retailers Association, said grocery store prices from the first half of 2011 to the first half of 2012 have increased 2.5 percent in the state, which is lower than 3.7 percent nationally.
Former Michigan Governor Jennifer Granholm created quite a stir with her six-minute speech at the Democratic National Convention calling out with great flair how many jobs the Obama administration’s auto industry rescue had created in each battleground state. Somewhat later in the month, the long-lost video of the 19-year old Granholm’s 1979 appearance on “Dating Game” complete with big hair surfaced. Both are available on YouTube.
Gary Olson, 57, longtime Senate Fiscal Agency Director who retired in 2010, recently died of cancer.
Peter Fletcher, 80, a top Republican strategist and activist during the 1970s and early 1980s, died September 29 in his hometown of Ypsilanti.
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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