Capitol News
July 9, 2017
The stand-off between the Governor and the House and Senate Republicans over the budget was resolved just in time for legislators to get away for their summer “district work” and for school districts and local governments to know what money they will have for the start of their fiscal years on July 1. Meanwhile there is exciting news on the ballot issues front.
BALLOT ISSUES UPDATE
The redistricting anti-gerrymandering proposal that Michigan SERA has endorsed was recently submitted to the Board of State Canvassers. SERA chapters and members should actively involve themselves in becoming informed about the proposal and help with signature gathering.
Voters Not Politicians submitted language to the Board of State Canvassers on July 3 to amend the Michigan Constitution to remove political district boundary line drawing from the power of the legislature and Governor and give it to a 13-member Independent Citizens Redistricting Commission.
Currently, after the decennial Census, the majority party in the legislature and Governor effectively have control of setting the U.S. Congressional and Michigan legislative district boundaries. The majority party then sets the boundaries to protect favored incumbents and those in their party with known intentions to run for an office. This has been labeled gerrymandering. According to the Brennan Center in a May 2017 report, Michigan, North Carolina, and Pennsylvania consistently had the most extreme levels of partisan bias in district boundaries in the last decade. Historically, both Republicans and Democrats have utilized their power to diminish the other party’s election chances. Typically in biased gerrymandering, little input is sought from the other party or the public and most of the process is done in closed meetings.
The proposed Independent Citizens Redistricting Commission would be selected from people who apply for membership: 4 from each of the two major parties; 5 from people who self-identify as independents. Those barred from membership are politically connected people: recent candidates for local, state or federal partisan office; elected partisan officials; political appointees; political party officials and officers (including precinct delegates); lobbyists and lobbyist agents; and close relatives of the preceding categories. There would be a mandated budget to support the commission. Extensive public hearings would be required before and after the district maps are produced. All meetings would be open to the public. The commission would need to follow federal law such as one-person/one-vote requirements and the Voting Rights Act in drafting district maps. The commission would also have to take into account “communities of interest,” and as much as possible respect city, township and county lines in drawing districts. In the event of legal challenges to the Michigan Supreme Court, the maps are referred back to the Commission.
If the voters approved the redistricting proposal in November 2018, it would not take effect until after the 2020 election. The next round of redistricting would take place after the release of the April 2020 census, during the 2021-22 legislative term.
Should the proposal get the 315,000+ valid voter signatures in a consecutive 180-day window period, the Legislature could draft its own redistricting amendment proposal to put on the ballot to compete with the Voters Not Politicians proposal. Such an effort would require support by a two-thirds majority in each chamber, which Republicans have in the Michigan Senate but not the House.
The redistricting proposal was drafted after the Voters Not Politicians organization held town hall-style meetings across the state, at which more than 3,000 people attended. The proposal was also reviewed by many attorneys before it was submitted to the Board of State Canvassers.
Six states have citizen redistricting commissions. The U.S. Supreme Court last year upheld an Arizona citizens’ commission saying it could take charge of a state’s reapportionment effort. The U.S. Supreme Court recently accepted for hearing a case from Wisconsin in which lower courts have said redistricting cannot be done to provide clear political advantage to one party.
Clean Michigan Government is a proposed constitutional amendment to require a part-time legislature. It was filed with the Secretary of State on May 12, 2017; an amended petition form was filed with the Secretary of State on May 19, 2017, it was approved by the Board of State Canvassers as to form, and petition circulators have subsequently been busy gathering voter signatures.
On July 3, its sponsor, Lt. Governor Brian Calley, announced that he intends to amend the petition language yet again. That would make the voter signatures gathered over the last month invalid. Among the changes in the new language: the Legislature would be required to adjourn sine die no later than April 15, rather than being given a set 90 days; the proposal would defer to other sections of the Constitution governing the calling of special sessions, rather than providing for those in the proposed amendment; the new petition rewords how legislative salaries would be set, but still bases them on a pro-rated average teacher salary; continues to eliminate legislative pensions and legislative retiree health care benefits.
BUDGETS APPROVED BY LEGISLATURE
The conference committees of House and Senate leadership met the week of June 19 and reached agreement on FY 2017-18 budget bills. The omnibus budget, HB 4323, spends $39.9 billion, $8.55 billion General Fund and the remainder from federal and other sources. This is a slight increase from the current budget. Statutory revenue sharing for cities, villages and townships would hold steady at $248.85 million, but the conference committee provided $6.2 million in supplemental funding for them.
The education omnibus, HB 4313, spends $16.61 billion overall, $1.5 billion General Fund and $13.18 billion School Aid Fund. Both chambers then approved the budget bills before recessing for most of the summer. The House approved the conference committee report on a 64-43 bipartisan vote. The legislature plans on returning for one-day sessions on July 12 and August 16 before Labor Day.
MPSERS REFORM PASSES
New school employees hired after February 2018 will face a different kind of retirement income savings arrangement. The House passed the final piece of the Michigan Public School Employees Retirement System changes in SB 401 (S-1) with the minimum support needed, 55-51, on June 20. It was then returned to the Senate for agreement and the Senate presented it to the Governor on June 29. He is expected to sign the bill within the 14 business-day time limit.
All Democratic representatives voted against HB 401, and were joined by Republican Reps. Joe Bellino of Monroe, Gary Howell of North Branch, Martin Howrylak of Troy, Mike McCready of Birmingham, Dave Pagel of Berrien Springs, Brett Roberts of Eaton Township and Jeff Yaroch of Richmond. All Democratic Senators voted against the bill and were joined by Republican Senators Tom Casperson of Escanaba, Rick Jones of Grand Ledge, Mike Nofs of Battle Creek, Margaret O’Brien of Portage, Tory Rocca of Sterling Heights and Dale Zorn of Ida.
Current Hybrid Pension System — Public Act 75 of 2010 closed the defined benefit school employee pension system and established a new “hybrid” pension plan for new school employees first hired on or after July 1, 2010. The hybrid consists of a defined benefit (DB) pension component and a defined contribution (DC) component.
Public Act 300 of 2012 provided an optional DC-only plan for employees first hired on or after September 4, 2012. The optional DC plan provides a 50% employer match on the first 6% of an employee’s contributions (i.e., the maximum employer match is 3% of pay). Roughly 20% of new employees choose the optional DC-only plan. In addition, Public Act 300 of 2012 eliminated retiree health insurance premium coverage for new hires, and replaced it with a plan that provides a maximum 2% employer match on an employee’s 2% of contributions into a personal health care 401k savings account. Some aspects of these plans are similar to the state employee DB and DC plans, but stingier.
New MPSERS Plan — SB 401 amends the Public School Employees Retirement Act to:
- Place all new school employees hired on or after February 1, 2018, into a 401k or 401k-style plan (i.e., a “defined contribution”/DC plan) unless a new employee elected to opt into the new hybrid plan (which would have different employee contributions than the current hybrid plan). If no option chosen, the employee would be considered to have selected the DC plan.
- Provide that the new hybrid plan would have the same pension calculations and benefits as the existing hybrid, along with the same DC component; however, the new hybrid would assume a 6% rate of return on assets supporting the system, change what an employee pays into the system, and include a variable retirement age based on mortality experience.
- Other changes to shore up financing of the various school employee retirement systems.
- Appropriate $5.0 million out of pension trust funds to ORS for administration of the changes in the Act. This would have the effect of making the new law referendum-proof.
BILL UPDATES
Pension tax — The interest in a tax cut of some kind is apparently still alive for some legislators, but so far they have not focused it on seniors or retirees. We need to continue to communicate with Rep. Jim Tedder (R-Clarkston), Chair of House Tax Policy Committee, at (517) 373-0159 or jimtedder@house.mi.gov and urge him to schedule a pension tax repeal bill for a hearing.
SS Fix — SB 266 and HB 4396 are identical bills that fix a perceived inequitable treatment of retired public employees not in the Social Security system with regard to the pension tax. Those affected are usually local government retired police and fire personnel. The bills have passed their sponsoring chambers. The Treasury Department has opposed the bills on the grounds that they treat similar retirees differently based on the date they retired and because of a retroactivity provision.
The Governor has signed HB 4131, now Public Act 43 of 2017, that provides for forfeiture of a public employer’s contributions to a defined contribution plan if the public employee is convicted of certain felonies against the public interest. It would allow no judicial discretion in the matter. The issue arose in the context of the Flint water crisis and some public employees indicted for their role in it.
HB 4759 that would authorize sale of the Farnum Building diagonally across from the Capitol Building, has passed the House and Senate. It was used from 1978 until the end of 2016 to house Senate offices. A $7 million purchase and renovation of a nearby building for new Senate offices caused quite a stir in 2015.
SERA Recent News — If you are a SERA member, you are eligible to receive SERA Recent News, a periodic e-mail about breaking news and links to media stories of interest to state employees and retirees. Write to michigansera@comcast.net, giving your name, email address, and chapter name.
Editor’s note: Mary Pollock is the 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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