June 22, 2018
The House and Senate began their summer break June 12, earlier than planned. They will meet one day in July, one day in August and return September 5 for a month. Meanwhile there are some big issues to wrap up before their departure like the budget and the MSU crisis legislation.
STATE PRIMARY IS AUGUST 7
The 2018 primary on August 7 is very important in Michigan since it is preliminary to the selection for the offices of Governor, Attorney General, Secretary of State, two Supreme Court Justices, all 110 Michigan State Representatives, all 38 State Senators, all 14 U.S. Representatives, and one U.S. Senate office. County commission and precinct delegates are on the ballot. In many districts that have voters of predominantly one party, the primary determines who will win in November. Please inform yourself about the candidates and issues in your jurisdiction and vote!
Voter registration — The last day to register or change your voting address for the August 7 primary is July 9. The nearest Secretary of State Office or municipal clerk’s office can assist. At the SOS Web site www.michigan.gov/vote you can view your sample ballot for the upcoming election, track the status of your absentee ballot, verify your voter registration information, or access other voting information.
FY 2019 BUDGET
The May 16 Revenue Estimating Conference projected better than expected revenues for the state, as the national and state economic growth continues. Economists agreed on a forecast that the state’s unemployment rate would be 4.5 percent for 2018, 4.4 percent for 2019 and 4.3 percent for 2020. They also forecast an uptick in personal income growth — 4.1 percent in 2018 and 4.4 percent in 2019. It was predicted that by the end of 2020, Michigan will have gained 701,600 jobs since the fourth quarter of 2009 — 82 percent of the jobs lost between 2000 and mid-2009.
The Governor and legislative leaders from both parties prioritized the extra state revenue for education, roads, school safety, paying down debt, funding for skilled trades work force training, $60 million in school safety funding, accountability for universities in sexual assault investigations, more for community mental health, and continued investment in the Budget Stabilization Fund. On June 12 the Legislature passed a $57 billion budget for fiscal year 2018-19. If the Governor signs the bills as expected, all schools will see a $120 per student funding increase, with the schools at the bottom of the scale receiving an increase of $240 per student, the largest in at least a decade. The DHHS budget also contained a controversial provision banning giving family planning and pregnancy services and pregnancy prevention funds to groups that also perform abortions and instead giving preference to providers in the same county that do not perform abortions.
Governor Snyder’s final budget this year will be the eighth in a row on-time for schools and municipalities to begin their July 1 fiscal year knowing what they will receive from the state.
As expected, the Governor signed HB 4410, now Public Act 143 of 2018, on May 9 to allow exclusion of a non-dependent adult child in one’s will from making a claim on the exempt property of the deceased.
Annuity Bill – On May 24, the Senate Finance Committee reported out of Committee House Bill 5231 to amend the State Employee Retirement Act to require the state to seek contractors to provide annuity options for state employees and retirees.
According to Wikipedia, in the United States, an annuity is a contractually executed investment product where the insured (usually, an individual) pays a life insurance company a lump-sum premium at the start of the contract or over a period of time. That money is to be paid back to the insured in fixed, incremental amounts, over some future period (predetermined by the insured). The insurer invests the premium; the resulting profit/return on investment funds the payments received by the insured and compensates the insurer. Conventional annuity contracts provide a predictable, guaranteed stream of future income (e.g., for retirement) until the death(s) of the beneficiaries(s) named in the contract, or, until a future termination date — whichever occurs first. In the U.S. Internal Revenue Code, the growth of the annuity value during the accumulation phase is tax-deferred.
At the Committee hearing the Treasury Department filed a card of support for the bill, a change of position from neutral in the House consideration of the bill. This usually means that the Governor’s office now agrees with the bill and will sign it. Michigan SERA put in a card of support for the bill.
According to the Senate Fiscal Agency analysis of the bill, under the current statute, there are no annuity options for the State Employee Retirement System participants. HB 5231 (H-6) would enact the same provisions for annuity options for SERS as are found in the Michigan Public School Employee Retirement System as amended in 2017, subject to the amendments proposed by House Bill 5230 (H-5) amending MPSERS. Those are:
The bill would require competitive bidding for providers of annuity options and require the State Treasurer to consider a number of qualifying factors in selecting an annuity provider.
Interest Rate and Actuarial Change Bill — Both chambers have now passed HB 5653 which would, according to the Senate Fiscal Agency, amend the State Employees’ Retirement Act to align two assumptions used in the calculation of survivor benefit payments with current (and future) experience. A survivor benefit option (which provides reduced pension payments to both the retiree while living and to a designated survivor after the death of the retiree) is designed to be actuarially cost-neutral to the pension fund compared to the cost of a non-reduced pension provided to a retiree who does not choose a survivor benefit option.
Under current law, when calculating the options for survivor benefit payments, the actuary is required to assume an 8% interest rate and also use the 1983 group annuity and mortality table. However, these do not reflect current conditions. The bills would replace those assumptions with an interest rate determined by the Director of the Department of Technology, Management, and Budget along with the State Retirement Board in consultation with the actuary, and using the mortality tables adopted by the Department and the State Retirement Board. The same changes were made to the Michigan Public School Employees’ Retirement System in the Public School Employees’ Retirement Act by Public Act 92 of 2017.
The Senate Fiscal Agency says the potential effect of these changes on the calculation of survivor benefit payments is indeterminate. A lower interest rate likely would lead to a higher reduction from the retiree’s pension and therefore a lower calculated survivor pension payment; however, longer mortality assumptions generally would lessen the reduction to the survivor benefit payments (i.e., result in a higher survivor benefit payment than a shorter mortality assumption would produce).
Kerrie VandenBosch, Director of the Office of Retirement Services, testified in favor of the bill.
Corrections classification correction — Eight active employees and one retiree will be included in the State Employee Retirees’ Act defined benefit pension benefits under HB 5411, which passed the House unanimously on May 1 and was referred to the Senate Appropriations Committee. The omission was discovered in a 2015 audit.
Senior Auto Insurance Proposal — In the morning on June 7, the Michigan Senate Committee on Insurance held a hearing on Senate Bill 787 that would allow those 65 and older to choose between unlimited personal injury protection (the current auto no-fault insurance system) or a $50,000 capped auto no-fault insurance benefit. If the latter is chosen, the senior would have to pay for any medical costs in excess of $50,000 through their own personal health insurance (Medicare, employer insurance coverage, Medicare supplement insurance, Medicaid or personal finances) for medical bills stemming from auto crashes. SB 787 is sponsored by Sen. Rick Jones (R-Grand Ledge).
That afternoon, the full Senate passed the bill 23 to 13 with four Republicans joining all nine Democrats present in opposition.
The bill is tie-barred to Senate Bill 1014, which would make various changes to the Insurance Code regarding automobile insurance and the Michigan Catastrophic Claims Association. Under Senate Bill 787 (S-4), payments to providers for products, services, and accommodations would be subject to limits proposed by Senate Bill 1014. SB 1014 would create an insurance fraud prevention authority, put limits on attendant care provided by a relative or person living in the same household and cap medical coverage for those injured where no insurance coverage exists at $400,000. There is no limit currently on what is known as assigned claims, those exceeding $550,000 in costs.
Both bills have been referred to the House Insurance Committee for further consideration.
Pension Tax Repeal — Yet another bill to sunset on December 31, 2018 the pension tax on those born after 1945 was introduced on June 7, HB 6132, sponsored by Rep. Curt VanderWall (R-Ludington).
HJR JJ — A legislatively proposed Constitutional amendment for the 2018 ballot would add two non-partisan elected representatives to the Michigan Civil Service Commission for terms of four years. Currently the Commission has four members appointed by the Governor for 8-year terms. HJR JJ has been referred to House Committee on Elections and Ethics. It would take a two-thirds majority in both chambers to put the measure on the ballot.
Renewable Energy Standards — The Clean Energy, Healthy Michigan ballot committee proposal backed by billionaire environmental activist Tom Steyer of California would have required Michigan’s utilities to achieve 30 percent renewable energy sources by 2030. DTE Energy and Consumers Power spent tens of millions of dollars in 2012 opposing a proposed constitutional amendment to raise the renewable energy standard to 25 percent by 2025. Current law has a goal of 15 percent renewable energy generation by 2021. Another expensive battle seemed inevitable.
However on May 18, DTE and Consumers Power agreed with the ballot committee to work toward a 50 percent clean energy goal by 2030 through 25 percent renewable energy and 25 percent energy efficiency if the ballot proposal was withdrawn. A wrinkle in this happy picture is that local governments are beginning to oppose wind and solar farms, likely making it more difficult for the energy companies to meet the goals of the agreement.
Marijuana Legalization — The Michigan State Board of Canvassers approved on April 26 the Coalition to Regulate Marijuana Like Alcohol’s petition signatures to put on the ballot a voter-initiated law that would legalize marijuana possession and consumption for all adults 21 years and older. Under Article II, Section 9 of Michigan’s Constitution, the Legislature has 40 session days from receiving a voter-initiated law to enact it without change or amendment or reject it. If rejected or no action is taken, the initiated law goes on the November ballot for voters to decide the matter. Alternatively, the Legislature can propose a different measure on the same subject and both proposals would go on the ballot. The Governor cannot veto a voter-initiated law.
A voter-approved initiated law can only be amended by a ¾ vote of the legislature, thus encouraging legislative tinkering during the 40-day review to stay in control of the issue. Michigan Senate Majority Leader Arlan Meekof (R-West Olive) claimed to have the 20 votes in that chamber to adopt the law to keep it off the ballot with the intent to amend it during lame duck session to tie it to federal marijuana legalization or set up a regulatory scheme. Keeping it off the ballot could coincidentally protect Republican candidates from younger voters potentially flocking to the polls to vote for legalization — and also potentially vote for Democrats. However, the House Republican leadership said there wasn’t support in its caucus to take up the matter, so the deadline of June 5 passed and voters will see marijuana legalization on the November 6 ballot.
Prevailing wage — In May, the Michigan Court of Appeals ordered the Michigan State Board of Canvassers to certify the signatures on the voter-initiated law to repeal Michigan’s prevailing wage act that requires the payment of union-scale wages on public construction projects. On June 1, the Board complied and a legislative vote to approve the proposed law was passed in both chambers in a contentious June 7 sessions. Repeal of prevailing wage law has been a long-held Republican goal. Proponents of repeal had to go the route of a voter-initiated law to avoid the Governor’s veto.
Redistricting — The Voters Not Politicians ballot proposal, endorsed by Michigan SERA, hopes to amend the state constitution to take the political district boundary drawing from legislative and gubernatorial control and place it in the hands of an independent citizen redistricting commission similar to the California model. Those opposed (apparently financed by the Michigan Chamber of Commerce) filed a court challenge saying the proposal does not mention every place the Constitution is affected and a constitutional convention is required to make so many changes. On June 7 a unanimous Court of Appeals panel rejected claims of the challengers and ordered the Board of State Canvassers to put the proposal on the ballot. The Michigan’s Supreme Court refused to grant a requested stay to block certification of the proposal to the ballot though a substantive appeal is still pending. On June 20 the Board approved the measure for the November ballot to the cheering of about 200 supporters.
Minimum wage — Petitions for a proposed initiated law to raise the minimum wage to $12 an hour and bring tipped workers into the minimum wage model over time were submitted in late May and are being evaluated by the Board of Canvassers. When a minimum wage ballot proposal was submitted to the Legislature in 2013, the legislature rescinded the overall law and replaced it with a reduced minimum wage increase while adding an appropriation to make the law referendum proof.
Earned Paid Sick Leave — Petitions for a proposed initiated law to require earned paid sick leave benefits were submitted in late May and are being evaluated by the Board of Canvassers. The organizer of this petition says she’s open to keeping it off the ballot if the legislature wants to negotiate passing a state law providing paid sick leave for the 40 percent of workers who don’t have it.
Promote The Vote — Proposed constitutional amendments to add a no-reason absentee voting option, straight-party ticket voting option, and generally modernize our voting laws similar to 35 other progressive states is still collecting signatures with a deadline in early July. Michigan SERA Coordinating Council has endorsed the proposal and urges chapters to help the campaign reach its goal. See www.promotethevotemi.org.
NASSAR CASE RESPONSE
On May 24 the Michigan House passed 27 bills related to the MSU crisis created by Dr. Larry Nassar’s sexual assault of hundreds of girls (and some boys) under the guise of medical treatment. The bills tighten the rules on medical record-keeping for procedures that penetrate the anus or vagina, make it a crime for doctors to sexually assault somebody under the pretext of medical treatment, extend statutes of limitations on criminal and civil lawsuits over childhood sexual assault, add mandatory reporters of sexual abuse and create enhanced child pornography charges. The $500 million settlement between MSU and the Nassar victims apparently included the survivor’s withdrawal of support for the bill removing governmental immunity in sexual assault cases.
On May 29 the Senate concurred with two of the bills returned to them by the House but loudly complained about how the House had watered down the bills. SB 871 would extend the statute of limitations for criminal sexual conduct in the second or third degree (sexual contact and sexual penetration, respectively) in which the victim is under 18 years of age, allowing an indictment to be found and filed as follows:
SB 872 as amended deals with the civil statute of limitations and provides a 90-day retroactive window for abuse victims to bring lawsuits and includes provisions that are likely to limit the bill’s effect to the women and girls abused by Nassar. The Senate had placed a one-year window in the original bill.
With Governor Snyder out of town, both bills were signed by Lt. Governor Brian Calley on June 12 with some of the sexual assault survivors in attendance. Recently an ad for Calley’s gubernatorial campaign featured the women complimenting Calley for his support.
Twenty-four bills were considered by the Senate Judiciary Committee on June 5 and 6 where some amendments were added to several House bills to strengthen them such as adding coaches to mandatory reporters. Expect the bills to clear both chambers and be presented to the Governor by the time the legislature leaves for the summer.
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 email@example.com, 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 firstname.lastname@example.org.
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