Capitol News
August 11, 2024
GOVERNOR SIGNS PENSION COLA STUDY
Governor Gretchen Whitmer signed the Fiscal Year (FY) 24-25 General Omnibus Appropriations Bill containing a proposed actuarial study about State employee retirees’ defined benefit annual cost of living adjustment (COLA) on Wednesday, July 24. SERA has been working on this effort since 2019.
The bill was sponsored by the Chair of the Senate Appropriations Committee, Sen. Sara Anthony (D-Lansing) with whom SERA has been working on the problem of the 3% or $300 cap on the annual COLA which has been in place since 1987 and affects over 85 percent of the 60,000 State employee defined benefit retirees.
Amended Language — The section authorizing the actuarial study is different from the version published in the June SERA-Nade. Conference committees made up of representatives from both chambers consider input from their own members and from executive branch representatives before passage and forwarding to the Governor.
Differences From S-1 Version — One addition asks the actuaries to estimate the cost of replacing the 3%/$300 cap with a 4% or $400 cap. That would just kick the can down the road and not address inflation. Another new provision excludes any past COLAs in calculating a new COLA prospectively. That would reduce the base and might even result in a lower pension than a current retiree has now!
The actuarial study apparently cannot begin until October 1 and we are told must compete with the Comprehensive Annual Financial Report for the time and attention of the actuaries. SERA has requested a meeting with the Office of Retirement Services before directions to the actuaries are given.
Provision As Adopted — Here is the provision as adopted in Senate Concurred Bill 747, now Public Act (PA) 121 of 2024 with Immediate Effect, FY 2024-25 General Omnibus Appropriation Bill for Department of Technology, Management, and Budget, Sec. 894, p. 105:
Sec. 894. (1) The MDTMB shall work with the office of retirement services to contract with the state’s actuary to conduct a study that provides an actuarial analysis on the impact to the state employees’ retirement system created under section 2 of the state employees’ retirement act, 1943 PA 240, MCL 38.2, for the proposals identified in subsection (2).
(2) Subject to subsections (3) to (5), the study must analyze all of the following proposals:
- Replacement of the current 3% or $300.00 cap with a cost-of-living adjustment based on the Consumer Price Index for Americans 62 years of age or older.
- Replacement of the $300.00 cap with $808.00 adjusted annually according to the Consumer Price Index for Americans 62 years of age or older.
- Replacement of the 3% or $300.00 cap with a 4% or $400.00 cap.
(3) The actuary shall model the proposals described in subsection (2) with all of the following assumptions:
- That the proposed COLA changes begin prospectively.
- That the COLAs made to a retiree’s compensation after retirement and before the prospective change remain unchanged.
- That the proposed COLA changes are applied to the retiree’s base pension amount excluding previous COLAs.
(4) The actuary must include in the study an estimate of the number of individuals impacted under each proposal.
(5) The actuary must include in the study an analysis of a 30-year projection of costs to this state to implement the proposals described in subsection (2).
(6) As used in this section, “COLA” means cost of living adjustment.
OTHER BUDGET NEWS
While SERA was most concerned with our actuarial study proposal, the big budget news was the $82.5 billion State budget adopted in the wee hours of the last spring legislative session day on June 27.
Education — The School Aid Bill, House Bill (HB) 5507 (H-1), now PA 120, gave pre-K-12, community colleges, and higher education institutions a total of $23.4 billion. It includes funding for student mental health, school safety, literacy grants and coaches, free breakfasts and lunches, and much more.
The education lobby was critical of the school aid budget for keeping the foundation allowance flat and reducing mental health and school safety funding. Governor Whitmer highlighted the sixth budget in a row to make a record investment in public education including expansion of universal pre-K availability.
Non-education Budget — Governor Whitmer signed Senate Bill (SB) 747 (PA 121) for $59.1 billion to fund the rest of State government, only $13 billion of which is State revenue and the remainder is federal dollars. Whitmer touted the budget’s gains for public safety, housing, transportation, and other community supports. The budget takes effect October 1.
PRIMARY ELECTION NEWS
Low Turnout — Voter turnout on August 6 was down compared to the last presidential election year in 2020 largely due to heavy rains and some severe weather warnings in southern lower Michigan. A few polling locations lost power temporarily.
Just over two million voted, with 1.2 million casting a ballot via the absentee process or during the new nine days of early voting. About 73,500 people took advantage of early voting. More than 1,800 voters registered to vote on primary election day itself.
In 2020, approximately 2.5 million people voted in the August primary. In the gubernatorial election years 2018 and 2022, turnout was 2.2 million and two million, respectively, for the August primary.
The next step in the 2024 election process is each county Board of Canvassers (two Republicans and two Democrats) reviews each precinct’s tallies against tabulator tapes to detect and correct any errors before the results are finalized and certified. Then each county’s results are sent to the State’s Bureau of Elections which helps the Board of State Canvassers review and certify each county’s results.
Federal Offices — In unofficial voting results, former Congressman Mike Rogers (R-Brighton) and U.S. Representative Elissa Slotkin (D-Holly) won their primary contests for the open U.S. Senate seat being vacated by the retiring U.S. Senator Debbie Stabenow (D-Lansing).
Congressional District (CD) 7 — Former State Senator Curtis Hertel (D-East Lansing) and former State Senator Tom Barrett (R-Grand Ledge) had no primary competition and will face off in November to represent the open CD 7 position representing the mid-Michigan area currently held by U.S. Representative Elissa Slotkin, who is running for the open U.S. Senate seat.
CD 8 — State Senator Kristen McDonald Rivet (D-Bay City) and Republican Paul Junge of Fenton won their primaries and will compete to replace retiring U.S. Congressman Dan Kildee (D-Flint) in the 8th District. Junge lost a 2020 bid for a different district and a 2022 challenge to Kildee.
Other CDs — Congressman Shri Thanedar (D-Detroit) won his primary in the 13th CD Democratic primary over former State Representative Mary Waters. In CD 3, incumbent U.S. Congresswoman Hillary Scholten (D-Grand Rapids) will face Paul Hudson of East Grand Rapids after Hudson emerged victorious from his hard-fought primary. CD 10 will see a rematch between Democrat Carl Marlinga and first-termer U.S. Congressman John James, after Marlinga beat out three other Democrats to win his party’s nomination.
In the Upper Peninsula’s 1st U.S. House District’s Democratic primary, newcomer Callie Barr of Traverse City, defeated Bob Lorinser of Marquette, who ran unsuccessfully for the seat in 2022. Barr will face incumbent U.S. Congressman Jack Bergman (R-Watersmeet). In the 4th District, U.S. Congressman Bill Huizenga (R-Zeeland) easily defeated his primary challenger, Brendan Muir. His general election opponent, Democrat Jessica Swartz of Kalamazoo, was unopposed in her primary. U.S. Congresswoman Haley Stevens (D-Birmingham) won her primary against Ahmed Ghanim of Ferndale with 87 percent of the vote and will face Republican Nick Somberg.
State House Races — Sixty-eight House incumbents sought reelection this year and had uncontested primaries; 34 faced challenges — 18 Democrats and 16 Republicans. All but two State House candidates — State Reps. Neil Friske (R-Charlevoix) and Robert Bezotte (R-Howell) — survived their primary elections. Parker Fairbairn of Harbor Springs defeated Rep. Neil Friske in the 107th House District by a wide margin. Likely one factor for Friske’s loss was that he was arrested in Lansing at the end of June, which was widely reported by State and local media though he has yet to be formally charged. In the Bezotte situation, he first decided not to run again and endorsed Jason Woolford. He then changed his mind and decided to run against Woolford.
Seven State Reps are not returning (3 Republican; 4 Democrat) and one Republican is term limited. It takes 56 State Reps to take the House majority. The House is now 56 Democrats and 54 Republicans. It is estimated that 44 seats lean or are safely held by Democrats; 47 seats lean or are safely held by Republicans; and 19 seats are competitive. Races to watch include the following districts: 27th, 38th, 44th, 58th, 61st, 81st, 83rd, 103rd, and 109th.
OTHER NEWS
Adopt and Amend Nixed — The Legislature’s 2018 decision to adopt and then amend two voter-initiated laws in the same session was unconstitutional, the Michigan Supreme Court ruled recently. That means the two laws passed using the scheme — PA 368 of 2018 and PA 369 of 2018 — were ruled invalid and that two voter-initiated versions — PA 337 of 2018 and PA 338 of 2018 — were ordered to go back into effect on February 21, 2025. One of the laws called for raising Michigan’s minimum wage to $12 per hour by 2022 and bringing the tipped minimum wage up to the regular minimum wage, and another that mandated earned paid sick time for workers.
Senate Redistricting Approved — The federal three-judge panel in the Agee v Benson (USWDM Docket No. 22-00272) case on July 26 approved the Michigan Independent Citizen’s Redistricting Commission’s redraw of Detroit-area Senate maps invalidated last year due to impermissible consideration of race in violation of the 14th Amendment Equal Protection Clause. The plaintiffs offered no objection to the Commission’s proposed redraw, and the special master tapped to review the map gave it the OK as well. The revised Senate districts offer a fairly stable plan from a partisan standpoint but includes some radical geographic changes for voters across 15 amended Senate districts in southeastern Michigan that will be used when the Senate is up for election in 2026.
Signed Into Law — The Governor has signed SB 603, sponsored by Senator Stephanie Chang (D-Detroit), to modify Michigan’s recount process as well as recount filing fees. Also signed was SB 604, sponsored by Senator Jeremy Moss (D-Southfield), to change the sentencing guidelines for certain Michigan election law violations, specifically related to recount violations. Republicans in the Senate did not grant the bills Immediate Effect; thus the bills will not go into effect until 91 days after the Legislature adjourns this year.
Meanwhile, the Bureau of Elections has proposed Administrative Rule changes about recounts for this election cycle. The Republican National Committee recently demanded the Bureau of Elections wait to enact proposed administrative rule changes to election recounts ahead of the November election, saying no changes should occur before the 2025 effective date of SBs 603 and 604.
FOIA Expansion — Two bills to expand the State’s Freedom of Information Act (FOIA), SB 669 and SB 670, passed the Senate in June. These bills would expand FOIA to include the Legislature and Governor’s office, with several exemptions. Bill sponsors and supporters said while the bill package was not perfect, members from both sides of the aisle said what was before them would provide long-overdue transparency to a state which has ranked near the bottom nationally in government transparency. In 2021, the State House unanimously passed State FOIA bills, but the State Senate never took them up.
Editor’s note: Mary Pollock is the Lansing SERA Chapter and SERA Coordinating Council’s Legislative Representative. She may be contacted at michigansera@comcast.net.
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