Legislative Report

April 2008

The political atmosphere in state government was relatively quiet during the month of March. This is attributable to several factors. Among them is the fact that the Democrats were busy fighting among themselves and with national party officials regarding how to get Michigan delegates to the Democratic National Convention seated in August. Closely tied to that problem were discussions regarding what to do about the fiasco primary election which took place on January 15 in which Hilliary Clinton was the only Democratic candidate on the ballot as the result of a protest by the other candidates to Michigan moving up its primary election to January in defiance of the national Democratic Party rules. As punishment, the national party announced it would not seat the Michigan Delegates at the Convention. Now that the Democratic race for president is a tight two person battle, Michigan supporters of each candidate are trying to maneuver for a solution which would be satisfactory to the national party officials, the candidates, and the Michigan voters to give their candidate the most delegates. Many Michigan Democrats were pushing for a “do-over” primary election which was eventually ruled out because of costs and logistics and politics. The idea of a caucus doesn’t seem appealing to most Democrats either. So, nothing has been solved as of this writing. The Michigan delegates are not yet recognized and if they are eventually recognized, the question remains how the delegates should be allocated between the two candidates. It is an unbelievably confusing situation!

Meanwhile, the legislature was busy passing appropriation bills for the 2008-9 fiscal year and preparing for a two week Spring break. Also, the legislature was busy passing bills which would make Michigan very attractive to the movie industry by giving various types of incentives to movie makers. A number of bills addressing this subject have passed and been signed into law by Governor Granholm. It remains to be seen what impact these measures will have on making Michigan the Hollywood of the Midwest.

Despite the activity mentioned above, a number of other bills, perhaps having more direct interest to seniors/retirees, were acted upon and are reported below:

SB 82 is now P.A. 43 of 2008. This new law might be of special interest to grandparents who transport their grandchildren. The act requires children between the ages of four through seven and who are less than four feet nine inches tall, be placed in a automobile restraint system commonly known as a “booster seat”. Violation of this requirement could result in the driver of the vehicle having to pay $65 in fines and court costs.

HB 5545, the status of this bill which transfers responsibility for the development and approval and administration of state retirees’ health plans from the Civil Service Commission to the Office of Retirement Systems remains unchanged since it was reported out of the Retiree Health Care Reforms Committee on December 13, 2007. SERA remains opposed to this bill for the reasons that have been previously outlined in this column and elsewhere. We believe the bill is simply not in the best interest of state retirees. SERA leadership strongly encourages its members to continue to contact their representatives via telephone, e-mail, or letter asking them not to support this bill should it come up for a vote. Chapter presidents have an explanation of the reasons for our opposition which you should obtain prior to making contact.

HB 5913 is a recently introduced bill which creates a vehicle to pre-fund retiree health care costs. The bill establishes separate 115 Trust accounts for each of the four retirement systems under the jurisdiction of the Office of Retirement Systems (State Employees, School Employees, Judges, and State Police) plus the Legislative Retirement System. The 115 Trust gets its name from the section of the Internal Revenue Code which allows such Trusts to be established. Only governmental entities may establish such trusts and, once established, the Trust must exclusively be used to fund health care costs. The creation of the Trusts must meet legal muster of various governmental entities and thus is a highly legalistic exercise. In its most simplistic form, it becomes the means by which the state may set up a system to pre-fund future costs of active employees’ health care once they retire. This bill addresses the establishment of depository for the funds and does not address how to obtain the funds required to pay for the health care costs. This will be addressed in other bills and could include employee contributions, state contributions, and interest on the earnings in the Trust. There is a possibility of bonding to get sufficient funds to jump-start the Trust and begin earning interest. The bill also allows for the establishment of individual retirement accounts as part of the Trust which may be used to pay for costs not provided for by the state such as deductibles, co-payments, etc. The bill has been referred to the Retiree Health Care Reforms Committee where a series of hearings and informal “work groups” are further refining the bill as introduced before it is approved by the Committee.

HB 4602 is a bill which is technical in nature but yet having practical significance to certain individuals and families. The bill amends acts pertaining to the “rule against perpetuities.” Generally, the “rule against perpetuities” is an attempt to prevent assets from being tied-up in long-term perpetual family trusts. This bill revises current law by removing personal property from the “rule against perpetuities”, thus leaving only real property covered under the current law. If this bill were to pass, families could amass fortunes in personal property-based perpetual family trusts. The bill has passed the House and gone to the Senate Committee on Judiciary.

HBs 4596, 5287 and 5288 are all bills regarding the regulation of mortgage loan officers. These bills are among a series of bills intended to regulate the mortgage lending industry. These specific bills address the regulation of loan officers, their compensation, and registration requirements. The bills have passed both legislative chambers and are on their way to the Governor for signature. Additional bills are working their way through the system.

HBs 5669 and 5727 are bills dealing with abuse of a vulnerable adult. HB 5669 would prohibit a magistrate from refusing to accept a complaint pertaining to the abuse of a vulnerable adult on the grounds that the complaint is made (based on information and belief) by an individual other than the victim. A vulnerable adult is someone age 18 or older who because of age, developmental disability, mental illness, or physical disability cannot live independently or is unable to protect himself or herself from abuse, neglect, or exploitation. HB 5727 would allow for the forfeiture, revocation, or severance of all benefits to a decedent’s estate if a person were convicted of committing abuse, neglect, or exploitation of the decedent. However, if the decedent executed a governing instrument after the conviction expressing specific intent to allow the felon to inherit or otherwise receive the estate or property the forfeiture, revocation, or severance would not apply. These bills have passed the House and gone to the Senate Committee on Senior Citizens and Veteran’s Affairs.

HB 5127 is a recently introduced bill which would allow non-real property owners to run for public office in a municipality in which he or she lived. Municipalities could not make property ownership a qualification for holding an elective or appointive public office. A person who was denied or threatened with denial of access to the ballot as a non-property owner could bring an action for equitable relief, and recover damages in a civil court proceeding. The bill was referred to the Ethics and Elections Committee.


State Pension Fund Losses — Not surprisingly, the instability of the stock market over the last several months has impacted the earnings on pension fund investments. The Department of Treasury has reported that the several funds administered by the Office of Retirement Systems lost more than $3 billion in value since the end of December when the value of the funds was $61.76 billion. At the end of February, the value stood at $58.65. There is no need for alarm however. While the figure loss is significant, such fluctuations do occur and are anticipated.

Michigan’s Performance Rating — The Pew Center for the States has given Michigan a high overall performance rating. Michigan received a B+ overall. The state received an A- for providing information, an A- for its infrastructure, a B+ for working with people, and a C+ for money. Only three states, Virginia, Utah and Washington received marks higher than Michigan.

Discretionary Clauses in Insurance Policies — A recent federal court ruling prohibits discretionary clauses in insurance contracts which give the insurance company sole authority to determine eligibility for benefits. The Office of Financial and Insurance Services issued an order in 2007 prohibiting such provisions in insurance contracts. After the federal court opinion, Ken Ross, OFIS Commissioner issued the following statement: “The decision prevents insurance companies from slipping clauses into their policies that unfairly disadvantage Michigan Consumers.”

Foreclosure Counseling Grant — The Michigan Housing Development Authority received a $661,000 federal grant to provide foreclosure prevention counseling to individuals. This grant is part of the National Foreclosure Mitigation Counseling Program.

2008-9 Projected Budget Shortfall — The Senate Fiscal Agency is projecting a $250 million shortfall for next fiscal year based on the Executive Budget currently being worked on in the legislature. A large part of this projected shortfall is based on lower property tax revenue. The final and official revenue estimates will come out of the Revenue Estimating Conference on May 16. This is a meeting held between the director of the Senate and House Fiscal Agencies and the State Treasurer.

Primary Voter Identification — A federal judge has ruled that voter identification records from the January 15 primary election cannot be released to the Republican and Democratic parties. Judge Nancy Edmonds ruled the law providing for the release of this information was unconstitutional. The basis for the decision was that public funds used for the election could not be used for private purposes (the release of the information to non governmental entities.)

People in the News

John C. Mackie, who was the last elected Highway Commissioner and former Director of the Department of State Highways, died at the age of 88 years of age. The first large portions of the state’s freeways were constructed under Mackie.

James Farrell, State Personnel Director for the last 3 and one-half years, has resigned to accept a position in the private sector. He will be joining EquaTerra, an international business consulting firm. It is anticipated that Janet McClelland, Chief Deputy Director, will be named interim director.

Jack Kervorkian, the assisted suicide physician who served eight years in prison for second degree murder, has announced that he will be a candidate for the congressional seat currently held by Republican Joe Knollenberg in Oakland County’s 9th Congressional District. Kervorkian is running as an Independent.

Kwame Kilpatrick, Mayor of the City of Detroit, has been charged with eight felonies including perjury, misconduct in office, and obstruction of justice by the Wayne County prosecutor. Mr. Kilpatrick refuses to resign as Mayor and promises to vigorously fight the charges.

Michael DeVos, has resigned as Director of the Michigan State Housing Development Authority. Mr. DeVos came under fire for failing to apply for federal tax credits that would have helped the construction industry. He will receive a termination package worth some $288,000.

Keith Molin, the former head of the Departments of Labor and Commerce under former Governor Milliken and the current Senior Associate Athletic Director at U of M will replace Mr. DeVos until a permanent director is selected.

Lisa Webb-Sharpe, Director of the Department of Management and Budget was recognized by the Michigan Business and Professional Women for her leadership in government.

Bill Schuette, currently a Court of Appeals Judge, has announced that he will not seek reelection to the Court. Schuette is a former congressman, legislator, and Agriculture Department Director.

Editor’s note: Alvin Whitfield is former President of the Lansing SERA Chapter and former Chairperson of the Michigan SERA Council and current Legislative Representative for both the Council and the Lansing Chapter. He may be contacted at 1241 Runaway Bay Drive, C-3, Lansing, Michigan 48917; phone 517/703-9666; e-mail: alwhit@worldnet.att.net.

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