Legislative Report
December 2008
The campaigning and elections are finally over and a degree of normalcy is finally returning to television news programs. No more controversial political advertisements. Fewer pundits pushing their candidate on talk shows. What a relief! Normalcy is an elusive concept, however. Now we are hearing the post elections analysis and predictions of what the winners will do in an environment fraught with some very serious problems, both in terms of homeland security and, most importantly, the economy. One thing is for sure, President-elect Obama and the U.S. congress as well as Governor Granholm and the state legislators have their work cut out for them in these trying times.
Governor Granholm has spent some time as a member of a team of economic advisors to the Obama Transition Team. At the same time, she is concerned with Michigan’s economy, especially with the automobile industry in need of billions of dollars in assistance from the federal government. Continuing her pursuit of economic stability for the state, Governor Granholm went on a Middle East trade mission. She visited Israel and Jordan and came back with a cooperative agreement with Israel to enhance opportunities for economic development. Finally, it is unclear whether Governor Granholm will be offered a position in the Obama administration.
Although, the November legislative sessions were shortened due to the elections, the deer hunting season and Thanksgiving, there were some important matters attended to while they were in session. Those that appear most important to retirees/seniors are reported below. In reviewing the items listed, please remember that there are few legislative days remaining for the lame duck session. Bills not passed before the year end adjournment will die and must be reintroduced when the new legislative session begins in 2009.
Post retirement benefits for some state retirees: HB 6713 was introduced in November and would make post retirement adjustments for state retirees who retired prior to October 1, 1990. The adjustment would range from 4% for those who retired between October 1, 1989 and September 30, 1990 to 30% for those retiring before October 1, 1977. Under the bill, the percentage of the adjustment would increase 2% per year for each year of retirement beginning and October 1, 1977and extending to September 30, 1990. The bill was assigned to the Committee on Health, Security and Retirement.
Changes in investment of public retirement funds: HB 6500 would change the way public retirement funds, both state and local, could be invested by amending the Public Employee Retirement System Act. Generally, the bill would increase the amount of investment of the systems assets in publicly or privately issued real estate investment trusts (REIT) from the current 5% to a maximum of 10%. The bill would allow the state treasurer to exceed the new limit of 10% of the system’s assets, just as can currently be done with the 5% limit. Non state treasurer investors cannot exceed the limit.
Another aspect of the bill would permit retirement systems having assets of more than $250 million to invest 10% of its assets in private equity and systems having $1 billion or more in assets to invest 15% in private equity. If the investment fiduciary is the state treasurer, the investment would not be subject to the percentage of total asset limitations. The bill limits the state treasurer to investing not more than 20% of the systems assets in “investments not otherwise qualified.” Under current law, an investment fiduciary can invest in various derivatives to enhance portfolio performance. The aggregate market value of the underlying security, future or other instrument or index cannot exceed 15% of the systems assets. Under this bill, the aggregate market value could not exceed 30%. The state treasurer could not invest more than 20% of a system’s assets in foreign securities under this bill. This is the same as the current law. This bill has passed the House and has gone to the Senate Appropriations Committee.
Approval, administration and management of state retirees’ health care plans: HB 5545, a bill which SERA opposes, continues to be on the House calendar. This bill would move the responsibility for health care plan development and administration from Civil Service to the Office of Retirement Systems. It is our belief that we will get more input and more consideration if the program remains in Civil Service. We thank our members for contacting their legislators and expressing their opposition to this bill.
Limited death benefit insurance policy: SB 1534 would amend the Insurance Code to allow a life insurer to offer an associated life insurance policy or annuity contract with a limited death benefit to a proposed insured who did not meet insurance requirements for a policy that provided immediate full coverage or who chose not to answer medical questions required for such a policy. Currently such policies are sold only by funeral establishments, cemeteries or sellers licensed as limited life insurance agents. In simple language, this bill would allow a life insurer to sell an associated life insurance policy with a “limited death benefit” which would have to disclose in boldfaced type that the death benefit would not be sufficient to cover the cost of the initial contract price for the goods and services for a period up to two years if the premium were not paid in full and, during this period, the price for those goods and services could increase at a rate higher than the increase in the consumer price index. “Limited death benefit” would mean the sum payable upon the insured’s death during the first two years that an associated life insurance policy or annuity contract was in effect that was less than the amount necessary to cover the initial contract price of cemetery goods and services or funeral goods and services, but that provided for a minimum benefit at least 25% and 50% of the initial contract price of cemetery goods and services or funeral goods and services during the first and second years of the contract, respectively. The bill has passed the Senate and has gone to the House Committee on Insurance.
Miscellany
Election Results — The Democrats picked up nine seats in the House as the result of the strong Democratic showing in the November election. As a result, they will have a 67-43 majority in the new legislature. There were several surprises in the election. Probably the most significant was the defeat of Chief Justice Clifford Taylor of the Michigan Supreme Court. Dianne Hathaway, a Wayne County Circuit Court judge, defeated Mr. Taylor and thereby changed the political complexion of the Supreme Court. The Court will now have four Republican justices and three Democratic justices, although Justice Elizabeth Weaver has recently tended to disassociate herself from her conservative Republican colleagues. This election will definitely impact the decisions of the Court. The Congressional representation for Michigan changed as the result of Democrat Gary Peters defeating Republican Representative Joe Knollenberg. Both men are from Bloomfield Hills. Democrat Mark Schauer of Battle Creek defeated Congressman Tim Walberg of Tipton. The two ballot proposals dealing with embryonic stem cell research and the use of marijuana for medical purposes passed. It will be interesting to see how both of these controversial measures are implemented.
Legislative Leadership — Both parties have chosen their legislative leaders. The Democratic leadership is as follows: Rep. Andy Dillon (Redford Township), Speaker of the House; Representative Kathy Angerer (Dundee), Floor Leader; Representative Pam Bruce (Chelsea), Speaker Pro Tempore. (The remaining Democratic leadership has not be chosen.) The Republican leadership in the House is as follows: Representative Kevin Elsenheimer (Bellaire), Minority Floor Leader; Dave Hildenbrand (Lowell), Minority Floor Leader; and assistant floor leaders: Representative Tonya Schuitmaker (Lawton) and Representative Elect Bill Rogers (Brighton). The Senate Leadership also changed due to Senator Mark Schauer being elected to Congress: Senator Mike Prusi (Ishpeming), Senate Minority Leader; Buzz Thomas (Detroit) continues as Minority Floor Leader after being defeated by Mr. Prusi.
Legislative demographics — There will be 28 women in the House beginning in 2009 (22 Democrats and 6 Republicans). This is the most women in the House since the 1999-2000 legislature when there were 29. With the nine women in the Senate, there will be a combined total of 37 women legislators, breaking the 1997-98 record of 34 women. For the first time in almost one hundred years, there will be two black Republicans in the House: Representatives Paul Scott (Genesee) and Larry DeShazor (Kalamazoo). There was one black Democrat added to that party’s ranks: Vincent Gregory (Southfield). The Black Caucus will increase in number from 21 to 24. For the first time, there will be one Muslim member of the House. Representative Rashida Tlaib will represent the 12th District (Detroit).
Secretary of State offers pilot program — A pilot program to assist deaf customers in branch offices has been announced by the Secretary of State. This pilot program will be available at ten branch offices and will provide remote video interpreter services. Interpreters at a remote site will be able to communicate with deaf customers and assist on site staff in assisting the customer. The program will be run in conjunction with the Communication Access Center for Deaf and Hard of Hearing located in Flint.
First Invest Michigan! investments made — The program allowing some $300 million in pension funds to be used to invest in Michigan companies has made its first two investments. The Treasury Department has invested in Microposite of Auburn Hills which makes clean technology home cleaning products. It also has invested pension funds in Ecosynthetix, a Lansing company which makes bio-based replacements for petroleum based products.
State assists banks and credit unions with cash — Details are being finalized for a program whereby the state will make available some $150 million to state banks and credit unions. This will be accomplished by the state using its common cash to purchase certificates of deposits at competitive rates. The intent of this program is to provide money to these lending institutions to make loans to businesses. 80% of the money invested would have to be used for loans. The question as yet unanswered is the length of maturity for the certificates of deposit inasmuch as the state must assure the liquidity of its common cash.
Former Governor Milliken’s position on term limits — At a recent dinner in his honor, former Governor William Milliken spoke out against term limits. According to Gongwer News Service, the former Governor attributed the divisive politics in Lansing to term limits and said it has turned this state into a disaster. Milliken is quoted in Gongwer as saying ”I know of no other line of work where inexperience is considered an asset. When you look for an accountant, a doctor or even Joe the Plumber, you look for people with experience.”
People in the News
Mike Cox, Michigan Attorney General, has filed the necessary paperwork with the Secretary of State to form an exploratory committee for his running for governor in 2010. He becomes the first candidate to do so.
Dennis Archer, former Supreme Court Justice and former Mayor of Detroit has announced that after giving much thought to running for Governor in 2010, he will not do so. With real candor, Mr. Archer said he is not willing to make the sacrifices required to run for Governor.
Dick DeVos, a prominent Republican and former gubernatorial candidate, announced that he will not be a candidate for governor in 2010. He believes he can be more effective on government working outside of government.
Kelly Keenan, most recently legal advisor to Governor Granholm now in private practice, has been appointed to the Civil Service Commission as a Democratic member by the Governor. He succeeds Bryan Waldman who resigned.
Saul Anuzis, Chairman of the Michigan Republican Party, has announced that he is seeking the chairmanship of the National Republican Party. Mr. Anuzis is being challenged for his current position as head of the Michigan Republican Party. The election for that position will take place in early 2009.
U.S. Representative John Dingell, a long serving Democratic member of Congress from Dearborn, was ousted from the position of chairman of the House Energy and Policy Committee. He has held that position since 1981. Congressman Henry Waxman a California Democrat defeated Mr. Dingell.
Representative Kevin Green, a Republican from Wyoming, was arrested in Saginaw for driving under the influence of alcohol. He pleaded guilty to a lesser charge and was fined and put on probation. He was subsequently stripped of two of his committee assignments and agreed to resign from a third committee. More importantly, he was a contender for the Minority Leader position in the House, but bowed out of the competition after his arrest.
Representative Rick Jones, a Eaton County Republican, allowed himself to be tased at a meeting of the House Tourism and Natural Resources Committee in order to generate support for a package of bills which would include the type of weapon used in his five second taser demonstration under the concealed weapons permit law.
Former Congressman Paul Todd, Jr. a Democrat from Kalamazoo who served one term in congress died recently at the age of 87. Mr. Todd served in congress in 1965-7.
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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