September Legislative Report by Capitol Services

On September 26, Speaker of the House Tom Leonard co-hosted a press conference with Detroit Mayor Mike Duggan to unveil a proposal to make major reforms to Michigan’s No-Fault Auto Insurance laws.  House leaders have made passage of this plan, incorporated into House Bill 5013, a top priority this fall.  While that issue is getting most of the attention in Lansing, the Legislature continues to work on a myriad of other topics ranging from unemployment insurance reforms, updates to Michigan’s 9-1-1 system, and attempts to respond to the opioid epidemic.  Meanwhile, the Michigan Civil Service Commission approved rule changes that will severely restrict collective bargaining rights for state employee unions. 
 
Civil Service Commission Approves Controversial Rule Changes
 
The Michigan Civil Service Commission on September 20 approved by a 3-1 vote new rules that will, among other things, restrict collective bargaining rights, reduce union leave time for state employee unions, and grant expanded abilities for state departments to go around the collective bargaining process when transferring employees.  The changes were strongly opposed by state employee unions such as AFSCME and SEIU, who argued that they would revive the “spoils system” of hiring that the civil service system was created to prevent.  Backers of the changes claimed that they would make human resources in state government more efficient. 
 
The major changes in the rules include (reprinted from last month’s report):
 

• Adding a prohibited subject on the employer’s right to assign staff. This would affect several contractual provisions on bumping, transfers, recall, scheduling, overtime assignment, and seniority.
• Ending mandatory statewide recall lists, while preserving agency recall lists.
• Adding a prohibited subject on employer-paid union leaves and a new rule allowing each recognized union paid leave for one employee’s full-time absence.
• Adding prohibited subjects of critical-position premium and performance-pay system.
• Standardizing the process by which employees can authorize dues deductions.
• Reorganizing and streamlining the list of prohibited subjects. 
• Reinstituting rules of general applicability to allow emergent situations to be promptly addressed.

 Legislature Eyes Municipal Pension Reform
 
Late last year, an effort sprung up in the House Republican Caucus to pass legislation that would have gutted retiree benefits for local government employees.  The bills died but their backers remain committed to “fixing” problems with local public pension systems much the same way the state “fixed” the State Employees Retirement System in 1997.  30 years after SERS was closed and new state employees were forced into a 401k-style plan, SERS has gone from being over 100% funded to less than 60% funded, and employees in the 401k-style system have average retirement savings that are woefully inadequate.  Needless to say, most local government employees are opposed to having their retirement plans “fixed” in this same way.
 
Earlier this year, Governor Snyder convened a task force to discuss local pension issues.  Dubbed the “Responsible Retirement Reform for Local Government Task Force,” the group was made up of representatives from management, labor and pension experts from across the state.  After several months of study and deliberation, the Task Force issued recommendations that focused on shortfalls in Other Post-Employment Benefits (OPEB) such as retiree health care. 
 
The task force agreed on four main recommendations:
 

• Greater reporting and transparency must be required of all local units to ensure a full understanding of the size and scope of the problem, and where the biggest challenges exist. This includes reporting using uniform assumptions to allow for better comparisons.
•  A pension and OPEB fiscal stress test system for local governments should be created to alert and assist local units in crafting solutions to best position them to continue to serve their residents, while funding their obligations and protecting benefits for employees and retirees. This system should identify and focus action on the local units experiencing the greatest fiscal stress. 
• This system, along with the creation of a new Municipal Stability Board (MSB), should assist in the review of a local unit’s finances and the development of a corrective action plan. The MSB should also provide research, training and technical assistance.
•  In addition to meeting existing constitutional and statutory requirements to pay pension costs, going forward all local governments should meet a minimum requirement to pay OPEB normal costs for new hires (i.e., to prefund new active employee’s current year obligation), if offered. 

These suggestions were agreed upon by both management and labor organizations, and may form the backbone of pending legislation.  Even though these reforms only apply to municipal employee plans, they could easily be used as a template for further changes that would impact state employees.  We expect legislation to be introduced in the next few weeks.
 
Flint Water Issue Continues to Dog Administration
 
Two events took place in the last few weeks that have once again brought the issue of Flint water back into the limelight.  First, new charges were issued by Special Prosecutor Todd Flood against Dr. Eden Wells, the state’s chief medical executive.  The charges, manslaughter, are related to the outbreak of Legionnaire’s Disease that accompanied the crisis.  Next, the timeline of the Legionnaire’s outbreak has been called into question after Snyder staff member Harvey Hollins contradicted the Governor’s statements regarding when the Governor first became aware of the outbreak. 
 
Mr. Hollins’ testimony prompted the U.S. House Oversight and Government Reform Committee (before which Governor Snyder testified last year) to offer the Governor the opportunity to alter his statements to the committee.  Governor Snyder had told the committee that he had first learned about the Legionnaire’s Disease outbreak in January of 2016, while Mr. Hollins stated that the Governor had been aware in December of 2015.  Both Mr. Hollins and Governor Snyder are standing by their contradictory statements, both taken under oath with the penalty of perjury.  It is as yet unclear what actions, if any, the U.S. House Oversight and Government Reform Committee – chaired by Congressman Trey Gowdy (R-South Carolina) – will now take. 
 
Schuette and Leonard Announce Candidacy for Governor and AG, Respectively
 
It has been widely known for quite some time (some would say many years) that Attorney General Bill Schuette (R-Midland) was planning on running for Michigan Governor in 2018.  He made it official with an announcement on September 12 that he was indeed running for governor.  A straw poll at the GOP Mackinac Island Conference showed Schuette to be the overwhelming favorite for the Republican primary, outpacing Lt. Governor Brian Calley (who has yet to formally announce his candidacy) and State Senator Patrick Colbeck by a wide margin.
 
Speaker of the House Tom Leonard (R-DeWitt) declared his intention in October to run for the seat being vacated by Mr. Schuette.  Mr. Leonard will face off against State Senator Tonya Schuitmaker (R-Lawton) to be the Republican candidate for Attorney General in 2018. 
 
On the Democratic side, former U.S. Attorney Pat Miles announced his candidacy for Attorney General in late September.  He will face attorney Dana Nessel, who became well known for leading the legal effort to allow same-sex marriage at the U.S. Supreme Court.  State Senator Steve Bieda (D-Warren) has also declared his intention to run for the Attorney General seat.