Bill Text: MI HB5725 | 2011-2012 | 96th Legislature | Introduced
Bill Title: Retirement; municipal employees; pension flexibility regarding opt-in and opt-out process; clarify. Amends sec. 36 of 1984 PA 427 (MCL 38.1536) & adds sec. 41a.
Spectrum: Partisan Bill (Republican 7-0)
Status: (Introduced - Dead) 2012-09-27 - Referred To Second Reading [HB5725 Detail]
Download: Michigan-2011-HB5725-Introduced.html
HOUSE BILL No. 5725
June 5, 2012, Introduced by Reps. MacGregor, Opsommer, Shaughnessy, McMillin, Jacobsen, Price and Franz and referred to the Committee on Appropriations.
A bill to amend 1984 PA 427, entitled
"Municipal employees retirement act of 1984,"
by amending section 36 (MCL 38.1536), as amended by 2004 PA 490,
and by adding section 41a.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 36. (1) A retirement board is created to administer this
act. Before the certification date, the retirement board shall
operate within the department of technology, management, and
budget. On and after the certification date, the retirement system
shall become a public corporation and shall no longer operate
within the executive branch of this state.
(2) On and after the certification date, except as otherwise
provided in section 41a, the retirement board has all of the
following powers and duties:
(a) The retirement board shall determine and establish all of
the provisions of the retirement system affecting benefit
eligibility, benefit programs, contribution amounts, and the
election of municipalities, judicial circuit courts, judicial
district courts, and judicial probate courts to be governed by the
provisions of the retirement system. The retirement board shall
establish all retirement system provisions. As of 12:01 a.m. on the
certification date, the retirement system provisions shall not
differ materially from the defined benefit provisions that are in
effect under this act at 11:59 p.m. on the day immediately before
the certification date. This subdivision does not limit the
retirement board's authority after the certification date to
establish additional programs, including, but not limited to,
defined benefit, defined contribution, ancillary benefits, health
and welfare benefits, and other postemployment benefit programs.
The retirement board may adopt the provisions of the reciprocal
retirement act, 1961 PA 88, MCL 38.1101 to 38.1106, on behalf of
the employees of the retirement board.
(b) The retirement board has the full and exclusive authority
and full responsibility to employ and pay for all professional
services, including, but not limited to, actuarial, investment,
legal, accounting, and any other services that the retirement board
considers necessary for the proper operation of the retirement
system. The power granted to the retirement board in this
subdivision includes complete control of the procurement process.
(c) The retirement board shall appoint a chief executive
officer and any other employees for which the retirement board
establishes positions. The retirement board shall establish the
compensation of all persons appointed by the board. On and after
the certification date, a person employed by the public corporation
is not an employee of this state for any purpose.
(d) The retirement board shall arrange for an annual actuarial
valuation and report of the actuarial soundness of each
participating municipality and court to be prepared by an
independent actuary based upon data compiled and supplied by
employees of the retirement system. The retirement board shall
adopt actuarial tables, assumptions, and formulas after
consultation with the actuary.
(e) The retirement board shall arrange for annual audits of
the records and accounts of the retirement system by a certified
public accountant or by a firm of certified public accountants
pursuant to generally accepted auditing standards and the uniform
budgeting and accounting act, 1968 PA 2, MCL 141.421 to 141.440a.
(f) The retirement board shall prepare an annual report for
each fiscal year in compliance with generally accepted accounting
principles. The report shall contain information regarding the
financial, actuarial, and other activities of the retirement system
during the fiscal year. The retirement board shall furnish a copy
of the annual report to the governor and a copy in print or
electronic format to each house of the legislature, each
participating municipality, and each participating court. The
retirement board shall make the report available to all members
upon request. The report shall also contain a review of the
actuarial valuation required under subdivision (d), if available.
(g) The retirement board shall appoint an attorney to be the
legal advisor of the board and to represent the board in all
proceedings.
(h) The retirement board shall appoint or employ custodians of
the assets of the retirement system. The custodians shall perform
all duties necessary and incidental to the custodial responsibility
and make disbursements of authorized retirement system payments
from the funds of the retirement system.
(i) The retirement board shall perform other functions that
are required for the execution of the provisions of this act.
(j) The retirement board shall establish the time and location
of the meetings of the retirement board and the time and location
of the annual meeting of the retirement system, consistent with the
provisions of the open meetings act, 1976 PA 267, MCL 15.261 to
15.275.
(3) Before the certification date, the provisions of the
executive organization act of 1965, 1965 PA 380, MCL 16.101 to
16.608, and the management and budget act, 1984 PA 431, MCL 18.1101
to 18.1594, shall govern the administrative functions of the
retirement system. However, any provision of law in actual conflict
with
the provisions of the amendatory act that added this sentence
shall
2004 PA 490 do not apply.
(4) On and after the certification date, the retirement board
consists of the following 9 members, each of whom, excepting the
retiree member and the retirement board appointees, shall be from a
different county at the time of appointment:
(a) Two members appointed by the retirement board who have
knowledge or experience in retirement systems, administration of
retirement systems, or investment management or advisory services.
(b) One member who is a retiree of the system appointed by the
board.
(c) Three members of the retirement system who are officers of
participating municipalities or courts, who shall be designated as
officer board members.
(d) Three employee members of the retirement system who are
not officers of a participating municipality or court, who shall be
designated as employee board members.
(5) The retirement board shall adopt its own rules of
procedure and shall keep a record of its proceedings. Five members
of the retirement board shall constitute a quorum at any meeting of
the retirement board and at least 5 concurring votes shall be
necessary for any decision by the retirement board. Each member of
the retirement board shall be entitled to 1 vote on each question
before the retirement board.
(6) The regular term of office of members of the retirement
board is 3 years. Each member of the retirement board shall take an
oath of office before assuming the duties of the position. Members
of the retirement board shall serve without compensation with
respect to their duties, but shall be reimbursed by the retirement
system for their actual and necessary expenses incurred in the
performance of their duties. A participating municipality or court
employing a member of the retirement board shall treat absences
from work on account of retirement board business in such a manner
that the individual does not suffer loss of pay or benefits.
(7) A vacancy shall occur on the retirement board upon the
occurrence of any of the following events:
(a) An officer board member ceases to be eligible for
nomination as an officer board member.
(b) An employee board member ceases to be eligible for
nomination as an employee board member.
(c) Failure to attend 3 consecutive scheduled meetings of the
retirement board, unless excused for cause by majority vote of the
board members attending the meeting.
(8) A vacancy occurring on the retirement board at least 120
days before the expiration of a term of office shall be filled by
the retirement board. Board appointments under this subsection
shall be for the period ending on the December 31 next following
the date of the vacancy. For the officer board members and employee
board members, a replacement for any further portion of the
unexpired term shall be filled pursuant to section 45. For the 2
appointed board members and the retiree board member, a replacement
for any further portion of the unexpired term shall be filled
pursuant to subsection (4).
(9) The retirement board shall select from its members a
chairperson and a chairperson pro-tem.
(10) The retirement board shall employ a chief executive
officer. The chief executive officer shall do all of the following:
(a) Manage and administer the retirement system under the
supervision and direction of the retirement board.
(b) Invest the assets of the retirement system, as directed by
the retirement board, consistent with the public employee
retirement system investment act, 1965 PA 314, MCL 38.1132 to
38.1140m, which act governs the investment of assets of public
employee retirement systems.
(c) Annually prepare and submit to the retirement board for
review, amendment, and adoption an itemized budget showing the
amount required to pay the retirement system's expenses for the
following fiscal year.
(d) Perform other duties as the retirement board, in its
discretion, shall delegate to the chief executive officer.
Sec. 41a. (1) By majority vote of its governing body, a
participating municipality may do any of the following:
(a) Revoke its election to be governed by the provisions of
the retirement system. A participating municipality may revoke its
election for all members in a plan, or for any division, subset, or
collective bargaining unit of the municipality.
(b) Change the benefit program and member contribution
programs that apply to employees of the participating municipality.
Changes include, but are not limited to, curtailing or eliminating
a member's accrual of future benefits or setting eligibility
criteria for an employee to participate in the defined benefit
provision of the retirement system. A participating municipality
may make a change for all members in a plan, or for any division,
subset, or collective bargaining unit of the municipality.
(2) If a participating municipality takes an action described
in subsection (1), the participating municipality shall select an
actuary to prepare an actuarial analysis. The actuarial analysis
shall include an analysis of the participating municipality's
contribution requirements associated with a revocation of
participation or change in coverage. Subject to section 20m of the
public employee retirement system investment act, 1965 PA 314, MCL
38.1140m, the actuary may use 1 or more actuarial methods or
alternative amortization periods, or both, that are generally
accepted within the actuarial profession. The participating
municipality shall select and approve a methodology or amortization
period, or both, to be used to determine the participating
municipality's contribution requirement. The actuary shall not
change other assumptions without the approval of the retirement
system. The retirement system shall pay the cost of actuarial
analysis from plan assets.
(3) A participating municipality that takes an action
described in subsection (1) shall be responsible for funding its
contribution requirements as determined under subsection (2) and
section 24 of article IX of the state constitution of 1963.
(4) The retirement system shall not require a participating
municipality that takes an action described in subsection (1) to
participate in another retirement plan administered by the
retirement system as a condition for a participating municipality
to take an action described in subsection (1).
