Bill Text: MI SB0260 | 2019-2020 | 100th Legislature | Introduced
Bill Title: Local government; other; authority of emergency managers to sell or transfer assets of a local government; modify. Amends secs. 12, 14, 15 & 19 of 2012 PA 436 (MCL 141.1552 et seq.) & adds secs. 12a & 14a.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2019-04-11 - Referred To Committee On Appropriations [SB0260 Detail]
Download: Michigan-2019-SB0260-Introduced.html
SENATE BILL No. 260
April 11, 2019, Introduced by Senator ALEXANDER and referred to the Committee on Appropriations.
A bill to amend 2012 PA 436, entitled
"Local financial stability and choice act,"
by amending sections 12, 14, 15, and 19 (MCL 141.1552, 141.1554,
141.1555, and 141.1559) and by adding sections 12a and 14a.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 12. (1) An emergency manager may take 1 or more of the
following additional actions with respect to a local government
that is in receivership, notwithstanding any charter provision to
the contrary:
(a) Analyze factors and circumstances contributing to the
financial emergency of the local government and initiate steps to
correct the condition.
(b) Amend, revise, approve, or disapprove the budget of the
local government, and limit the total amount appropriated or
expended.
(c) Receive and disburse on behalf of the local government all
federal, state, and local funds earmarked for the local government.
These funds may include, but are not limited to, funds for specific
programs and the retirement of debt.
(d) Require and approve or disapprove, or amend or revise, a
plan for paying all outstanding obligations of the local
government.
(e) Require and prescribe the form of special reports to be
made by the finance officer of the local government to its
governing body, the creditors of the local government, the
emergency manager, or the public.
(f) Examine all records and books of account, and require
under the procedures of the uniform budgeting and accounting act,
1968 PA 2, MCL 141.421 to 141.440a, or 1919 PA 71, MCL 21.41 to
21.55, or both, the attendance of witnesses and the production of
books, papers, contracts, and other documents relevant to an
analysis of the financial condition of the local government.
(g) Make, approve, or disapprove any appropriation, contract,
or
expenditure, or loan, the
creation of any new position, or the
filling of any vacancy in a position by any appointing authority.
(h) Review payrolls or other claims against the local
government before payment.
(i) Notwithstanding any minimum staffing level requirement
established by charter or contract, establish and implement
staffing levels for the local government.
(j) Reject, modify, or terminate 1 or more terms and
conditions of an existing contract.
(k) Subject to section 19, after meeting and conferring with
the appropriate bargaining representative and, if in the emergency
manager's sole discretion and judgment, a prompt and satisfactory
resolution is unlikely to be obtained, reject, modify, or terminate
1 or more terms and conditions of an existing collective bargaining
agreement. The rejection, modification, or termination of 1 or more
terms and conditions of an existing collective bargaining agreement
under this subdivision is a legitimate exercise of the state's
sovereign powers if the emergency manager and state treasurer
determine that all of the following conditions are satisfied:
(i) The financial emergency in the local government has
created a circumstance in which it is reasonable and necessary for
the state to intercede to serve a significant and legitimate public
purpose.
(ii) Any plan involving the rejection, modification, or
termination of 1 or more terms and conditions of an existing
collective bargaining agreement is reasonable and necessary to deal
with a broad, generalized economic problem.
(iii) Any plan involving the rejection, modification, or
termination of 1 or more terms and conditions of an existing
collective bargaining agreement is directly related to and designed
to address the financial emergency for the benefit of the public as
a whole.
(iv) Any plan involving the rejection, modification, or
termination of 1 or more terms and conditions of an existing
collective bargaining agreement is temporary and does not target
specific classes of employees.
(l) Act as sole agent of the local government in collective
bargaining with employees or representatives and approve any
contract or agreement.
(m) If a municipal government's pension fund is not
actuarially funded at a level of 80% or more, according to the most
recent governmental accounting standards board's applicable
standards, at the time the most recent comprehensive annual
financial report for the municipal government or its pension fund
was due, the emergency manager may remove 1 or more of the serving
trustees of the local pension board or, if the state treasurer
appoints the emergency manager as the sole trustee of the local
pension board, replace all the serving trustees of the local
pension board. For the purpose of determining the pension fund
level
under this subdivision, the valuation shall must exclude
the
net value of pension bonds or evidence of indebtedness. The annual
actuarial valuation for the municipal government's pension fund
shall
must use the actuarial accrued liabilities and the
actuarial
value of assets. If a pension fund uses the aggregate actuarial
cost method or a method involving a frozen accrued liability, the
retirement system actuary shall use the entry age normal actuarial
cost method. If the emergency manager serves as sole trustee of the
local pension board, all of the following apply:
(i) The emergency manager shall assume and exercise the
authority and fiduciary responsibilities of the local pension board
including, to the extent applicable, setting and approval of all
actuarial assumptions for pension obligations of a municipal
government to the local pension fund.
(ii) The emergency manager shall fully comply with the public
employee retirement system investment act, 1965 PA 314, MCL 38.1132
to
38.1140m, 38.1141, and section 24 of article IX of the state
constitution
of 1963, and any actions taken shall must be
consistent with the pension fund's qualified plan status under the
federal internal revenue code.
(iii) The emergency manager shall not make changes to a local
pension fund without identifying the changes and the costs and
benefits associated with the changes and receiving the state
treasurer's approval for the changes. If a change includes the
transfer of funds from 1 pension fund to another pension fund, the
valuation of the pension fund receiving the transfer must be
actuarially funded at a level of 80% or more, according to the most
recent
governmental accounting standards board's Governmental
Accounting Standards Board's applicable standards, at the time the
most recent comprehensive annual financial report for the municipal
government was due.
(iv) The emergency manager's assumption and exercise of the
authority and fiduciary responsibilities of the local pension board
shall
must end not later than the termination of the
receivership
of the municipal government as provided in this act.
(n) Consolidate or eliminate departments of the local
government or transfer functions from 1 department to another and
appoint, supervise, and, at his or her discretion, remove
administrators, including heads of departments other than elected
officials.
(o) Employ or contract for, at the expense of the local
government and with the approval of the state financial authority,
auditors and other technical personnel considered necessary to
implement this act.
(p)
Retain 1 or more persons or firms, which that may be an
individual or firm selected from a list approved by the state
treasurer, to perform the duties of a local inspector or a local
auditor as described in this subdivision. The duties of a local
inspector are to assure integrity, economy, efficiency, and
effectiveness in the operations of the local government by
conducting meaningful and accurate investigations and forensic
audits, and to detect and deter waste, fraud, and abuse. At least
annually,
a report of the local inspector shall must be submitted
to the emergency manager, the state treasurer, the superintendent
of public instruction if the local government is a school district,
and each state senator and state representative who represents that
local
government. The annual report of the local inspector shall
must be posted on the local government's website within 7 days
after the report is submitted. The duties of a local auditor are to
assure that internal controls over local government operations are
designed and operating effectively to mitigate risks that hamper
the achievement of the emergency manager's financial plan, assure
that local government operations are effective and efficient,
assure that financial information is accurate, reliable, and
timely, comply with policies, regulations, and applicable laws, and
assure assets are properly managed. At least annually, a report of
the
local auditor shall must be submitted to the emergency manager,
the state treasurer, the superintendent of public instruction if
the local government is a school district, and each state senator
and state representative who represents that local government. The
annual
report of the local auditor shall must be posted on the
local government's website within 7 days after the report is
submitted.
(q)
An emergency manager may initiate Initiate court
proceedings in the Michigan court of claims or in the circuit court
of the county in which the local government is located in the name
of the local government to enforce compliance with any of his or
her orders or any constitutional or legislative mandates, or to
restrain violations of any constitutional or legislative power or
his or her orders.
(r) Subject to section 19, if provided in the financial and
operating plan, or otherwise with the prior written approval of the
governor or his or her designee, sell, lease, convey, assign, or
otherwise use or transfer the assets, liabilities, functions, or
responsibilities of the local government, provided the use or
transfer of assets, liabilities, functions, or responsibilities for
this purpose does not endanger the health, safety, or welfare of
residents of the local government or unconstitutionally impair a
bond, note, security, or uncontested legal obligation of the local
government.
(s)
Apply Subject to section
19, apply for a loan from the
state on behalf of the local government, subject to the conditions
of the emergency municipal loan act, 1980 PA 243, MCL 141.931 to
141.942.
(t) Order, as necessary, 1 or more millage elections for the
local government consistent with the Michigan election law, 1954 PA
116, MCL 168.1 to 168.992, sections 6 and 25 through 34 of article
IX of the state constitution of 1963, and any other applicable
state law.
(u) Subject to section 19, authorize the borrowing of money by
the local government as provided by law.
(v)
Approve Subject to section
19, approve or disapprove of
the
issuance of issuing obligations of the local government on
behalf of the local government under this subdivision. An election
to
approve or disapprove of the issuance of issuing obligations of
the
local government pursuant to this subdivision shall must only
be held at the general November election.
(w) Enter into agreements with creditors or other persons or
entities for the payment of existing debts, including the
settlement of claims by the creditors.
(x) Enter into agreements with creditors or other persons or
entities to restructure debt on terms, at rates of interest, and
with
security as shall be is agreed among the parties, subject to
approval by the state treasurer.
(y) Enter into agreements with other local governments, public
bodies, or entities for the provision of services, the joint
exercise of powers, or the transfer of functions and
responsibilities.
(z) For municipal governments, enter into agreements with
other units of municipal government to transfer property of the
municipal government under 1984 PA 425, MCL 124.21 to 124.30, or as
otherwise provided by law, subject to approval by the state
treasurer.
(aa) Enter into agreements with 1 or more other local
governments or public bodies for the consolidation of services.
(bb) For a city, village, or township, the emergency manager
may recommend to the state boundary commission that the municipal
government consolidate with 1 or more other municipal governments,
if the emergency manager determines that consolidation would
materially alleviate the financial emergency of the municipal
government and would not materially and adversely affect the
financial situation of the government or governments with which the
municipal government in receivership is consolidated. Consolidation
under
this subdivision shall must
proceed as provided by law.
(cc) For municipal governments, with approval of the governor,
disincorporate or dissolve the municipal government and assign its
assets, debts, and liabilities as provided by law. The
disincorporation or dissolution of the local government is subject
to a vote of the electors of that local government if required by
law.
(dd) Exercise solely, for and on behalf of the local
government, all other authority and responsibilities of the chief
administrative officer and governing body concerning the adoption,
amendment, and enforcement of ordinances or resolutions of the
local government as provided in the following acts:
(i) The home rule city act, 1909 PA 279, MCL 117.1 to 117.38.
(ii) The fourth class city act, 1895 PA 215, MCL 81.1 to
113.20.
(iii) The charter township act, 1947 PA 359, MCL 42.1 to
42.34.
(iv) 1851 PA 156, MCL 46.1 to 46.32.
(v) 1966 PA 293, MCL 45.501 to 45.521.
(vi) The general law village act, 1895 PA 3, MCL 61.1 to
74.25.
(vii) The home rule village act, 1909 PA 278, MCL 78.1 to
78.28.
(viii) The revised school code, 1976 PA 451, MCL 380.1 to
380.1852.
(ix) The state school aid act of 1979, 1979 PA 94, MCL
388.1601
to 388.1896.388.1897l.
(ee) Take any other action or exercise any power or authority
of any officer, employee, department, board, commission, or other
similar entity of the local government, whether elected or
appointed, relating to the operation of the local government. The
power
of the emergency manager shall be is superior to and
supersede
supersedes the power of any of the foregoing officers or
entities.
(ff) Remove, replace, appoint, or confirm the appointments to
any
office, board, commission, authority, or other entity which
that is within or is a component unit of the local government.
(2) Except as otherwise provided in this act, during the
pendency of the receivership, the authority of the chief
administrative officer and governing body to exercise power for and
on behalf of the local government under law, charter, and ordinance
shall
be is suspended and vested in the emergency manager.
(3) Except as otherwise provided in this subsection, any
contract involving a cumulative value of $50,000.00 or more is
subject to competitive bidding by an emergency manager. However, if
a potential contract involves a cumulative value of $50,000.00 or
more, the emergency manager may submit the potential contract to
the state treasurer for review and the state treasurer may
authorize that the potential contract is not subject to competitive
bidding.
(4) An emergency manager appointed for a city or village shall
not sell or transfer a public utility furnishing light, heat, or
power without the approval of a majority of the electors of the
city or village voting thereon, or a greater number if the city or
village charter provides, as required by section 25 of article VII
of the state constitution of 1963. In addition, an emergency
manager appointed for a city or village shall not utilize the
assets of a public utility furnishing heat, light, or power, the
finances of which are separately maintained and accounted for by
the city or village, to satisfy the general obligations of the city
or village.
Sec. 12a. An emergency manager for a municipal government does
not have the authority to name or rename any entity or institution
in that municipal government.
Sec. 14. In addition to the actions otherwise authorized in
this act, an emergency manager for a school district may take 1 or
more of the following additional actions with respect to a school
district that is in receivership:
(a) Negotiate, renegotiate, approve, and enter into contracts
on behalf of the school district.
(b) Receive and disburse on behalf of the school district all
federal, state, and local funds earmarked for the school district.
These funds may include, but are not limited to, funds for specific
programs and the retirement of debt.
(c) Seek approval from the superintendent of public
instruction for a reduced class schedule in accordance with
administrative rules governing the distribution of state school
aid.
(d) Subject to section 19, sell, assign, transfer, or
otherwise use the assets of the school district to meet past or
current obligations or assure the fiscal accountability of the
school district, provided the use, assignment, or transfer of
assets for this purpose does not impair the education of the pupils
of the school district. The power under this subdivision includes
the closing of schools or other school buildings in the school
district.
(e) Approve or disapprove of the issuance of obligations of
the school district.
(f)
Exercise Subject to
section 14a, exercise solely, for and
on behalf of the school district, all other authority and
responsibilities affecting the school district that are prescribed
by law to the school board and superintendent of the school
district.
(g) With the approval of the state treasurer, employ or
contract for, at the expense of the school district, school
administrators considered necessary to implement this act.
Sec. 14a. An emergency manager for a school district does not
have the authority to name or rename any school or educational
entity or institution in that school district.
Sec.
15. (1) Unless the potential sale and value of an asset
is
included in the emergency manager's financial and operating
plan,
the An emergency manager shall not sell an asset of the
local
government valued at more than $50,000.00 without the state
treasurer's approval and the approval required under section 19.
(2) A provision of an existing collective bargaining agreement
that authorizes the payment of a benefit upon the death of a police
officer
or firefighter that occurs in the line of duty shall must
not be impaired and is not subject to any provision of this act
authorizing an emergency manager to reject, modify, or terminate 1
or more terms of an existing collective bargaining agreement.
Sec.
19. (1) Except as otherwise provided in this subsection,
before
Before an emergency manager executes an action under
section
12(1)(k),
(r), or (u) or section 14(d), he or she shall submit his
or her proposed action to the governing body of the local
government.
The governing body of the local government shall have
has 10 days from the date of submission to approve or disapprove
the action proposed by the emergency manager. If the governing body
of the local government does not act within 10 days, the proposed
action is considered approved by the governing body of the local
government and the emergency manager may then execute the proposed
action.
For an action under section 12(1)(r) or section 14(d), this
subsection
only applies if the asset, liability, function, or
responsibility
involves an amount of $50,000.00 or more.
(2) If the governing body of the local government disapproves
the proposed action under section 12(1)(k) within 10 days, the
governing body of the local government shall, within 7 days of its
disapproval of the action proposed by the emergency manager, submit
to the local emergency financial assistance loan board an
alternative proposal that would yield substantially the same
financial result as the action proposed by the emergency manager.
The
local emergency financial assistance loan board shall have has
30 days to review both the alternative proposal submitted by the
governing body of the local government and the action proposed by
the emergency manager and to approve either the alternative
proposal submitted by the governing body of the local government or
the action proposed by the emergency manager. The local emergency
financial assistance loan board shall approve the proposal that
best serves the interest of the public in that local government.
The emergency manager shall implement the alternative proposal
submitted by the governing body of the local government or the
action proposed by the emergency manager, whichever is approved by
the local emergency financial assistance loan board.
(3) Before an emergency manager executes an action under
section 12(1)(r), (s), (u), or (v) or section 14(d), he or she
shall submit his or her proposed action to the governing body of
the local government. The governing body of the local government
has 10 days from the date of submission to approve or disapprove
the action proposed by the emergency manager. If the governing body
of the local government approves the proposed action within 10
days, the emergency manager may execute the proposed action. If the
governing body of the local government disapproves the proposed
action within 10 days, the emergency manager must not execute the
proposed action. If the governing body of the local government does
not act within 10 days, the emergency manager must not execute the
proposed action without the approval at an election of a majority
of the electors of the local government voting on the proposed
action.