Bill Text: MI SB1171 | 2011-2012 | 96th Legislature | Introduced

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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 1-0)

Status: (Introduced - Dead) 2012-06-06 - Referred To Committee On Appropriations [SB1171 Detail]

Download: Michigan-2011-SB1171-Introduced.html

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SENATE BILL No. 1171

 

 

June 6, 2012, Introduced by Senator PAPPAGEORGE 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).