Bill Text: MI HB6074 | 2015-2016 | 98th Legislature | Introduced
Bill Title: Retirement; health benefits; local unit of government retirement act; create. Creates new act.
Spectrum: Partisan Bill (Republican 4-0)
Status: (Introduced - Dead) 2016-12-01 - Bill Electronically Reproduced 11/30/2016 [HB6074 Detail]
Download: Michigan-2015-HB6074-Introduced.html
HOUSE BILL No. 6074
November 30, 2016, Introduced by Reps. Cotter, Poleski, Nesbitt and Somerville and referred to the Committee on Local Government.
A bill to prescribe the retirement benefits provided to
employees of local units of government; to prescribe civil
sanctions; and to provide remedies.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the "local
unit of government retirement act".
Sec. 3. As used in this act:
(a) "Base pay" means the remuneration paid an employee on
account of the employee's services rendered to a local unit of
government. Base pay does not include any of the following:
(i) Payment for overtime services.
(ii) Remuneration paid in lieu of accumulated sick leave.
(iii) Remuneration received as a bonus.
(iv) Payment for accrued vacation pay.
(v) One-time lump-sum payments.
(vi) The cost of fringe benefits, including, but not limited
to, a medical benefit plan.
(vii) Remuneration paid for the sole purpose of increasing
final average compensation.
(b) "Beneficiary unit" means a past member and his or her
retiree health dependents.
(c) "Defined contribution plan" means a defined contribution
plan as defined in section 414(i) of the internal revenue code of
1986, 26 USC 414.
(d) "Employee" means an individual holding a position by
appointment or employment in a local unit of government.
(e) "Former qualified participant" means an individual who was
a qualified participant and who terminates employment on which his
or her participation is based for any reason.
(f) "Local unit of government" means any of the following:
(i) A village.
(ii) A city.
(iii) A township.
(iv) A county.
(v) A county road agency.
(vi) A county road commission.
(vii) An authority established by law that may expend funds of
the authority.
(g) "Medical benefit plan" means that term as defined in
section 2 of the publicly funded health insurance contribution act,
2011 PA 152, MCL 15.562.
(h) "Medicare" means benefits under the federal Medicare
program established under title XVIII of the social security act,
42 USC 1395 to 1395lll.
(i) "Member" means an employee included in the membership of
an applicable retirement system.
(j) "Past member" means a former member who has retired under
the applicable retirement system or a former qualified participant
who has terminated employment from the applicable local unit of
government.
(k) "Qualified participant" means a member who is a
participant in a defined contribution plan under an applicable
retirement system.
(l) "Retiree health dependent" means an individual other than
a past member who is eligible to receive a retirement health
benefit under the applicable retirement system.
(m) "Retirement health benefit" means a payment or
contribution to, for, or on behalf of a past member or a retiree
health dependent under the applicable retirement system intended to
pay for expenses related to medical, dental, or vision care, or for
premiums for insurance covering such expenses, or for premiums for
life, disability, long-term care, or similar insurance.
(n) "Retirement system" means a retirement system that a local
unit of government establishes, maintains, or participates in and
that, by its express terms or as a result of surrounding
circumstances, does 1 or more of the following:
(i) Provides retirement income to participants.
(ii) Results in a deferral of income for periods extending to
the termination of covered employment or beyond.
(iii) Provides retirement health benefits to participants.
(o) "Retirement system" does not include a state unit as that
term is defined in section 2 of the public employee retirement
benefit protection act, 2002 PA 100, MCL 38.1682.
Sec. 5. (1) Subject to section 9, beginning May 1, 2017, if a
local unit of government offers or provides a retirement health
benefit, for a past member who was first employed by the local unit
of government before May 1, 2017, all of the following apply:
(a) Subject to subsection (2), the local unit of government
shall not pay more than 80% of the annual cost of the retirement
health benefit for each beneficiary unit if the state treasurer
determines 1 of the following applies:
(i) The actuarial accrued liability of the retiree health
system of the local unit of government is less than 80% funded,
according to the most recent summary annual report required under
section 13 of the public employee retirement system investment act,
1965 PA 314, MCL 38.1133, on the date this act is enacted into law.
(ii) The actuarial accrued liability of the retiree health
system of the local unit of government is not less than 80% funded,
according to the most recent summary annual report required under
section 13 of the public employee retirement system investment act,
1965 PA 314, MCL 38.1133, on the date this act is enacted into law,
but that funding level subsequently falls below 80% for 2
consecutive years.
(b) If each individual included in a beneficiary unit is
eligible for Medicare, the local unit of government shall not pay
more than 80% of the annual cost of a retirement health benefit
that is a supplement to reimbursements under Medicare for the
beneficiary unit.
(c) The local unit of government shall not provide a
retirement health benefit to a past member who is eligible to
participate in a medical benefit plan or retirement health benefit
offered or provided by an employer other than the local unit of
government.
(2) A local unit of government subject to subsection (1)(a)
remains subject to subsection (1)(a) regardless of any changes to
the actuarial accrued liability of the retiree health system of the
local unit of government in any subsequent summary annual report
required under section 13 of the public employee retirement system
investment act, 1965 PA 314, MCL 38.1133.
(3) If a collective bargaining agreement entered into before
the date this act is enacted into law clearly and expressly confers
a fixed, unalterable right to a vested retirement health benefit
for an unambiguous duration, this act does not impair that vested
retirement health benefit for that duration.
Sec. 7. Subject to section 9, if a local unit of government
offers or provides a retirement health benefit, for a member who is
first employed by the local unit of government after April 30,
2017, the local unit of government may contribute not more than 2%
of the member's base pay to an appropriate tax-deferred account for
the member as the retirement health benefit.
Sec. 9. (1) A contract or agreement, or provision of a
contract or agreement, entered into, modified, extended, or renewed
after the date this act is enacted into law that conflicts with the
requirements or restrictions of this act is void.
(2) Except as otherwise provided in sections 5 and 7, a local
unit of government shall not offer or provide any other retirement
health benefit to a member, past member, or retiree health
dependent.
Sec. 11. (1) If a local unit of government is not complying
with this act, the attorney general or a resident of the local unit
of government may commence a civil action to compel compliance or
to enjoin further noncompliance with this act.
(2) An action for injunctive relief under this section against
a local unit of government must be commenced in the circuit court
for the county in which the local unit of government is located.
(3) An action for mandamus under this section against a local
unit of government must be commenced in the court of appeals.
(4) If the court determines, in an action commenced under this
section, that a local unit of government willfully and
intentionally failed to comply with this act or otherwise acted in
bad faith, the court shall order the local unit of government to
pay a civil fine of not less than $5,000.00 or more than $12,500.00
for each violation. In determining the amount of a civil fine under
this subsection, the court shall consider the budget of the local
unit of government and whether the local unit of government has
been previously assessed penalties for violations of this act. A
civil fine under this subsection must be deposited in the state
school aid fund established under section 11 of article IX of the
state constitution of 1963.
