April 28, 2011 - Legislative Summary

1)  BUDGET and TAXATION

Budget. There are six bills, two in the House and four in the Senate, under active consideration to provide the various education appropriations. These bills are HB 4325 which is an omnibus K-12, community college and higher education budget bill, SB 183 dealing with K-12 budgets; SB 178 dealing with higher education budget; SB 171 dealing with community college budgets; and HB 4273 and SB 174 dealing with Department of Education budget.  The Governor’s budget recommendation would partially fund community colleges and universities from the School Aid Fund and to move both of those entities into what has traditionally been called the School Aid Act. The specific amounts proposed by the Governor for SAF revenue shifted into both the Community Colleges budget ($195.9 million out of $295.6) and the Higher Education budget ($699.7 million out of $1.7 billion), for a total of $895.6 million. Those amounts together use up what would have been a stable K-12 funding source and cause the foundation allowance reduction of a minimum of $470 per pupil.

On April 28 the House Appropriations Committee reported HB 4325, the Omnibus Education Appropriation bill (which combines former HB 4268, HB 4275 & HB 4280). For K-12 the bill makes permanent the $170 per pupil reduction from 2010-11, in addition it reduces the per pupil allowance by 3.9% of the 2010-11 amount, or the basic foundation allowance whichever is less. The bill makes numerous other changes (mostly reductions) in specific line items. For community colleges the bill reduces the total appropriation by $49.9 million (14.8%). It also shifts $195.9 million of the total from the general fund (GF/GP) to the school aid fund (SAF). For higher education the bill reduces the total appropriation by $216 million (13.7%) to $1.3623 billion. Of this total, $669.2 million is shifted to the SAF instead of the GF/GP budget. Between the overall reduction for higher education and community colleges plus the amount shifted to the SAF for these budgets, the GF/GP budget saves a total of $1.22 billion which is approximately 2/3 of the $1.8 billion special interest tax cuts for business. A detailed analysis to the committee version is available at http://www.legislature.mi.gov/documents/2011-2012/billanalysis/House/pdf/2011-HLA-4325-3.pdf

On April 27 the Senate adopted an amended version of SB 183, school aid, and sent it to the House. The vote on the bill was a 19-19 tie, forcing Lt. Governor Calley to cast a tie breaking vote to pass the bill. The bill reduces the foundation allowance by $340 per pupil which is $130 less than the Governor proposed. It also removed the “hard cap” on insurance cost sharing which would have penalized districts that pay more than 80% of health premiums for employees. The bill reduces funding for half day kindergarten saving the State $175 million. A detailed analysis by the Senate Fiscal Agency is available at http://www.legislature.mi.gov/documents/2011-2012/billanalysis/Senate/pdf/2011-SFA-0183-U.pdf

On April 27 the Senate passed the SB 171, community college appropriations, by a vote of 21 to 17, and sent it to the House. The bill reduces the appropriations for community colleges by $10 million. It goes on to agree with Governor and shift $198.9 million of the funding from the GF/GP budget to the SAF budget. A detailed analysis by the Senate Fiscal Agency is available at http://www.legislature.mi.gov/documents/2011-2012/billanalysis/Senate/pdf/2011-SFA-0171-U.pdf

On April 27 the Senate passed SB 178, higher education appropriations, by a vote of 20-18, and sent it to the House. The bill reduces higher education appropriations by $213.1 million (15%) from current levels. It also shifts $200 million of the higher education funding to the K-12 school aid fund, which is less than the Governor proposed but still a substantial raid on the SAF. A detailed analysis of the bill by the Senate Fiscal Agency is available at http://www.legislature.mi.gov/documents/2011-2012/billanalysis/Senate/pdf/2011-SFA-0178-U.pdf

HB 4481 is a bill that removes the exemption from state income taxes from public school employee pensions. It is part of a multi-bill package removing exemptions from taxation for all public employee pensions. The package was reported out of the House Tax Committee on April 27, and would subject all public pensions, including school employee pensions, to taxation by the state. HB 4361 (below) is the bill where the tax is spelled out. This apparently reflects the reported agreement between the Governor and legislative leaders on the issue.

HB 4361is an omnibus bill amending the Income Tax Act to do numerous things including imposing the tax on profits for publicly traded corporations, freeze the tax rate starting in 2013 at 4.25%, eliminate numerous tax credits and deductions, etc. Regarding taxation of public and private pensions, current law would apply to anyone born before 1946, NO CHANGE. For people born between 1946 and 1952 could exempt all social security income from state tax plus $20,000 (single filer) or $40,000 (joint filer) of retirement income; and they keep the $3,700 personal exemption. For people born after 1952 receive no exemption for retirement income until they reach age 67, EXCEPT social security income. At age 67 they are eligible for either 1) the $20,000/40,000 exemption against all types of income, with no personal exemptions and with no additional exemption for Social Security, or 2) continuing the exemption for Social Security, along with the personal exemptions for which they were eligible. Finally, for people born after 1946 (the 2nd and 3rd groups above), the $20,000/$40,000 exemption would not be available where total household resources exceeded $75,000 for a single return or $150,000 for a joint return.

2)  COMPENSATION and BENEFITS

SJR “B” is a constitutional amendment which would empower the legislature to impose a 5% pay cut for all public employees including college and university employees.  That lowered amount would then be frozen for a period of three years, not subject to bargaining.

SJR “C” proposes to amend the State Constitution of 1963 by adding Section 9 to Article XI, which would authorize the Michigan Legislature to provide, by law, for cost allocation requirements for health benefit plans for public employees and officers and elected and appointed officials. The proposal would require any health benefits offered to State employees, local government employees, and employees of public universities to conform to the cost allocation requirements established by State law.

SB 0007 is the bill which would require employees to pay 20% of the public employer aggregate premium cost for insurance within any unit of local government, school district community college or university.  It should be emphasized that the payment is made on the aggregate cost as that could be punitive to bargaining units who have opted for lower cost plans while other groups have maintained more expensive coverage.  The bill has several problematic provisions including a provision to allow units of local government to opt out, but not allowing schools and colleges to opt out of the contribution.  Further, it provides for a lesser contribution (10%) for groups with HSA’s but does not provide a similar reduction for HRA’s.  It is paired with SJR “C” which would put a constitutional change on the ballot to empower the legislature to control insurance for currently constitutionally exempt entities such as land grant universities, civil service employees and state and school retirees.

3) PRIVATIZATION

HB 4306, Privatization which calls for mandatory bidding of support services is a proposed change to the Michigan School Code which only regulates K-12 and Charter Schools. 

4) EDUCATION REFORM

Teacher Tenure Repeal/Rollback. Five house bills attack the Teacher Tenure Act (HB 4142, HB 4241, HB 4320, HB 4321 and HB 4365). One or more of them contain various of these provisions: repeal the entire act; provide a new period of probation for a tenured teacher who is not “effective” as measure by student performance data; eliminate the provision that failure to provide a written statement of whether or not a teacher is satisfactory is conclusive proof of satisfactory service and instead provide that a probationary teacher cannot be re-employed unless found to be “effective”; require that salary be placed in escrow while tenure charges are being heard at the ALJ/Commission level.

A new tenure bill, HB 4586, was introduced on April 27 by Rep. Thomas Hooker (R) Byron Center. This bill requires a charging party to present a tenured teacher with charges against her/him at least five days before the charges go to the board of education; it gives the teacher a right to file a written response to the charges; and it requires the board to consider the response before voting on the charges. This bill was referred to the House Education Committee.

SB 131 Ed-Flex. The bill creates and regulates so called educational mandate contracts whereby local districts can have many state legal and regulatory requirements waived by the State Superintendent.

HB 4459 Higher education; educational assistance for entrepreneurial courses and training. An eligible student who enrolls in 1 or more qualified courses in entrepreneurship at an approved school is eligible for and may receive educational assistance for the eligible costs he or she would have otherwise paid the approved school in connection with the course or courses. The Department of Education would establish the form and format of the application and guidelines for implementation of the act. The department would also annually asses the performance of approved schools in providing effective entrepreneurship education.

HB 4496 and SB 225 would allow community colleges to grant bachelor degrees in nursing, cement technology maritime technology or culinary arts.

5)  COLLECTIVE BARGAINING and UNION RIGHTS

HB 4152, Freeze Steps is an amendment to PERA which impacts all public employees. When employees are working without a contract while bargaining continues, it prohibits the payment of step increases and any increase in the cost of health type benefits. The bill also prohibits any retroactive pay to cover these costs when the contract is finally settled.

HB 4465 Strike Penalties is a bill to suspend the teaching certificate, for two years, of any teacher who participates in a strike.

HB 4466 Strike Penalties is a bill to grant circuit court jurisdiction to impose penalties of $5,000 per day on labor organizations and one day’s pay on employees in the event that there is an illegal strike by public employees. It imposes notification requirements on local superintendents and the State Superintendent.On April 27 the House Education Committee reported an amended version of the bill to the House floor. This version provides for up to five years decertification of a union whose members strike or discuss the possibility of striking.

HB 4052is an amendment to PERA which impacts all public employees. It provides that apublic employee or collective bargaining organization shall not use publicly owned property, facilities, or services, including an electronic mail system, for political activities, political fund raising, campaigning for office of a collective bargaining organization, collective bargaining organizing activities, or solicitation of employees for membership in a collective bargaining organization. This prohibition does not limit the right of a public employee or collective bargaining organization to use, on the same terms as members of the general public, public property that is made available as a public forum.

HB 4059 is an amendment to PERA which impacts all public employees. It provides that apublic employer, after the effective date of the amendatory act that added this subdivision enter into or renew a bargaining agreement that requires or allows paid release time for union officers or bargaining representatives to conduct union business if the release time is paid by the public employer.