A recent court decision has disrupted how many communities have been operating under PA 152 of 2011, the state’s hard cap/80-20 law.  Both the House and Senate are considering bills that would address two key components of the recent Command Officers Association v Shelby Township case that the Michigan Supreme Court decided last year.  House Bill 6531 and Senate Bill 1209 propose to correct two key issues within that decision. The first proposed change addresses the court finding that the 20% employee cost share, for any community using the 80/20 model, is a mandatory subject of bargaining.  In real terms this means that the first unit to the table could negotiate for a lesser cost share and the following bargaining units would be responsible for paying a higher proportion.  The second part of the court decision was the determination that health insurance premiums/rates could not be a blended rate between actives and retirees.  While there are many communities that already split their rates between active employees and retirees, there are also communities that have historically blended their rates to keep overall costs down or are self-insured and only handle their rates on a blended basis within their pool.  Being required to now split those rates could seriously increase the OPEB costs for those communities.  The bill language simply states that the combination of rates is not prohibited, leaving any decision to split or combine rates the same local option that existed prior to the court decision.

The League is supporting this legislation and testified in both the House and Senate committee about the need to preserve the same environment for communities that existed prior to the Shelby decision, maintaining how every community understood the rules under the law as originally passed.  Substitute bill language was adopted in each committee to update the hard cap numbers in the bill to match Treasury’s recently released 2019 numbers.

These bills have passed committee and are awaiting action in their respective chambers.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and [email protected].