Capitol News

October 2013

Shutdown Showdown!

October 1, 2013 will be remembered as the day the federal Obamacare Marketplace exchanges opened up and the day the “non-essential services” of the federal government closed down. Ironically the stalemate was supposedly about Obamacare.

The state sent furlough notices to the unions because many state employees are partially or fully funded through federal money. The state receives about $55 million a day from the federal government, with 65 percent of that for mandated programs like Medicaid and unemployment. Temporary Assistance to Needy Families, food assistance, Women, Infants and Children program, child nutrition and school lunch programs, and low-income energy assistance are examples of programs that are affected. Many of the 30,000 federal employees in the state will not be paid, reducing income and sales tax revenues to the state. The state budget office estimated the federal shutdown would cost the state $18 million a day in revenue.

There is a basic philosophical difference between those who think the government should be very small (except for public safety and military) to maximize individual liberty and keep taxes low, and those who think government should also provide an expansive array of programs and services to the public. Because of gerrymandering, those in “safe” electoral districts favoring one of these philosophies over the other have no motivation to compromise and find a middle ground to protect their seats. The result is significant stalemate on some issues as the “marginal” electoral district elected officials do not have sufficient numbers to control the direction of some disputed public policy issues.

The Michigan Legislature had a similar philosophical difference over Medicaid expansion under Obamacare in recent months. The anti-expansion advocates were able to delay implementation, not thwart it entirely. However, they didn’t hold up the whole budget over it and state government was not shut down.

Similarly, there is a current debate over funding the Common Core standards for education in Michigan, an idea originated from the bi-partisan National Governor’s Association, adopted by the Michigan Department of Education, 43 other states and most school districts, but opposed by the anti-government expansion advocates in the Michigan Legislature. So far they have successfully blocked funding for Common Core, which will risk about a billion dollars in federal education aid but not the entire state budget.

One-party government like we have in Michigan is unlikely to produce a government shutdown.

Pension Tax Lawsuit Update

The class action lawsuit, Okrie v State of Michigan, et al Case No. 13-93-MK filed in the Ingham County Court of Claims challenging the pension tax was scheduled for its first hearing on October 9 concerning the state’s motion for summary judgment. Attorney Gary Supanich filed amendments to his original promissory estoppel/breach of contract claim, adding claims for unjust enrichment; breach of an employment contract; impairment of a contractual obligation in violation of Michigan’and the U.S. Constitution, Article 1, § 10; violations of the takings clause under Michigan Constitution Article 10, § 2 and U.S. Constitution Amendment V; violations of substantive due process under Michigan Constitution Article I, § 17 and U.S. Constitution Amendment XIV; and violations of procedural due process under Michigan Constitution, Article I, § 17 and U.S. Constitution Amendment XIV.

There will be more hearings in the future announced in the emailed SERA Recent News as well as in chapter meetings and newsletters. This is going to be quite a long process with procedural skirmishing and appeals.

Recent Legislative News

No-fault auto insurance reform — When a front-page article appeared in the Lansing State Journal about a 65-year old woman on Medicare having to pay increased auto insurance cost that duplicates the medical cost aspect of the Personal Injury Protection benefit, several insurance reform-minded legislators leaped into action and introduced bills to exempt those 65 and over from PIP (SB 510 and HB 4959). The only problem is that lifetime long-term care supports and services are provided by PIP and would be unavailable if a senior declined to pay for PIP. Long-term supports and services are a huge cost for those severely injured in an auto crash. SERA will watch these bills carefully.

More elder abuse prevention bills — In 2006, the Governor’s Elder Abuse Task Force Report included a recommendation that financial institutions be required to fully disclose all features of a joint account. Many do this voluntarily. Seniors are commonly encouraged by others to add another person (usually a relative or caregiver) to their accounts, which provides the other person with full access to the money in the account. While it can be helpful in many situations to have a family member or caregiver help pay the bills, sometimes a relative or caregiver depletes the account for their own benefit.

HB 5030, 5031 and 5032 would require financial institutions (credit unions, savings banks, banks) to disclose certain terms and conditions of joint accounts before opening the account. These disclosures include:

  • That each account holder would be the owner of the money in a joint account.
  • That each joint account holder would have the authority to deposit or withdraw any or all of the money in a joint account.
  • That if one of the owners of a joint account dies, the other owners would continue as the owners of that account and could still access the money.
  • That money in a joint account may be subject to the claims of creditors of any joint account holder.

The bills would serve to standardize these practices across the state and make sure the above terms and conditions are made known to all patrons. All parties need to be aware that creditors could potentially have a claim to money in a joint account.

Mental health courts — The Michigan House of Representatives passed HB 4694-4697 in a 104 – 0 vote to establish mental health courts across Michigan. Currently about 20 percent of incarcerated individuals have mental disabilities. Mental health courts are intensive probation programs designed to provide mentally ill individuals in the criminal justice system with a solution to their illness instead of incarceration. One study showed that more than two years after a mental health court started, participants had a recidivism rate of just 18.9 percent, compared to 43.2 percent for non-participating offenders.

Retired COs — Retired Corrections Officers can be rehired by the Department of Corrections (DOC) without losing their retirement benefits until September 30, 2015 under legislation signed into law September 24. The bill also says that a rehired Corrections Officer cannot be paid more than 80 percent of the maximum wages granted to a classified civil service employee who performs the same duties.

Other News

Bargaining news — The state’s unions and the Office of the State Employer have filed statements saying that they are at impasse in their negotiations about wages, benefits, and working conditions. If they don’t come to some agreement, there will be Impasse Panel hearings October 28 through November 15 before the Civil Service Employment Relations Board, with the Civil Service Commission making a decision, likely at its December 18 meeting.

DOC News — A relatively routine Civil Service Commission meeting in September witnessed a crowded room of Department of Corrections’ employees and advocates protesting the contracting out of DOC food services to Aramark for three years. Senator Tom Casperson told the Civil Service Commission that a flawed bidding process led to the state’s decision to privatize food service for 45,000 Michigan prisoners and eliminate about 370 state jobs. The Administrative Board has approved the contract and Aramark expects to begin taking over the food operations in December. DOC will be offering a special Corrections Officer training program for the displaced workers who want to move into those vacancies.

In related news the state has decided that private vendors cannot run a prison as cheaply as the state. Utah-based Management & Training Corp.’s lowest bid to run the Standish prison was $20.1 million, 56 percent higher than the estimated $12.9 million cost for the DOC to run the facility in its first year with state employees, according to the state budget office.

GEO Group, a Florida-based private prison operator, submitted a low bid of $18.6 million to operate its shuttered west Michigan prison in Lake County — 44 percent higher than the direct cost for the state to run a facility.

Michigan Coalition of State Employee Unions v. Michigan (COA docket No. 314048) — A panel of the Michigan Court of Appeals held unanimously on August 14 that a statute requiring state workers to contribute 4 percent into the pension system was unconstitutional because it did not have the approval of the Michigan Civil Service Commission. On September 24, the state appealed the decision to the Michigan Supreme Court.

SERA Recent News — If you are a SERA member, you are eligible to receive SERA Recent News, a periodic e-mail about breaking news and media stories of interest to state employees and retirees. Write to, giving your name and chapter.

Editor’s note: Mary Pollock is the Lansing SERA Chapter and SERA Council’s Legislative Representative. She may be contacted at 1200 Prescott Drive, East Lansing, MI 48823-2446; Phone 517-351-7292; E-mail

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