Mich. Coal. of State Emp. Unions v. State
| Citation | 870 N.W.2d 275,498 Mich. 312 |
| Decision Date | 29 July 2015 |
| Docket Number | Docket No. 147758.,Calendar No. 2. |
| Parties | MICHIGAN COALITION OF STATE EMPLOYEE UNIONS v. STATE of Michigan. |
| Court | Supreme Court of Michigan |
William A. Wertheimer, Bingham Farms, for all plaintiffs.
Michael B. Nicholson, Buchanan and Ava R. Barbour, Detroit, for International Union UAW and Local 6000.
Sachs Waldman, PC (by Andrew Nickelhoff and Mami Kato, Royal Oak), for SEIU Local 517M and the Michigan Corrections Organization.
Fraser Trebilcock Davis & Dunlap, PC, Lansing (by Michael E. Cavanaugh and Brandon W. Zuk ), for the Michigan Coalition of State Employee Unions.
Miller Cohen, PLC, Detroit (by Robert D. Fetter and Keith D. Flynn ), for Michigan AFSCME Council 25.
Bill Schuette, Attorney General, Aaron D. Lindstrom, Solicitor General, Matthew Schneider, Chief Legal Counsel, Larry F. Brya, Special Assistant Attorney General, and Frank J. Monticello, Joshua O. Booth, and Patrick M. Fitzgerald, Assistant Attorneys General, for all defendants.
Miller, Canfield, Paddock and Stone, PLC, Lansing (by Michael J. Hodge and Scott R. Eldridge ), for the Michigan Civil Service Commission.
Plaintiffs are several unions that represent employees in the state classified civil service. Their members are the beneficiaries of and participants in Michigan's retirement system established under the State Employees Retirement Act (SERA).1 SERA was enacted in 1943 and has been amended many times since. Plaintiffs challenge the most recent SERA amendment, 2011 PA 264. They contend that, because 2011 PA 264 increases the cost and reduces the accumulation of future pension benefits previously recognized, it unconstitutionally infringes the exclusive constitutional powers of the Civil Service Commission (commission) to manage and oversee the civil service system. The commission has never formally opposed or attempted to repudiate the application of SERA or any of its several amendments, including 2011 PA 264, to the employees of the state classified civil service.
While the commission has considerable constitutional powers to manage the civil service system and to preserve its sphere of constitutional authority, the commission has no legislative powers. It may neither enact legislation nor revise an enactment, nor may it dictate that the Legislature repeal or modify an enactment. Therefore, we hold that because the commission has acquiesced in the application of SERA to the employees of the civil service system, plaintiff's objections fail to establish a basis for relief.
We reverse the judgment of the Court of Appeals and remand to the Court of Claims for further proceedings consistent with this opinion.
In 1940, through an initiative petition, the people of Michigan ratified a constitutional amendment establishing a state civil service system.2 Const. 1908, art. 6, § 22 became effective on January 1, 1941, and provided in part:
Shortly after its creation, the commission promulgated a rule requiring its state personnel director to recommend that the Legislature establish a retirement plan for classified employees:
RETIREMENT. The director, in conjunction with appointing authorities, other supervising officials, the state budget director and members of the legislature, shall prepare and submit to the commission for approval and subsequent recommendation to the governor and the legislature for adoption by law, a comprehensive and workable contributory retirement system for employees in the state civil service.[ 3 ]
Apparently, the commission thereafter designed a model retirement plan, which it submitted to the Governor for comment. However, before the Governor completed his review of the commission's plan,4 the precursor to SERA was introduced in the House of Representatives as House Bill No. 177.5 SERA was signed into law as 1943 PA 240, and was codified as MCL 38.1 et seq.
Subsequently, the people ratified a new Constitution in 1963, which altered somewhat the way that the commission operates. Const. 1963, art. 11, § 5, ¶ 4, remains largely unchanged from Const. 1908, art. 6, § 22, and provides in relevant part:
The commission shall classify all positions in the classified service according to their respective duties and responsibilities, fix rates of compensation for all classes of positions, approve or disapprove disbursements for all personal services, determine by competitive examination and performance exclusively on the basis of merit, efficiency and fitness the qualifications of all candidates for positions in the classified service, make rules and regulations covering all personnel transactions, and regulate all conditions of employment in the classified service.[ 6 ]
In the same section, however, the ratifiers introduced a new legislative check on compensation increases for civil servants authorized by the commission:
Increases in rates of compensation authorized by the commission may be effective only at the start of a fiscal year and shall require prior notice to the governor, who shall transmit such increases to the legislature as part of his budget. The legislature may, by a majority vote of the members elected to and serving in each house, waive the notice and permit increases in rates of compensation to be effective at a time other than the start of a fiscal year. Within 60 calendar days following such transmission, the legislature may, by a two-thirds vote of the members elected to and serving in each house, reject or reduce increases in rates of compensation authorized by the commission. Any reduction ordered by the legislature shall apply uniformly to all classes of employees affected by the increases and shall not adjust pay differentials already established by the civil service commission. The legislature may not reduce rates of compensation below those in effect at the time of the transmission of increases authorized by the commission.[ 7 ]
Following the ratification of the 1963 Constitution, the commission replaced its initial retirement rule, Rule XXXVIII, but its replacement did not purport to fundamentally change the commission's advisory role in SERA's administration:
The commission's rules have remained substantively unchanged in this regard.9
In 2011, the Legislature amended SERA.10 Relevant to the instant case are the amendments of MCL 38.1e, MCL 38.35a, and MCL 38.50a. Broadly speaking, the amendments (1) potentially reduce the value of overtime compensation as it factors into a member's pension formula for future benefits,11 and (2) require members to make an election between paying to remain in a defined benefit plan (that was previously free), or instead joining a “Tier 2,” 401(k)-style defined contribution plan.12
Plaintiffs argue that SERA retirement benefits are “rates of compensation” or, alternatively, “conditions of employment,” as these terms are used in Const. 1963, art. 11, § 5. Accordingly, plaintiffs claim, SERA retirement benefits are not subject to legislative change because the regulation of “rates of compensation” and “conditions of employment” of employees in the classified civil service is within the exclusive and plenary authority of the commission.
The Court of Claims held that 2011 PA 264 was unconstitutional. The Court of Appeals affirmed the ruling of the Court of Claims, concluding that SERA retirement benefits are properly classified as both “rates of compensation” and “conditions of employment,” neither of which is subject to legislative alteration.13 The state appealed and we granted leave, directing the parties to brief “whether 2011 PA 264 is unconstitutional, in whole or in part, in violation of Const. 1963, art. 11, § 5.”14
This Court reviews the grant or denial of summary disposition de novo.15 Questions of constitutional and statutory interpretation also are reviewed de novo.16
As noted, plaintiffs make two alternative arguments that by enacting 2011 PA 264, the Legislature infringed the commission's constitutional authority. First, plaintiffs allege that the pension accrual characteristics altered by 2011 PA 264 affect classified employees' “rates of compensation” under Const. 1963, art. 11, § 5, and that the Legislature cannot act in that area. Second and in the alternative, plaintiffs allege that the pension accrual characteristics affected by 2011 PA 264 are “conditions of employment” under Const. 1963, art. 11, § 5. We address these two arguments in turn.
As used in article 11, § 5, we conclude that the term “rates of compensation” was not understood by the ratifiers of...
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