Transcript 2011 Bargaining BOOT CAMP

2011
Bargaining
BOOT CAMP
KINGS AND DICTATORS:
THE EMERGENCY MANAGER
LEGISLATION
ARTHUR R. PRZYBYLOWICZ
MEA GENERAL COUNSEL
FRIDAY, MARCH 25, 2011
PUBLIC ACT 4 OF 2011
 The Local Government and School District Fiscal
Accountability Act.
 Adopted at the same time were amendments to several
existing laws, including the Revised School Code (PA
8) and the Public Employment Relations Act (PA 9).
WHO IS COVERED BY THE LAW?
Cities,
Villages,
Townships,
Charter townships,
Counties,
Public utilities owned by a city, village, township, or
county,
School districts,
Intermediate school districts.
WHO IS NOT COVERED
BY THE LAW?
Charter schools!
APPLICATION TO
SCHOOL DISTRICTS
 The Superintendent of Public Instruction may conduct
a preliminary review to determine the existence of a
local government financial problem upon:
 1. Request of the school board or superintendent.
 2. Request of creditor with claim for greater of $10,000 or
1% of general fund budget, whichever is greater.
 3. Petitions from voters totaling at least 5% of the
number of votes cast for Governor.
 4. Failure to pay wages, salaries, or other compensation
more than 7 days after they were due to be paid.
APPLICATION TO
SCHOOL DISTRICTS
 5. Defaulting on a bond or violating a bond covenant.
 6. A resolution from either the Senate or House of
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Representatives requesting a preliminary review.
7. Violating any laws governing the issuance of bonds.
8. Violating a requirement of the Uniform Budgeting Act.
9. Failing to timely file annual audit that conforms to
minimum procedures of Superintendent of Public
Instruction.
10. Failing to forward taxes collected for another
governmental entity.
11. Violating any term of a deficit elimination plan.
APPLICATION TO
SCHOOL DISTRICTS
 12. A court ordering a tax levy on the school district.
 13. Ending a fiscal year in a deficit in 1 or more funds and
not submitting a deficit elimination plan in 30 days.
 14. Receiving a long-range bond rating below BBB.
OR…
APPLICATION TO
SCHOOL DISTRICTS
THE EXISTENCE OF OTHER
FACTS OR CIRCUMSTANCES
THAT IN THE SUPERINTENDENT
OF PUBLIC INSTRUCTION’S SOLE
DISCRETION ARE INDICATIVE
OF SCHOOL DISTRICT
FINANCIAL DISTRESS.
SCHOOL DISTRICT FINANCIAL
REVIEW TEAM
Upon a finding of school district financial stress, a
committee is appointed, consisting of:
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State Treasurer or designee,
Superintendent of Public Instruction or designee,
Director of Technology, Management, and Budget or
designee,
Nominee of Senate majority leader,
Nominee of Speaker of House,
Any others the Governor chooses to appoint.
SCHOOL DISTRICT FINANCIAL
REVIEW TEAM
May negotiate consent agreement with superintendent
of school district.
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Continuing operations plan.
Recovery plan
Consent agreement may grant to school district
superintendent, CFO, or school board the powers of an
Emergency Manager, except the power to terminate collective
bargaining agreements.
A material breach of the consent agreement results in an
Emergency Manager taking over.
SCHOOL DISTRICT FINANCIAL
REVIEW TEAM
 The Review Team submits a report to the Governor.
The report must include the existence or “an
indication of the likely occurrence” of any of the
following:
1. A default in a bond payment.
2.Failure for 30 days to transmit taxes withheld or
contribution to a benefit plan.
3.Failure to pay wages and salaries or other compensation
owed to employees for 7 days after they were due.
SCHOOL DISTRICT FINANCIAL
REVIEW TEAM
 4. Accounts payable exceed 10% of total expenditures.
 5. Failure to eliminate a deficit for 2 years.
 6. Projecting a deficit in excess of 5% of revenues.
 7. Failure to comply with a deficit elimination plan.
 8. Existence of increasing loans to the general fund.
 9.Existence of recurring unbudgeted subsidies from
general fund to other funds.
 10. Existence of a structural operating deficit.
 11. Improper use of restricted funds.
OR…
SCHOOL DISTRICT FINANCIAL
REVIEW TEAM
ANY OTHER FACTS AND
CIRCUMSTANCES INDICATIVE
OF SCHOOL DISTRICT
FINANCIAL STRESS OR
FINANCIAL EMERGENCY.
SCHOOL DISTRICT FINANCIAL
REVIEW TEAM
Review team will make 1 or 4 recommendations in
report:
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School district not in financial stress or mild stress.
School district is in severe financial stress, but consent
agreement entered into.
School district in severe financial stress without a consent
agreement.
A financial emergency exists.
GOVERNOR’S INPUT
 Within 10 days of receiving report, Governor shall
make 1 of the 4 determinations.
 If Governor finds financial emergency, then school
district has 7 days to request hearing before
Superintendent of Public Instruction.
 Following the hearing, the Governor shall either
confirm or revoke his determination of a financial
emergency.
“APPEAL RIGHTS”
 School board by 2/3 majority, may appeal to the
Ingham County Circuit Court.
 Court must agree with Governor, unless:
 Not supported by competent, material, and substantial
evidence on the whole record or the decision is
 Arbitrary, capricious, or clearly an abuse of discretion.
RECEIVERSHIP
 Once financial emergency is confirmed, Governor appoints
an Emergency Manager (EM a/k/a Dictator).
 EM acts for and in the stead of the public body.
 EM qualifications:
5 years experience and “demonstrable expertise” in
business, financial, or local or state budgetary matters.
Serves at the pleasure of Governor, subject to impeachment
by the Legislature.
EMERGENCY MANAGER ORDERS
 The EM may issue orders to officials and employees of
the public body that EM considers necessary to
implement this law, including developing a financial
and operating plan that has an academic and
educational plan.
 If EM is not satisfied that official or employee is
properly carrying out those orders, EM may remove
official or employee from access to facilities, e-mail,
and internal information systems.
FINANCIAL AND OPERATING PLAN
 Within 45 days, EM shall submit a financial and
operating plan, including an academic plan, to the
state Treasurer and Superintendent of Public
Instruction.
 The Plan shall detail the need for the “modification,
rejection, termination, and renegotiation of contracts”
and a plan for the payment of all debt services on
bonds.
“PUBLIC INPUT”
 Within 30 days of submitting the Plan, the EM shall
conduct a public informational meeting on the Plan.
 However, this does not mean that EM must receive
public approval before or while implementing the
Plan.
POWERS OF THE EM
Just a few of the enumerated powers of the EM:
 1. Analyze circumstances contributing to financial crisis.
 2. Develop and approve budget.
 3. Receive and disburse all funds of the school district.
 4. Develop plan for paying all outstanding debts.
 5. Identify and require the types of reports to be issued.
 6. Subpoena power for witnesses and documents relevant to
an analysis of the financial condition of the school district.
 7. Make, approve, or disapprove any appropriation, contract,
expenditure, loan, new position, or filling of any vacancy.
POWERS OF THE EM
 8. Review payrolls and other claims before payment.
 9.Establish and implement staffing levels.
 10. Reject, modify, or terminate 1 or more terms and
conditions of an existing contract.
 11. Reject, modify, or terminate 1 or more terms and
conditions of an existing collective bargaining
agreement.
TERMINATING COLLECTIVE
BARGAINING AGREEMENTS
 In order to reject, modify, or terminate 1 or more provisions of a
collective bargaining agreement, EM must:
“Meet and confer” with bargaining representative.
If, in sole discretion of EM, “a prompt and satisfactory resolution is
unlikely to be obtained,” then contract may be terminated.
Termination is appropriate if the EM and state Treasurer determine
that:
1. The financial emergency makes it reasonable and necessary.
2.
It is reasonable and necessary to deal with a broad, generalized
economic problem.
3.
It is directly related and designed to address the financial
emergency.
4.
The termination is temporary and does not target specific
classes of employees.
THE ULTIMATE
ENUMERATED EM POWER
“Take any other action or exercise any power or authority
of any officer, employee, department, board,
commission, or other similar entity of the local
government, whether elected or appointed, relating to
the operation of the local government. The power of the
emergency manager shall be superior to and supersede
the power of any of the foregoing officers or entities.”
ADDITIONAL EM POWERS IN
SCHOOL DISTRICTS
 In addition to those powers, EM in a school district may:
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Negotiate contracts on behalf of school district.
Receive and disburse all federal, state, and local funds.
Seek approval from Superintendent of Public Instruction for
a reduced class schedule.
Sell assets of the district to pay creditors, so long as it does
not impair the education of the pupils of the district.
Approve the issuance of obligations of the district.
Exercise solely all other authority and responsibilities
prescribed by law to the school board or superintendent.
Employ or contract for school administrators.
IMMUNITY FROM LIABILITY
 Like all dictators, EMs are immune from liability for any
of his or her actions.
 The Attorney General shall defend the EM in any legal
action challenging the law or the EM’s authority and the
attorney fees, costs, and expert witness fees incurred by
the Attorney General are added to the debt of the school
district.
 The salary and expenses of the EM and any others hired
to assist the EM are the responsibility of the school
district.
ELIMINATION OF
COLLECTIVE BARGAINING
 A local government placed in receivership has no duty
to bargain for 5 years from the date it was placed in
receivership or until the end of the receivership,
whichever occurs first.
 Prior to terminating the receivership, the EM shall
adopt and implement a 2-year budget to begin upon
termination, including all contractual and
employment agreements.
 The budget may not be changed during that 2-year
period without the approval of the state Treasurer.
2011
Bargaining
BOOT CAMP
KINGS AND DICTATORS:
THE EMERGENCY MANAGER
LEGISLATION
ARTHUR R. PRZYBYLOWICZ
MEA GENERAL COUNSEL
FRIDAY, MARCH 25, 2011