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2011 House Bill 4214: Increase power of school and local emergency financial managers

Public Act 4 of 2011

  1. Introduced by Rep. Al Pscholka (R) on February 9, 2011, to add to the conditions that can trigger the appointment of an Emergency Financial Manager for fiscally failing municipalities and school districts, and greatly enhance the powers of EFMs. They would have the power to cancel or amend existing government or school employee union collective bargaining agreements and other contracts. School EFMs would have authority over academic matters. An EFM could also order new borrowing, or put a property tax millage increase on the ballot.
    • Referred to the House Local, Intergovernmental, and Regional Affairs Committee on February 9, 2011.
      • Reported in the House on February 17, 2011, with the recommendation that the substitute (H-2) be adopted and that the bill then pass.
    • Substitute offered in the House on February 22, 2011, to replace the previous version of the bill with one that revises details but does not change the substance as previously described. The substitute passed by voice vote in the House on February 22, 2011.
    • Amendment offered by Rep. Al Pscholka (R) on February 22, 2011, to revise details on what triggers an EFM appointment, include whether a local government or school has debt from "pension obligation bonds" as a consideration for various EFM actions, give a school EFM the authority close schools, increase various disclosure requirements, and other changes that do not change the substance as previously described. The amendment passed by voice vote in the House on February 22, 2011.
    • Amendment offered by Rep. Vicki Barnett (D) on February 22, 2011, to cap the salary of an EFM at that of the Governor, with certain exceptions. The amendment failed by voice vote in the House on February 22, 2011.
    • Amendment offered by Rep. Woodrow Stanley (D) on February 22, 2011, to not give Emergency Financial Managers appointed to fiscally failing school districts or municipalities the power to cancel or revise public employee union collective bargaining agreements or provisions, and instead mandate that EFMs must negotiate with the public employee unions. The amendment failed 46 to 62 in the House on February 22, 2011.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Rep. David Nathan (D) on February 22, 2011, to require the Department of Treasury to post on the internet when certain steps occur in the process of triggering an EFM appointment. The amendment failed by voice vote in the House on February 22, 2011.
    • Amendment offered by Rep. Woodrow Stanley (D) on February 22, 2011, to prohibit hiring a management firm to be an EFM. Only an individual could be an EFM. The amendment failed 46 to 62 in the House on February 22, 2011.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Rep. Bob Constan (D) on February 22, 2011, to strip out the proposed authority of an EFM to replace a municipality's pension fund board of trustees if the fund fails to meet certain fiscal standards, or meets them only because money was borrowed in a "pension obligation bond". The amendment failed 46 to 62 in the House on February 22, 2011.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Rep. Jim Townsend (D) on February 22, 2011, to strip out the proposed authority of an EFM to replace a municipality's pension fund system with a state-run one if the system fails to meet certain fiscal standards, or meets them only because money was borrowed in a "pension obligation bond". The amendment failed by voice vote in the House on February 22, 2011.
    • Amendment offered by Rep. Tim Melton (D) on February 22, 2011, to require competitive bidding for any contract over $50,000 approved by an EFM, unless the state treasurer waives the requirement for a particular contract. The amendment passed 108 to 0 in the House on February 22, 2011.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Rep. Maureen Stapleton (D) on February 22, 2011, to exempt counties from the proposed EFM provisions. The amendment failed by voice vote in the House on February 22, 2011.
    • Amendment offered by Rep. Jim Townsend (D) on February 22, 2011, to make the bill's provisions "non-severable," meaning that if a court invalidates any single provision the entire new law would be invalid. The amendment would strip a provision explicitly making the provisions "severable". The amendment failed by voice vote in the House on February 22, 2011.
    • Amendment offered by Rep. Tim Melton (D) on February 22, 2011, to prohibit any reductions in state revenue sharing to a municipality under the management of an EFM. The amendment failed by voice vote in the House on February 22, 2011.
    • Amendment offered by Rep. Amanda Price (R) on February 22, 2011, to limit the authority of EFMs to sell assets. The amendment passed by voice vote in the House on February 22, 2011.
    • Amendment offered by Rep. Tim Melton (D) on February 22, 2011, to increase EFM reporting requirements. The amendment failed by voice vote in the House on February 22, 2011.
  2. Passed 62 to 47 in the House on February 23, 2011, to add to the conditions that can trigger the appointment of an Emergency Financial Manager for fiscally failing municipalities and school districts, and greatly enhance the powers of EFMs. They would have the power to cancel or amend existing government or school employee union collective bargaining agreements and other contracts. School EFMs would have authority over academic matters, and could close schools. An EFM could also order new borrowing, or put a property tax millage increase on the ballot.
    Who Voted "Yes" and Who Voted "No"

  3. Received in the Senate on February 24, 2011.
    • Referred to the Senate Education Committee on February 24, 2011.
      • Reported in the Senate on March 3, 2011, with the recommendation that the substitute (S-2) be adopted and that the bill then pass.
    • Substitute offered in the Senate on March 8, 2011, to adopt a version of the bill that limits the EMF's authority to sell assets, adds more procedural steps to the EMF appointment process, eliminates a provision allowing a financial management firm to be an EFM rather than just an individual, and makes other changes, but which leaves intact the key powers proposed for EMFs in the House-passed version. The substitute passed by voice vote in the Senate on March 8, 2011.
    • Amendment offered by Sen. John Gleason (D) on March 9, 2011, to establish as "the intent of the legislature" that a local government placed in receivership under this law "will not have its bond rating downrated." Note: Municipal bond creditworthiness ratings are provided by independent private agencies over which a state legislature has absolutely no control. The amendment failed 12 to 26 in the Senate on March 9, 2011.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Sen. Tupac Hunter (D) on March 9, 2011, to add more detailed EFM conflict of interest prohibition language. The amendment failed 13 to 25 in the Senate on March 9, 2011.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Sen. Virgil Smith, Jr. (D) on March 9, 2011, to require a state review team assigned to determine whether a local government needs an EFM to consult with the governing body of a local government before signing a consent agreement with the chief administrative officer on the unit taking remedial measures to avoid an EFM appointment. The amendment failed 14 to 24 in the Senate on March 9, 2011.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Sen. Virgil Smith, Jr. (D) on March 9, 2011, to appoint EFMs to terms of a defined length (rather than serving "at the pleasure of the governor"), and prohibit EFMs from negotiating contracts extending beyond the end of their own terms. The amendment failed 13 to 25 in the Senate on March 9, 2011.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Sen. Tupac Hunter (D) on March 9, 2011, to prohibit the appointment of an EFM who was an elected or appointed official within the jurisdiction of the troubled school district or local government within the past several years. The amendment failed 12 to 26 in the Senate on March 9, 2011.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Sen. Tupac Hunter (D) on March 9, 2011, to prohibit the appointment of an EFM who was an employee or elected or appointed official of a fiscally troubled local government within the past five years. The amendment failed 11 to 27 in the Senate on March 9, 2011.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Sen. Tupac Hunter (D) on March 9, 2011, to prohibit paying an EFM more than the governor gets. The amendment failed 19 to 19 in the Senate on March 9, 2011.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Sen. Tupac Hunter (D) and Sen. Bert Johnson (D) on March 9, 2011, to create a new board in the Department of Education to oversee EFMs appointed to troubled school districts. The amendment failed 12 to 26 in the Senate on March 9, 2011.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Sen. Rebekah Warren (D) on March 9, 2011, to make state taxpayers responsible for paying EFMs rather than those of the fiscally-troubled school district or local government. The amendment failed 15 to 23 in the Senate on March 9, 2011.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Sen. Rebekah Warren (D) on March 9, 2011, to mandate that an EFM appointed to a fiscally troubled school district must have "a background in education or teaching". The amendment failed 14 to 24 in the Senate on March 9, 2011.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Sen. Rebekah Warren (D) on March 9, 2011, to explicitly declare that the EFM law "does not authorize the impairment of vested retirement benefits." Note: The state Constitution prohibits the impairment of "accrued financial benefits," which may not be the same thing. The amendment passed 14 to 24 in the Senate on March 9, 2011.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Sen. Rebekah Warren (D) on March 9, 2011, to strip out the following provision: "The emergency manager shall assume and exercise the authority and fiduciary responsibilities of the local pension board, including to the extent applicable, setting and approval of all actuarial assumptions for pension obligations of a municipal government to the local pension fund". The amendment failed 12 to 26 in the Senate on March 9, 2011.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Sen. Rebekah Warren (D) on March 9, 2011, to narrow the authority of EFMs to purely fiscal matters. The amendment failed 12 to 26 in the Senate on March 9, 2011.
      Who Voted "Yes" and Who Voted "No"

    • Substitute offered by Sen. Morris Hood, III (D) on March 9, 2011, to adopt a substitute version of the bill that would grant much narrower EFM powers. The substitute failed 12 to 26 in the Senate on March 9, 2011.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Sen. Bert Johnson (D) on March 9, 2011, to prohibit EFMs from accepting additional compensation from any outside source. The amendment failed 17 to 21 in the Senate on March 9, 2011.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Sen. Glenn Anderson (D) on March 9, 2011, to impose extensive personal finance disclosure mandates on prospective EFMs. The amendment failed 12 to 26 in the Senate on March 9, 2011.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Sen. Coleman Young (D) on March 9, 2011, to not give EFMs the authority to revise or cancel government employee union contracts. The amendment failed 12 to 26 in the Senate on March 9, 2011.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Sen. Bruce Caswell (R) on March 9, 2011, to not give an EFM the power to recommend breaking up a school district into multiple districts. The amendment passed by voice vote in the Senate on March 9, 2011.
    • Amendment offered by Sen. Phil Pavlov (R) on March 9, 2011, to remove a provision prohibiting a local government from amending a collective bargaining agreement adopted by an outgoing EFM as part of a two-year budget the outgoing EFM is required to adopt. The amendment passed by voice vote in the Senate on March 9, 2011.
    • Amendment offered by Sen. Phil Pavlov (R) on March 9, 2011, to remove a provision requiring the concurrence of the state superintendant of public instruction before placing a school district that has violated a fiscal prudence consent agreement under state receivership. The amendment passed by voice vote in the Senate on March 9, 2011.
    • Amendment offered by Sen. Tonya Schuitmaker (R) on March 9, 2011, to include EFMs under the same rules for contracting on behalf of a public body that apply to other "public servants" as defined in the law. The amendment passed by voice vote in the Senate on March 9, 2011.
    • Amendment offered by Sen. Judy Emmons (R) on March 9, 2011, to establish that an EFM's assumption of a local government's pension board responsibilities may not end later than the local government's receivership. The amendment passed by voice vote in the Senate on March 9, 2011.
    • Amendment offered by Sen. Mike Nofs (R) on March 9, 2011, to make an exception to an EFM's power to revise or toss out existing government employee union contract provisions in cases where the contract "that authorizes the payment of a benefit upon the death of a police officer or firefighter . . . in the line of duty." Note: Sen. Nofs is a former police officer. The amendment passed by voice vote in the Senate on March 9, 2011.
    • Amendment offered by Sen. Phil Pavlov (R) on March 9, 2011, to make a number of wording and detail changes to the bill that do not affect its content as previously described here. The amendment passed by voice vote in the Senate on March 9, 2011.
    • Amendment offered by Sen. Patrick Colbeck (R) on March 9, 2011, to clarify the provision dealing with the impeachment of an EFM by the legislature. The amendment passed by voice vote in the Senate on March 9, 2011.
    • Amendment offered by Sen. Tory Rocca (R) on March 9, 2011, to eliminate a requirement that a review team assessing the finances of a fiscally troubled school district or local government must include in its final report "any other facts and circumstances indicative of local government financial stress or financial emergency". The amendment failed 13 to 25 in the Senate on March 9, 2011.
      Who Voted "Yes" and Who Voted "No"

  4. Passed 26 to 12 in the Senate on March 9, 2011, to add to the conditions that can trigger the appointment of an Emergency Financial Manager for fiscally failing municipalities and school districts, and greatly enhance the powers of EFMs. They would have the power to cancel or amend existing government or school employee union collective bargaining agreements and other contracts. School EFMs would have authority over academic matters, and could close schools. An EFM could also order new borrowing, or put a property tax millage increase on the ballot.
    Who Voted "Yes" and Who Voted "No"

  5. Received in the House on March 9, 2011.
    • Amendment offered by Rep. Maureen Stapleton (D) on March 15, 2011, to require local voter approval for an EFM to sell or transfer a city's water and sewer utility. Note: The Detroit water system serves dozens of communities in neighboring counties, has been cited for many instances of mismanagement, and has been the subject of many discussions about placing management in a regional authority. The amendment failed by voice vote in the House on March 15, 2011.
    • Amendment offered by Rep. David Nathan (D) on March 15, 2011, to not give EFMs authority over a fiscally troubled school district's academic and educational plan. The amendment failed by voice vote in the House on March 15, 2011.
    • Amendment offered by Rep. Tim Melton (D) on March 15, 2011, to not give an EFM the authority to sack the trustees of an underfunded local government pension system and exercise that authority himself or herself instead. The amendment failed by voice vote in the House on March 15, 2011.
    • Amendment offered by Rep. Harold Haugh (D) on March 15, 2011, to prohibit paying an EFM more than the governor gets. The amendment failed by voice vote in the House on March 15, 2011.
    • Amendment offered by Rep. Woodrow Stanley (D) on March 15, 2011, to not give Emergency Financial Managers appointed to fiscally failing school districts or municipalities the power to cancel or revise government employee union collective bargaining agreements or provisions, and instead mandate that EFMs must negotiate with the government employee unions. The amendment failed 48 to 62 in the House on March 15, 2011.
      Who Voted "Yes" and Who Voted "No"

  6. Passed 62 to 48 in the House on March 15, 2011, to authorize the emergency manager for a municipal government to disincorporate or dissolve the municipal government with the approval of the Governor; or recommend consolidation with another municipal government.
    Who Voted "Yes" and Who Voted "No"

  7. Signed by Gov. Rick Snyder on March 16, 2011.

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