CREATIVE CONSOLIDATION: Success in Shared Services

Transcription

1 CREATIVE CONSOLIDATION: Success in Shared Services March 20, 2012 Presented by: Miller, Canfield, Paddock and Stone, P.L.C. North America Europe Asia millercanfield.com

2 CREATIVE CONSOLIDATION: Success in Shared Services Case for intergovernmental cooperation is obvious: economies of scale. (Oversold?) Economic Vitality Incentive Program ( EVIP ) developed to replace statutory revenue sharing Message is to share and consolidate Incentive based program to implement local government best practices : city, village or township received 1/3 of potential EVIP payment for meeting each of the following: Citizen s guide and performance dashboard (transparency) New requirements for employee compensation plan CONSOLIDATION OF SERVICES millercanfield.com 2

3 millercanfield.com 3 CREATIVE CONSOLIDATION: Success in Shared Services Sources of Authority Michigan Constitution Article VII, Section 28 The legislature by general law shall authorize two or more counties, townships, cities, villages or districts, or any combination thereof among other things to: enter into contractual undertakings or agreements with one another or with the state or with any combination therof for the joint administration of any of the functions or powers which each would have the power to perform separately; share the costs and responsibilities of functions and services with one another or with the state or with any combination thereof which each would have the power to perform separately; transfer functions or responsibilities to one another or any combination thereof upon the consent of each unit involved; cooperate with one another and with state government; lend their credit to one another or any combination thereof as provided by law in connection with any authorized publicly owned undertaking.

4 CREATIVE CONSOLIDATION: Success in Shared Services Key: Constitutional limitation on local units power to cooperate: if the objective is to achieve something jointly, in general the thing to be accomplished must be something which each local unit is empowered to accomplish individually. millercanfield.com 4

5 millercanfield.com 5 CREATIVE CONSOLIDATION: Success in Shared Services Sources of Authority Many statutes enable government cooperation of some sort Principal authority: Act 7 of 1967 (Urban Cooperation Act) Act 8 of 1967 (Intergovernmental Transfers of Functions and Responsibilities) Act 35 of 1951 (Intergovernmental Contracts Between Municipal Corporations) Act 425 of 1984 (Intergovernmental Conditional Transfer of Property by Contract) Act 57 of 1988 (Emergency Services to Municipalities) Act 292 of 1989 (Metropolitan Councils Act)

6 CREATIVE CONSOLIDATION: Success in Shared Services Act 7 Authorizes public agencies to exercise jointly any power or authority that they each could exercise individually pursuant to an inter-local agreement approved by their respective governing bodies Permits the participating agencies to create a separate board or commission to administer the agreement. Mandates that any agreement for revenue sharing include four provisions covering the duration, method of rescission, description of property to be taxed, formula for revenue sharing and a distribution schedule millercanfield.com 6

7 CREATIVE CONSOLIDATION: Success in Shared Services Act 8 Authorizes two or more political subdivisions to enter into a contract with each other providing for the transfer of functions or responsibilities to one another or any combination thereof upon the consent of each political subdivision involved. Cannot involve the transfer of the legislative power of the governing body of any participating political subdivision. OAG, , No 5312, p. 476 (June 13, 1978). No expansion or material alteration of existing individual functions, must have power to contract for the transfer: DARTA case, AFSCME v. City of Detroit (2005). millercanfield.com 7

8 millercanfield.com 8 CREATIVE CONSOLIDATION: Success in Shared Services Act 35 Authorizes municipal corporations to enter into contracts with other municipal corporations for the ownership, operation, or performance, jointly, or by any 1 or more on behalf of all, of any property, facility or service which each would have the power to own, operate or perform separately. Specifically authorizes a municipal corporation to furnish municipal services outside the corporate limits of the municipal corporation, and to sell and deliver heat, power, and light at wholesale or other than wholesale outside its corporate limits, so long as another utility serving that territory consents to the provision of those services in writing.

9 millercanfield.com 9 CREATIVE CONSOLIDATION: Success in Shared Services Act 425 Contracts to transfer property between units for purpose of economic development project Limit of 50 years (may be renewed) Requires public hearing If 20% or more of registered voters, or owners of 50% of property, in land to be transferred petition within 30 days of hearing, goes to referendum Transferred land under jurisdiction of unit to which it is transferred except to extent specified in contract

10 CREATIVE CONSOLIDATION: Success in Shared Services Act 57 Establish intergovernmental authority to provide EMS to participating municipalities Emergency services limited to fire protection services, emergency medical services, police protection, and any other emergency health or safety services as defined by the governmental entity millercanfield.com 10

11 CREAITVE CONSOLIDATION: Success in Shared Services Act 57 Two step process : 1)articles of incorporation adopted by the legislative body of each incorporating municipality; and 2)endorsement of the articles of incorporation by county executive or chair of the county board of commissioners and county clerk, the mayor and city clerk, the village president and village clerk, or the township supervisors and clerk of the township. Authority created under Act 57 may also adopt ordinances to collect fees for emergency services, further enhancing the economic benefit of consolidating services millercanfield.com 11

12 CREATIVE CONSOLIDATION: Success in Shared Services What we ve seen most often Consolidation of services, not whole entities (* but will discuss both) Public safety, emergency services Snow removal, mowing Intergovernmental authorities (utilities, joint building authorities) Regional authorities (drainage districts, libraries, convention center, aerotropolis) millercanfield.com 12

13 millercanfield.com 13 CREATIVE CONSOLIDATION: Success in Shared Services Benefits to collaborative agreements: Increased operational efficiency Emphasize strengths, enhance services Eliminate duplication of efforts Cost savings sometimes Limits Statutory restrictions on what you can do Need to draft agreements carefully to define responsibilities, expectations Ensuring equitable distribution of costs and services Issues with retirement, insurance and CBAs

14 millercanfield.com 14 CREATIVE CONSOLIDATION: Success in Shared Services Last year, the Legislature passed at least 4 bills seeking to eliminate labor related impediments to shared services that have to date complicated efforts under such statutes Was it Mission Accomplished?

15 CREATIVE CONSOLIDATION: Success in Shared Services millercanfield.com 15 Act 7 of 1967 (Urban Cooperation Act): specified certain restrictions regarding the manner of employing, compensating, transferring, and discharging personnel. Act 263 of 2011 amended Act 7 stripped those requirements

16 CREATIVE CONSOLIDATION: Success in Shared Services millercanfield.com 16 Act 8 of 1967 (Intergovernmental Transfer of Functions and Responsibilities Act): The law required that contract include the manner in which the affected employees, if any, of the participating political subdivision would be transferred, reassigned, or otherwise treated. Act 262 of 2011 amended Act 8 stripped this requirement

17 CREATIVE CONSOLIDATION: Success in Shared Services millercanfield.com 17 Act 425 of 1984 (Conditional Transfer of Property by Contract): specified that employees whose duties are transferred under this act would maintain their seniority status and all benefits rights of the positions held in the previous unit before the transfer. Act 114 of 2011 amended Act 8 eliminated this provision

18 CREATIVE CONSOLIDATION: Success in Shared Services Act 57 of 1988 (Emergency Services Authority Act): specified that employees whose duties are transferred to an authority under this act would maintain their seniority status and all benefits rights of the positions held in the municipal emergency response service before the transfer. Act 261 of 2011 amended Act 57 eliminated this provision millercanfield.com 18

19 CREATIVE CONSOLIDATION: Success in Shared Services Act 204 of 1967 (Metropolitan Transportation Authorities Act); Metropolitan transportation authorities now are bound by existing labor union agreements with public or privately owned entities that are acquired, purchased or condemned by the authority. House Bill 4310 (pending) would eliminate this provision millercanfield.com 19

20 millercanfield.com 20 Act 7 Urban Cooperation Act Prior Labor limitation: Sec. 5(g) Permits only the employees necessary for the operation of an undertaking to be transferred to and appointed And, a transferred employee shall not, by reason of the transfer be placed in any worse position with respect to worker s compensation, pension, seniority, wages, sick leave, vacation, health and welfare insurance, or any other benefits that the employee enjoyed as an employee of the acquired system.

21 Act 7 Urban Cooperation Act P.A. 263 of 2011 eliminated those restrictions and: 1) Requires the agreement set forth the public agency that will function as the employer of personnel and staff 2) Provides that the contents or language of a contract for a joint exercise of power is a permissive subject of bargaining 3) States that nothing in this act creates an employment relationship between existing employees and the joint exercise of power. millercanfield.com 21

22 Act 8 Governmental Transfers of Functions and Responsibilities Act millercanfield.com 22 Pre-amendment (7) Labor limitations: Act 8 only allows for the transfer of employees necessary for the operation of the transferred functions and responsibilities.

23 Act 8 Governmental Transfers of Functions and Responsibilities Act millercanfield.com 23 Pre-Amendment: Employees retain all rights and benefits previously held, including all seniority credits and sick leave, vacation, insurance and pension credits in accordance with the records or labor agreements from the acquired system. No employee who is transferred to a position with the political subdivision shall by reason of such transfer be placed in any worse position with respect to the terms and conditions of employment.

24 Act 8 Governmental Transfers of Functions and Responsibilities Act millercanfield.com 24 Pre-Amendment: Whether or not successor employer obliged to recognize the union representing the transferred employees and abide by the terms of the CBA, the acquiring governmental unit must maintain the status quo of the terms and conditions of employment the transferred employees enjoyed while working for the transferring governmental unit

25 Act 8 Governmental Transfers of Functions and Responsibilities Act Act 262 of 2011 eliminated these provisions and added new provisions Does this solve the problem? millercanfield.com 25

26 Act 8 Governmental Transfers of Functions and Responsibilities Act millercanfield.com 26 1) Requires the agreement set forth the public agency that will function as the employer of personnel and staff 2) Provides that the contents or language of a contract for a joint exercise of power is a permissive subject of bargaining 3) States that nothing in this act creates an employment relationship between existing employees and the joint exercise of power. 4) Provides that if employees who are transferred to the joint system are represented by a labor organization the old CBA applies until modified or 6 months after the transfer, whichever is earlier. Negotiations must begin no less than 180 days before the transfer. 5) Previous unions continue to represent, but absent a voluntary agreement any party may request a representation election 6) Authority must develop a single seniority list 7) Authority is not required to assume the contract

27 millercanfield.com 27 Act 35 Intergovernmental Contracts Amended in 1999 to permit municipalities to enter into multiple employer welfare arrangements under chapter 70 of the insurance code of 1956, MCL to , for hospital, medical, surgical or dental benefits.

28 millercanfield.com 28 Act 57 Emergency Services to Municipalities Pre-Amendment: employees of a municipal emergency service whose duties are transferred must be given comparable positions of employment with the emergency service established by the authority. employees maintain their seniority status and all benefits rights of the positions held in the municipal emergency response service before the transfer. An authority may bargain collectively and enter into agreements with labor organizations pursuant to Act No. 336 of the Public Acts of that is, the Public Employees Relations Act (PERA).

29 millercanfield.com 29 Act 57 Emergency Services to Municipalities P.A. 261 of 2011: 1) Requires the agreement set forth the public agency that will function as the employer of personnel and staff 2) Provides that the contents or language of a contract for a joint exercise of power is a permissive subject of bargaining 3) States that nothing in this act creates an employment relationship between existing employees and the joint exercise of power. 4) Provides that if employees who are transferred to the joint system are represented by a labor organization the old CBA applies until modified or 6 months after the transfer, whichever is earlier. Negotiations must begin no less than 180 days before the transfer. 5) Previous unions continue to represent, but absent a voluntary agreement any party may request a representation election 6) Authority must develop a single seniority list 7) Authority is not required to assume the contract

30 CREATIVE CONSOLIDATION: Success in Shared Services Statutes needing amendment to enable greater cooperation (in addition to the above): Act 336 of 1947 (Public Employment Relations Act, PERA ) some amendments have been made Act 312 of 1969 (Compulsory Arbitration of Labor Disputes Police and Fire) Act 116 of 1954 (Michigan Election Law) Act 279 of 1909 (Home Rule City Act) Act 140 of 1971 (State Revenue Sharing Act) Act 206 of 1893 (General Property Tax Act) millercanfield.com 30

31 Act 312 Mandatory Binding Arbitration for Public Safety Current Amendments are helpful (but could backfire Emphasis on Ability to pay LBOs at the front end Limit on cost increases tied to CPI or Gerneral Fund millercanfield.com 31

32 Act 292 Metropolitan Councils Act Enacted in 1989 Permits local units of government in metropolitan statistical areas of less than 1.5 million to join together to form a public authority (a Metropolitan Area Council or MAC ) to provide for nearly all municipal services. millercanfield.com 32

33 millercanfield.com 33 Act 292 Metropolitan Councils Act To create a MAC, two or more local units in a metropolitan area must adopt articles of incorporation by an affirmative vote of a majority of the members elected to and serving on the legislative body of each participating local government unit. Authorized to provide various services, including water and sewer, solid waste, recycling, parks, museums, zoos, recreation facilities, airports, economic development, higher education and others.

34 millercanfield.com 34 Act 292 Metropolitan Councils Act Once established a MAC may require that each participating unit pay up to.2 mills multiplied by the taxable value of all the real and personal property within that local unit of government. The statute also permits a MAC to authorize an ad valorem tax of not to exceed 0.5 mills of the taxable value of the taxable property within the council area, subject to vote.

35 millercanfield.com 35 Act 292 Metropolitan Councils Act Section 23 of the MCA : a public employee whose duties are transferred to a council shall be given a position of a comporable description with the council, and shall retain the seniority status and benefit rights of the public employment position held before the transfer.

36 millercanfield.com 36 Act 292 Metropolitan Councils Act The council shall immediately assume and be bound by an existing labor agreement applicable to those powers or duties for the remainder of the term of the labor agreement. The union representing the employees continues to act in that capacity, unless or until the employees sucessfully win a decertification petition before the Michigan Employment Relations Commission ( MERC ). There are no proposed changes to MCA labor limitations.

37 millercanfield.com 37 Act 292 Metropolitan Councils Act MCA not used why not?

38 millercanfield.com 38 Act 258 Municipal Partnership Act New Legislation Enacted in December 2011: authorizes local units to enter into contract to form joint endeavor to jointly exercise local functions Contract may include a public agency (single- or multipurpose public authority or Indian tribe Authorizes the joint endeavor to levy up to 5 mills with voter approval Provides that contract controls over local charters and ordinances PERA also amended (Act 259 of 2011) to apply to Act 258

39 10 Steps to Intergovernmental Cooperation Success millercanfield.com 39 Identify Economies of Scale Identify Potential Areas of Cooperation Identify Constitutional and Statutory Barriers Identify Financial Barriers Identify Existing Collective Bargaining Agreements Identify major wage, benefits, and seniority differences Conduct Financial Analysis Identify Stakeholders and Interests Meet with Stakeholders Address the Concerns

40 CREATIVE CONSOLIDATION: Success in Shared Services millercanfield.com 40 Case Studies Consolidation and Shared Services

41 millercanfield.com 41 Thank You! millercanfield.com

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