STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6058

April 21, 1982

STATE OFFICERS AND EMPLOYEES:

Surety bonds for Municipal Employees' Retirement System

RETIREMENT SYSTEMS:

Municipal Employees' Retirement System--liability of board members

Officers and employees of the Municipal Employees' Retirement System are not covered by the provisions of the state blanket bond authorized by 1969 PA 10.

Newly appointed members of the Municipal Employees' Retirement Board are not personally liable for the actions taken by the board before their appointment.

Mr. John W. Fonger

Manager

Municipal Employees' Retirement System

Stevens T. Mason Building

P.O. Box 30026

Lansing, Michigan

You have requested my opinion as to the extent to which the Municipal Employees' Retirement System is covered by the state blanket faithful performance bond. You also ask what liability a member of the Board incurs upon acceptance of an appointment to the Board.

The Municipal Employees' Retirement Act, 1945 PA 135; MCLA 38.601 et seq; MSA 5.4001 et seq, provides for the establishment of the Municipal Employees' Retirement System, hereafter MERS. MERS is composed of local governmental units which voluntarily elect to come under the provisions of the Act for the economies of scale and expertise to be gained from their combined size. 1945 PA 135, supra, Sec. 6 et seq.

The administration of MERS and the authority to make rules for the System are vested in the Municipal Employees' Retirement Board which is composed of, ex officio, the State Treasurer, three officers of participating municipalities and three participating employees appointed by the Governor. 1945 PA 135, supra, Sec. 3. Each member of the Board, upon appointment, takes an oath of office. 1945 PA 135, supra, Sec. 11. The members of the Board serve without compensation for their services. 1945 PA 135, Sec. 11, supra.

1945 PA 135, supra, Sec. 15(e), requires the State Treasurer to file a bond:

1945 PA 135, supra, is silent concerning all other employees and officers of MERS on the issue of providing a bond conditioned on faithful performance of duties. The express mention in a statute of one thing implies exclusion of all other similar things. Sebewaing Industries, Inc v Village of Sebewaing, 337 Mich 530; 60 NW2d 444 (1953). The remaining Municipal Employees' Retirement Board members are, therefore, not required by 1945 PA 135, supra, to file a faithful performance bond.

1969 PA 10; MCLA 15.1 et seq; MSA 3.930(11) et seq, provides for the establishment of uniform bond coverage for officers and employees of state departments and agencies. 1969 PA 10, supra, Sec. 1, provides:

The Director of the Department of Management and Budget is to determine, after consultation with the Director of the Department of Commerce, the conditions of each bond and whether a single state bond for all state officers and employees or departmental bonds 'would best serve the state.' [Emphasis added.] 1969 PA 10, supra, Sec. 2.

The Director of the Department of Management and Budget has decided to secure a 'blanket bond' for all employees of the executive and legislative branches of the State of Michigan, except state senators and representatives, pursuant to 1969 PA 10, supra. The blanket bond provides that the surety will indemnify the people of the State of Michigan for losses caused by the failure of state officers or employees, acting alone or with others, to perform faithfully their duties or to account properly for all monies and property received by virtue of their position or employment. The total amount of indemnity available for a loss is $1,000,000 with a higher limit if caused by several employees.

The state 'blanket bond' established pursuant to 1969 PA 10, supra, addresses only state funds. MERS is , though administered at the state level, a local government retirement program. The state is not liable for funding or paying the benefits of local government retirement programs including MERS. OAG, 1975-1976, No 5076, p 563 (August 9, 1976).

It is my opinion, therefore, that the officers and employees of the Municipal Employees' Retirement System, holding only local funds, are not covered by the state blanket bond established pursuant to 1969 PA 10, supra.

You have also asked what liability a member of Municipal Employees' Retirement Board incurs upon acceptance of the Governor's appointment to the Board?

The investment duties of Municipal Employees' Retirement Board are established by law. 1945 PA 135, supra, Sec. 61, provides:

Public officers are subject to fiduciary duties in the conduct of their office. OAG, 1981-1982, No 5864, p 64 (March 17, 1981). That opinion cites People ex rel Plugger v Twp Board of Overyssel, 11 Mich 222, 226-227 (1863), concerning the responsibility of public officers where matters of personal interest are involved:

It is to be noted that 1945 PA 135, supra, Sec. 62, provides:

The members of the Municipal Employees' Retirement Board, upon their appointment, must provide the public with their best judgment, unbiased by private interests, and exercise their powers with proper prudence and diligence. Those duties apply, however, only to the Board member's own actions. Newly appointed Board members are not personally liable for the actions taken by the Board before appointment.

It is my opinion, therefore, that Municipal Employees' Retirement Board members do not inherit any personal liability upon acceptance of their appointment to the Board.

Frank J. Kelley