STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6244

August 31, 1984

RETIREMENT SYSTEMS:

Municipal Employees' Retirement System--impact of collective bargaining agreements upon retirement plan for police officers and fire fighters

Municipal Employees' Retirement System--impact of final arbitration award upon retirement plan for police officers and fire fighters

Police officers and fire fighters employed by a municipality which is a member of the Municipal Employees' Retirement System may bargain collectively with the municipality with respect to modifications in the retirement plan administered under 1945 PA 135, provided that the negotiations conform to the mandates of Const 1963, art 9, Sec. 24.

The authority of the Municipal Employees' Retirement Board in the area of member classification is subject to the right of police officer and fire fighter members and the member municipality to bargain collectively in accordance with 1945 PA 135 regarding the establishment of other classification systems in the retirement plan, including separate pension benefit provisions in the retirement plan for separate bargaining units within the municipality.

An arbitration panel final award pursuant to 1969 PA 312 ordering retirement benefit provisions in conflict with the Municipal Employees' Retirement Board's classification must be observed by the retirement board, including any award of different contractual benefit provisions for separate bargaining units within the same police or sheriff's department.

Honorable Debbie Stabenow

State Representative

The Capitol

Lansing, Michigan

Honorable Maxine Berman

State Representative

The Capitol

Lansing, Michigan

In separate letters you have requested my opinion on several questions regarding the relationship of the public employment relations act (PERA), 1947 PA 336, as amended; MCLA 423.201 et seq; MSA 17.455(1) et seq, and the Municipal Employees' Retirement Act, 1945 PA 135, as amended; MCLA 38.601 et seq; MSA 5.4001 et seq. Your first question may be restated as follows:

PERA, supra, Sec. 15 imposes on a public employer the obligation to bargain collectively with the representatives of its employees with respect to 'wages, hours, and other terms and conditions of employment . . ..' Changes in a police retirement plan are mandatory subjects of bargaining under PERA, Sec. 15, supra. Detroit Police Officers Ass'n v Detroit (DPOA), 391 Mich 44, 63; 214 NW2d 803 (1974). The parties are required to bargain concerning any of such subjects proposed by either party. DPOA, supra, 54-55. The obligation to bargain in good faith is not an obligation to agree, as the Supreme Court stated in DPOA, supra, 54:

This PERA-imposed obligation to bargain regarding pension and retirement provisions may conflict in certain respects with 1945 PA 135, supra, which creates and provides for the operation of a retirement system for municipal employees. The system encompasses a fixed set of options and does not, therefore, permit variations not specified in the statute. If a variation were to be provided in a collective-bargaining agreement, a conflict between PERA and 1945 PA 135, supra, would arise.

The Supreme Court has decided several cases in which counties, public universities, courts, school districts, and cities have asserted that constitutional provisions, statutes, charters, and ordinances prevail over conflicting provisions in PERA.

In Wayne County Civil Service Comm'n v Bd of Supervisors, 384 Mich 363, 374; 184 NW2d 201 (1971), the court held that the original authority and duty of the civil service commission, acting pursuant to the county civil service act, 1941 PA 370; MCLA 38.401 et seq; MSA 5.1191(1) et seq, was diminished pro tanto by PERA, to the extent of free administration of the latter.

In Bd of Control of Eastern Michigan Univ v Labor Mediation Bd, 384 Mich 561; 184 NW2d 921 (1971), the court determined that the university is a public employer and subject to PERA. In reaching this result, the court was guided by Const 1963, art 4, Sec. 48, which provides:

The court concluded there that the public policy of this state as to labor relations in the entire public sector of employment, other than the state classified civil service, is for legislative determination by virtue of Const 1963, art 4, Sec. 48. Eastern Michigan Univ, supra, 384 Mich 566.

The court also determined that PERA was superimposed upon, and limited the constitutional authority of, the University of Michigan Board of Regents, subject to the autonomy of the educational institution in the educational area. Regents of the Univ of Michigan v Employment Relations Comm'n, 389 Mich 96, 108-109; 204 NW2d 218 (1973). In a similar vein, the court stated as follows in Central Michigan Univ Faculty Ass'n v Central Michigan Univ, 404 Mich 268, 279; 273 NW2d 21 (1978):

The application of PERA to the judiciary has been of somewhat narrower scope. The Supreme Court has held PERA applicable to the employees of the district court, Judges of the 74th Judicial Dist v Bay County, 385 Mich 710; 190 NW2d 219 (1971) and Teamsters Union Local 214 v 60th Dist Court, 417 Mich 291; 335 NW2d 470 (1983), and to employees of the circuit court, Livingston County v Livingston Circuit Judge, 393 Mich 265; 225 NW2d 352 (1975), although that applicability extends only to ministerial employees of those courts and not to employees whose function is central to the judicial function. Council No 23, Local 1905, AFSCME v Recorder's Court Judges, 399 Mich 1, 7, 9; 248 NW2d 220 (1976); Teamsters Union Local 214 v 60th Dist Court, supra, 295. Nor is PERA applicable to the Supreme Court. In the Matter of the Petition for a Representation Election Among Supreme Court Staff Employees, 406 Mich 647; 281 NW2d 299 (1979). These limitations on PERA's applicability to the judiciary derive from the separation of the powers of government provision of Const 1963, art 3, Sec. 2.

An aspect of PERA's applicability to school districts was tested in Rockwell v Crestwood School Dist Bd of Educ, 393 Mich 616; 227 NW2d 736 (1975), reh den, 394 Mich 944 (1975), which involved a conflict between PERA and the teachers' tenure act, 1937 Ex Sess PA 4; MCLA 38.71 et seq; MSA 15.1971 et seq. The Supreme Court concluded that PERA prevailed over the teachers' tenure act, based upon: the apparent intent of the Legislature that PERA be the dominant law for public employment relations and disputes; the consistent holdings of the court that PERA is the dominant law regulating public employment relations; and the need for uniform treatment of all public employment relations questions.

The court has also considered the impact of PERA on various questions involving municipalities. In DPOA, supra, the court determined that collective bargaining obligations under PERA prevailed over charter provisions otherwise lawful under Const 1963, art 7, Sec. 22. The court avoided finding a complete conflict between PERA and the home rule cities act, 1909 PA 279, as amended; MCLA 117.1 et seq; MSA 5.2071 et seq, but found that the substantive details and terms of a pension and retirement plan were required to be left to collective negotiation under PERA, DPOA, supra, 391 Mich 67-68. In Pontiac Police Officers Ass'n v City of Pontiac, 397 Mich 674, 677, 685; 246 NW2d 831 (1976), the court held that the duty to perform in accordance with the terms of a collective bargaining agreement prevails over conflicting provisions of the charter of a home-rule city. In so holding, the court rejected the assertion that Const 1963, art 7, Sec. 22 or the fire and police civil service act, 1935 PA 78, as amended; MCLA 38.501 et seq; MSA 5.3351 et seq, carved out an exception to PERA.

In a more recent case involving a municipality, the court considered the question whether a collective bargaining agreement's provision concerning promotions, entered into under PERA, is valid and enforceable when it conflicts with provisions of a city charter and the fire and police civil service act, 1935 PA 78, supra. Local 1383, Int'l Ass'n of Fire Fighters, AFL-CIO v City of Warren, 411 Mich 642; 311 NW2d 702 (1981). The court's analysis contained a comprehensive review of its previous decisions discussed herein. Following that review, the court stated:

The court stated its holdings as follows:

In summary, the court determined in DPOA, supra, that changes in a police retirement plan are mandatory subjects of bargaining under PERA, Sec. 15, supra. Although there are no cases specifically holding that PERA prevails over conflicting provisions of 1945 PA 135, it follows from the Supreme Court's reasoning in the above-cited cases that it would, in an appropriate case, reach the same conclusions as it did in Local 1383, supra, since the court has consistently held PERA to be the dominant law regulating public employment relations.

In answer to your first question, it is my opinion that police officers and fire fighters have the right, under PERA, to bargain collectively concerning modifications in pension and retirement plans administered under 1945 PA 135, supra. It is my further opinion that negotiations with respect to retirement benefits must be conducted in conformance with the mandates of Const 1963, art 9, Sec. 24, which provides that accrued financial benefits of a retirement system for a political subdivision of the state shall be a contractual obligation thereof which may not be diminished or impaired. ⁽¹⁾

Your second question may be restated as follows:

In response to your second question, it is appropriate to consider the matter of bargaining unit configuration. The authority to determine appropriate bargaining units is vested by PERA, supra, Sec. 13 in the Michigan Employment Relations Commission (MERC). In making such determinations, MERC may adopt a unit agreeable to the parties. 1939 PA 176, as amended, Sec. 9e; MCLA 423.9e; MSA 17.454(10.4). In determining units, a primary objective is to constitute the largest unit which is most compatible with the effectuation of the purposes of the Act and to include in a single unit all common interests. Hotel Olds v State Labor Mediation Bd, 333 Mich 382; 53 NW2d 302 (1952). A bargaining unit may not contain both supervisory and nonsupervisory personnel. School Dist of the City of Dearborn v Labor Mediation Bd, 22 Mich App 222, 228; 177 NW2d 196 (1970). Review of MERC determinations regarding bargaining units is to be undertaken in accordance with the usual standards, i.e., whether the determination is supported by competent, material, and substantial evidence on the whole record. Detroit Bd of Educ v Local 28, Organization of School Administrators & Supervisors, AFL-CIO, 106 Mich App 438, 448; 308 NW2d 247 (1981), lv den, 413 Mich 859 (1982).

Consistent with the foregoing principles, it is seen that, in the typical police or sheriff department, there may be at least two bargaining units, delineating supervisory and nonsupervisory employees. Where different contractual provisions regarding retirement benefits are negotiated for employees of the same department by the representatives of their separate units, the conflict posed by your second question would arise.

For the answer to that question, reference is also made to Local 1383, supra. The retirement board created in 1945 PA 135, supra, Sec. 3, is vested with the following authority:

Pursuant to this provision, the retirement board may undertake to establish pension classifications and, further, to require that all members of a police or sheriff department, regardless of the existence of separate bargaining units of employees in a department, be assigned the same classification. The retirement board's authority is circumscribed by PERA, however, in much the same fashion as that of the police and fire civil service commission in Local 1383, supra. Thus, if the collective bargaining process authorized by PERA results in contract provisions which conflict with the retirement board's pension classifications, then the contract prevails. In this connection, it should be noted that the Supreme Court stated that parties engaged in collective bargaining are free to adopt substantive provisions of 1935 PA 78, supra. Local 1383, supra, 411 Mich 654.

In answer to your second question, it is my opinion that the retirement board's authority to assign pension classifications and require that parties adhere to the classifications is subject to the right of the parties, under PERA, to bargain collectively regarding pension and retirement plans establishing other classifications.

Your third question may be restated as follows:

As discussed above, the line of cases culminating in Local 1383, supra, holds that PERA is the dominant law in public employment relations. Based upon the holdings in those cases, as stated above in response to your second question, the retirement board's authority under 1945 PA 135 regarding pension classifications is subject to the right to bargain collectively under PERA. The answer to your third question involves the same analysis as did the answer to your second question and requires the same response.

It is my opinion, therefore, that the retirement board's adoption of a pension classification system does not preclude bargaining under PERA of contractual provisions which differ from the retirement board's classification system.

Your fourth question may be restated as follows:

Under PERA, parties may freely bargain regarding pension and retirement plans, notwithstanding the authority of the retirement board under 1945 PA 135, supra, to administer the retirement system. Parties who are subject to the compulsory arbitration provisions of 1969 PA 312, as amended; MCLA 423.231 et seq; MSA 17.455(31) et seq, are not subjected thereby to a limitation of their rights under PERA, because 1969 PA 312, supra, Sec. 14 provides that 1969 PA 312, supra, is supplementary to PERA.

The Supreme Court considered the scope of the arbitration panel's authority and stated:

It follows that, inasmuch as changes in a police retirement plan are mandatory subjects of bargaining under PERA, Sec. 15 (DPOA, supra, 391 Mich 63), an arbitration panel acting under authority of 1969 PA 312, supra, may order contractual provisions regarding pension and retirement which conflict with the retirement board's classifications. Since 1969 PA 312, supra, Sec. 8 requires arbitrators to 'adopt the last offer of settlement which . . . more nearly complies with the applicable factors prescribed in section 9' as to each economic issue, arbitrators are required to choose between the last offer of settlement proposed by the respective parties. Thus, if the last offers of the respective parties regarding pension and retirement provisions conflict with the retirement board's classifications, the 1969 PA 312 arbitration panel must order contractual provisions which conflict with those classifications.

In answer to the fourth question, it is my opinion that, by virtue of the provisions of 1969 PA 312, supra, an arbitration panel acting pursuant thereto, is not precluded, in spite of the authority of the retirement board to administer the retirement system under the provisions of 1945 PA 135, supra, from ordering different contractual benefit provisions for separate bargaining units within the same police or sheriff department.

By way of epilogue, it is to be noted that the foregoing conclusions accord to public employers and their affected employees the right to, in effect, negotiate a statute out of existence as to the contracting parties through collective bargaining.

Notwithstanding my concern in this regard, the answers to your questions were constrained by the Supreme Court's consistent holdings with respect to the dominance of PERA in the public employment sphere. The continuation of such predominance is a question for legislative consideration.

Frank J. Kelley