STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6663

October 30, 1990

RETIREMENT AND PENSIONS:

Municipal Employees' Retirement System--right of an Act 230 county hospital to join as an independent member

Mecosta County General Hospital, having been converted to an Act 230 corporation, may now qualify as a "participating municipality" in the Municipal Employees' Retirement System.

The Board of Trustees of Mecosta County General Hospital constitutes the "governing body" of the Hospital within the meaning of the Municipal Employees' Retirement Act.

If Mecosta County General Hospital elects to become a "participating municipality" in its own right, the Municipal Employees' Retirement System may move the accounts of Hospital employees by an intra-system transfer from the Mecosta County Employees' Plan in MERS to the Mecosta County General Hospital Employees' Plan in MERS.

Mr. Richard L. Beers

Director

Bureau of Retirement Systems

Dept. of Management & Budget

General Office Bldg., Third Fl.

Lansing, Michigan 48909

You have requested my opinion on three questions, all of which concern the authority of Mecosta County General Hospital to participate in the Municipal Employees' Retirement System (MERS).

You advise that, at the present time, employees of Mecosta County General Hospital participate in MERS pursuant to the Mecosta County Employees' Plan, the plan adopted by the County for county employees generally. The Hospital proposes to convert its status to that of an independent "participating municipality," participating in MERS in its own right rather than merely under the auspices of the County. Your questions generally concern whether and in what manner such a conversion may be accomplished.

Your first question is whether Mecosta County General Hospital may join MERS as an independent "participating municipality" separate from Mecosta County.

A similar question was answered in OAG, 1981-1982, No 5979, p 369 (September 16, 1981). That opinion concluded that, under then existing laws, the Board of Trustees of Mecosta County General Hospital was without authority to independently join MERS. This conclusion was based on the determination of the powers of the Hospital under 1913 PA 350, the statute governing the Hospital's operation at the time of that opinion. Section 4a of 1913 PA 350, MCL 331.154a; MSA 14.1134(1), allowed a county hospital board of trustees to establish its own retirement or pension plan for its employees, but required approval by the county pension plan committee created by the county board of commissioners pursuant to 1851 PA 156; MCL 46.12a; MSA 5.333(1). In light of this requirement, OAG, No 5979, supra, concluded that the hospital board of trustees was limited to establishing a pension plan only pursuant to the plan for county employees generally and did not have the legal authority to function as an independent participant in MERS.

On December 28, 1987, the Michigan Legislature enacted 1987 PA 230; MCL 331.1101 et seq; MSA 14.1148(101) et seq, the County Health Facilities Corporations Act, effective February 27, 1988. Act 230 was subsequently amended by 1988 PA 502, effective January 1, 1989. The Act, as amended, is known as the Municipal Health Facilities Corporation Act. The Act permits the reorganization of county and other municipal hospitals into public non-profit corporations with broad powers. Significantly, Act 230 provides that county hospitals existing under previous statutes automatically become incorporated under the new Act 90 days after the Act's effective date unless a prohibitory resolution is enacted by the county board of commissioners. MCL 331.1203(1); MSA 14.1148(203)(1). I am advised the Mecosta County Board of Commissioners did not pass such a prohibitory resolution and, therefore, the Mecosta County Hospital automatically became incorporated under Act 230 on May 27, 1988.

Act 230 was recently held constitutional in its entirety by the Michigan Court of Appeals in Petrus v Dickinson Co Bd of Commissioners, 184 MichApp 282; ___ NW2d ___ (1990); lv den ___ Mich ___ (Docket 89523, August 27, 1990).

Section 303 of 1987 PA 230, as amended, MCL 331.1303; MSA 14.1148(303), sets forth the powers of a hospital board of trustees. With regard to pensions, the hospital's board of trustees may:

Act 230, unlike Act 350, does not contain a provision requiring a separate pension plan for hospital employees to be approved by the county pension plan committee and, further, expressly authorizes the hospital's board of trustees to establish its own retirement or pension plan. Consequently, Act 230 removes the barrier to a county hospital's independent participation in MERS that existed under 1913 PA 350, as described in OAG, No 5979, supra, and that opinion is, therefore, not controlling as to hospitals which are now incorporated under Act 230. ⁽¹⁾

Membership in the Municipal Employees' Retirement System is provided for each qualified employee of a "participating municipality." Municipal Employees' Retirement Act (MERA), 1984 PA 427 (as amended), Sec. 3; MCL 38.1503; MSA 5.4001(3). Section 2b(4) of MERA, MCL 38.1502b(4); MSA 5.4001(2b)(4), (as last amended) defines "municipality" as:

Mecosta County General Hospital, incorporated pursuant to the provisions of 1987 PA 230, is a "municipality" as defined in the MERA and may join the MERS as a "participating municipality" separate from Mecosta County.

It is my opinion, therefore, in response to your first question, that Mecosta County General Hospital, having been converted to an Act 230 corporation, may now qualify as a "participating municipality" in MERS.

Your second question is whether the Board of Trustees of Mecosta County General Hospital is the hospital's "governing body" for purposes of MERA.

Section 2a(6) of MERA, MCL 38.1502a(6); MSA 5.4001(2a)(6), defines the term "governing body," as used in that Act, as follows:

Pursuant to section 303 of Act 230; MCL 331.1303; MSA 14.1148(303), the Board of Trustees of Mecosta County General Hospital is the administrative board of the hospital corporation with broad powers to conduct the affairs of the corporation.

It is my opinion, therefore, in response to your second question, that the Board of Trustees of Mecosta County General Hospital constitutes the "governing body" of the Hospital within the meaning of MERA.

Your final question asks whether, upon Mecosta County General Hospital properly electing to become a "participating municipality" separate from the county, MERS may move the accounts of hospital employees by an intra-system transfer from the Mecosta County Employees' Plan to the Mecosta County General Hospital Employees' Plan.

Section 2c(2) of MERA, MCL 38.1502c(2); MSA 5.4001(2c)(2), requires that a participating municipality must have "elected to be governed by the provisions of this act." Section 41(1) of MERA, MCL 38.1541(1); MSA 5.4001(41)(1), states, in pertinent part:

Section 53 of MERA, MCL 38.1553; MSA 5.4001(53), although generally prohibiting the transfer or assignment of benefits under MERA, does authorize transfers of assets in certain instances, providing in pertinent part that:

See, also, OAG, 1987-1988, No 6540, p 397 (September 22, 1988), sustaining as statutorily authorized the transfer to MERS, pursuant to a collective bargaining agreement, of membership of certain deputy sheriffs along with their contributions from a county police department retirement plan under 1937 PA 345, MCL 38.551 et seq; MSA 5.3375(1) et seq.

I am advised by the manager of MERS that prior intra-system transfers have been implemented upon actuarially-determined bases where employees of a participating municipality have become employees of another participating municipality (eg, city library employees participating separate from former MERS membership as general city employees).

Statutes must be construed to accomplish legislative intent. Dussia v Monroe County Employees' Retirement System, 386 Mich 244, 248-249; 191 NW2d 307 (1971). The Petrus Court opined that where "Act 350 hospital property automatically transfers to an Act 230 hospital, the property remains with a public entity." 184 MichApp at 297. Given the legislative intent in enacting Act 230 authorizing county hospitals incorporated under that Act to function independently, to establish their "own retirement or pension plans" pursuant to section 303(e), supra, and, in light of the administrative practice of MERS, it is appropriate to construe section 53(4) of MERA as authorizing such intra-system transfers within MERS under the circumstances here involved.

It is my opinion, therefore, in response to your third question, that, if Mecosta County General Hospital elects to become a "participating municipality" in its own right, MERS may move the accounts of Hospital employees by an intra-system transfer from the Mecosta County Employees' Plan to the Mecosta County General Hospital Employees' Plan.

Frank J. Kelley

Attorney General