STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 5342

June 29, 1978

RETIREMENT AND PENSIONS:

Non-contributory pension system arranged by collective bargaining

FIREMEN AND FIRE DEPARTMENTS:

Retirement credit for volunteer firemen

MUNICIPALITIES:

Retirement credit for volunteer firemen

A municipality which has adopted 1937 PA 345, may not agree in a collective bargaining agreement to pay the 5% member contributions for members of the retirement system.

A full-time member of a fire department is entitled to receive service credit for all 'paid service' as a fireman performed for a municipality.

Where a municipality, in lieu of payment of wages to a volunteer fireman for services, pays a sum of money to a fire fighters association, this arrangement does not qualify as 'paid service' for the purposes of retirement credit. This would not prevent a volunteer fireman who is paid compensation for his or her services from turning all or a portion of it over to a fire fighters association and thereby receiving retirement credit during the period for which he or she was paid.

Honorable Kerry Kammer

State Senator

The Capitol

Lansing, Michigan

You have requested my opinion on two questions concerning 1937 PA 345, MCLA 38.551 et seq; MSA 5.3375 et seq. Your questions will be addressed seriatim:

1937 PA 345, supra, provides for the establishment and maintenance of a retirement system for the police officers and firemen of cities, villages and municipalities which have full-time police and fire departments. At the outset, it should be noted that the act does not become effective in any city, village or municipality unless it is adopted by its electors in accordance with 1937 PA 345, supra, Sec. 11. It should also be noted that the term 'municipality' includes counties, townships, charter townships, cities and incorporated villages. 1937 PA 345, supra, Sec. 7.

You have informed me that the municipality in question adopted 1937 PA 345, supra, in 1961 and you have indicated that the municipality is currently paying the 5 per cent member contributions for its police and fire chief. You question the legality of such payments and ask whether the municipality can also agree in a collective bargaining contract to pay the 5 per cent member contributions for the other members of the retirement system.

The contributions by the members of the retirement system are governed by 1937 PA 345, supra, Sec. 9, as follows:

As the Supreme Court reaffirmed in Dussia v Monroe County Employees' Retirement System, 386 Mich 244, 249; 191 NW2d 307, 310 (1971):

By its plain and unambiguous terms, 1937 PA 345, Sec. 9, supra, clearly states that the 'contributions of a member to the retirement system shall be 5 per cent of the salary paid to him by the . . . municipality. . . . Every member shall be deemed to consent and to agree to the deductions made and provided for herein . . .' There is no language in such statute which states or implies that a municipality may agree in a collective bargaining contract, or otherwise, to pay the 5 per cent member contributions. Indeed, 1937 PA 345, supra, Sec. 2(3) states that the retirement board shall '[c]ause amounts as established by law to be deducted from the salaries of active members of the retirement system and be paid into the treasury of the retirement system.'

In Detroit Police Officers Association v City of Detroit, 391 Mich 44, 214 NW2d 803 (1974), the Michigan Supreme Court held that municipal pension and retirement benefits are mandatory subjects of collective bargaining under 1947 PA 336, Sec. 15, MCLA 423.215; MSA 17.455(15). In reaching that result, the Court noted that under the home rule cities act, 1909 PA 279, MCLA 117.1 et seq; MSA 5.2071 et seq, the city charter need only contain a general grant of authority to city government to maintain a retirement system. The substantive provisions of the retirement system could be determined locally through the collective bargaining process.

However, the Court, in Detroit Police Officers Association v City of Detroit, supra, 391 Mich at 66, 214 NW2d at 814, also stated '. . . that PERA [1947 PA 336, as amended, supra,] contemplates open negotiations between the parties unless controlled by a specific state law. . . .' (emphasis supplied) In 1937 PA 345, supra, we have a specific and controlling state law that requires employees to contribute 5 per cent of their salary to the retirement system. Further, the law is settled that retirement systems must be administered in conformity with the statutes creating such retirement systems. Stover v Retirement Board of the City of St. Clair Shores Fireman and Police Pension System, 78 Mich App 409, ---- NW2d ---- (1977) leave to appeal denied, 402 Mich 879 (1978); Michigan State Police Command Officers' Association, Inc. v Department of Public Safety, 80 Mich App 278, ---- NW2d ---- (1977) leave to appeal denied, ---- Mich ----, (March 22, 1978).

Therefore, in response to your first question, it is my opinion that a municipality with a retirement system for firemen and policemen, established pursuant to 1937 PA 345, supra, may not agree, in a collective bargaining contract, or otherwise, to pay into the funds of such retirement system the 5 per cent member contributions required by 1937 PA 345, Sec. 9, supra. This would not, however, preclude the municipality from increasing the salaries of firemen and policemen in an amount that would be equivalent to the contribution.

Membership in the retirement system established by the city, village or municipality, in accordance with the provisions of 1937 PA 345, supra, Sec. 12, 'shall include all policemen and firemen employed by city, village or municapility.' This statutory section also provides that membership in the retirement system shall not include volunteer firemen, privately employed policemen and firemen, persons temporarily employed during emergencies, and civilian employees of the police and fire departments, except certain policemen or firemen transferred to a civilian position within the police or fire department.

1937 PA 345, supra, Sec. 4, states:

In Local 1557, Sterling Heights Fire Fighters Association, AFL-CIO v Sterling Heights Policeman and Fireman Pension Board, 70 Mich App 599; 246 NW2d 151 (1976), the plaintiffs, who were full-time fire fighters for the City of Sterling Heights, sought pension credits for service performed as paid, part-time volunteer fire fighters for either the city or its predecessor township prior to the enactment of 1937 PA 345, supra. The Court held that pursuant to 1937 PA 345, Sec. 4, supra, the plaintiffs were entitled to receive service credit for all paid service performed for the city or its predecessor township prior to its adoption of 1937 PA 345, supra.

The Court stated:

Sterling Heights Fire Fighters Association, supra, 70 Mich App at 600; 246 NW2d at 151.

In a letter opinion to Representative Allen F. Rush, dated March 12, 1968, it was held that under 1937 PA 345, Sec. 4, supra, the prior service credit of a member is determined by including credit for all prior paid service as a volunteer fireman.

Accordingly, in view of the foregoing, it is clear that a member of the retirement system is entitled to receive service credit for all paid service as a fireman performed for the municipality prior to its adoption of 1937 PA 345, supra.

However, if a municipality, in lieu of payment of wages to a volunteer fireman for services, pays a sum of money to a fire fighters association, this would not qualify as paid service for the purpose of retirement credit. This would not prevent a volunteer fireman who is paid compensation for his or her services from turning all or a portion of it over to a fire fighters association and thereby receiving retirement credit during the period for which he or she was paid.

Therefore, in response to your second question, it is my opinion that a municipality must grant additional service credit only to members who performed paid volunteer service as firemen for such municipality prior to its adoption of 1937 PA 345, supra, and directly receive compensation for such services.

Frank J. Kelley