SB-0484, As Passed Senate, December 1, 2011

SUBSTITUTE FOR

SENATE BILL NO. 484

A bill to amend 1936 (Ex Sess) PA 1, entitled

"Michigan employment security act,"

by amending the title and section 2 (MCL 421.2) and by adding

sections 10a and 26a.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

TITLE

An act to protect the welfare of the people of this state

through the establishment of an unemployment compensation fund, and

to provide for the disbursement thereof; to create certain other

funds; to create the Michigan employment security commission, and

to prescribe its powers and duties; to provide for the protection

of the people of this state from the hazards of unemployment; to

levy and provide for contributions from employers; to levy and

provide for obligation assessments; to provide for the collection

of ~~such~~ those contributions and assessments; to enter into

reciprocal agreements and to cooperate with agencies of the United

States and of other states charged with the administration of any

unemployment insurance law; to furnish certain information to

certain governmental agencies for use in administering public

benefit and child support programs and investigating and

prosecuting fraud; to provide for the payment of benefits; to

provide for appeals from redeterminations, decisions and notices of

assessments; and for referees and a board of review to hear and

decide the issues arising from redeterminations, decisions and

notices of assessment; to provide for the cooperation of this state

and compliance with the provisions of the social security act and

the Wagner-Peyser act passed by the Congress of the United States

of America; to provide for the establishment and maintenance of

free public employment offices; to provide for the transfer of

funds; to make appropriations for carrying out the provisions of

this act; to prescribe remedies and penalties for the violation of

~~the provisions of~~ this act; and to repeal all acts and parts of

acts inconsistent with ~~the provisions of~~ this act.

Sec. 2. (1) ~~Declaration of policy.~~ The legislature acting in

the exercise of the police power of the state declares that the

public policy of the state is as follows: Economic insecurity due

to unemployment is a serious menace to the health, morals, and

welfare of the people of this state. Involuntary unemployment is a

subject of general interest and concern which requires action by

the legislature to prevent its spread and to lighten its burden

which so often falls with crushing force upon the unemployed worker

and his or her family, to the detriment of the welfare of the

people of this state. Social security requires protection against

this hazard of our economic life. Employers should be encouraged to

provide stable employment. The systematic accumulation of funds

during periods of employment to provide benefits for periods of

unemployment by the setting aside of unemployment reserves to be

used for the benefit of persons unemployed through no fault of

their own, thus maintaining purchasing power and limiting the

serious social consequences of relief assistance, is for the public

good, and the general welfare of the people of this state.

(2) The legislature finds that from time to time high levels

of unemployment have resulted in the exhaustion of the funds in

this state's account of the unemployment trust fund, has required

advances or loans to the state from the federal account of the

unemployment trust fund, and has caused the imposition of lawful

penalty taxes and solvency taxes to repay those advances and the

interest on those advances. The financing and payment of the

outstanding principal amount heretofore or hereafter advanced or

loaned to this state from the federal account of the unemployment

trust fund and the interest on those loans, if any, the funding of

unemployment compensation benefits, and the financing and funding

of this state's account in the unemployment trust fund including,

without limitation, the funding of sufficient fund balances in the

unemployment trust fund, are an essential governmental function and

public purpose of this state. The legislature further finds that

the issuance of bonds by the Michigan finance authority or other

issuer to finance the foregoing payments and to avoid or reduce the

imposition of penalty taxes and solvency taxes will further and

facilitate an essential governmental function and public purpose of

this state that will encourage the development of industry and

commerce, foster economic growth, provide employment opportunities

for the citizens and residents of this state and further other

economic development and activities in this state, and in general

promote the public health and general welfare of the people of this

state.

Sec. 10a. (1) The obligation trust fund is created as a

separate fund in the state treasury. The assets of the obligation

trust fund shall not be commingled with any other fund and shall

not be considered part of the general fund of the state.

(2) The state treasurer may receive money or other assets from

any source for deposit into the fund. All obligation assessments on

employers collected under section 26a; all interest on payments,

penalties, and damages collected in connection with the obligation

assessments made under section 26a; and a portion of the proceeds

of any obligations, as described in section 26a, in amounts

specified by the issuer, shall be deposited into the obligation

trust fund. The state treasurer shall direct the investment of the

fund. The state treasurer shall credit to the fund interest and

earnings from fund investments.

(3) Money in the obligation trust fund at the close of the

fiscal year shall remain in the fund and shall not lapse to the

general fund. Money in the fund is continuously appropriated for

the purposes specified in section 26a.

(4) The department of licensing and regulatory affairs shall

be the administrator of the fund for auditing purposes.

(5) The department of licensing and regulatory affairs shall

expend money from the fund only for 1 or more of the following

purposes:

(a) To pay obligations, administrative expenses, and

associated expenses described in section 26a.

(b) To refund erroneously collected assessments under section

26a.

Sec. 26a. (1) The director of the department of licensing and

regulatory affairs may request the Michigan finance authority to

issue notes, bonds, financial instruments, or other evidences of

indebtedness, the proceeds of which may be used for any of the

following purposes:

(a) To finance, refinance, refund, or advance refund any

payment required or obligation arising under this section or under

42 USC 1321 and 1322.

(b) To repay amounts owed or to be owed to the United States

treasury resulting from advances made to this state by the federal

government under federal law, including 42 USC 1321, together with

interest on those advances.

following circumstances:

(i) By this state to the unemployment trust fund and used to

make any payment required or obligation described in this section

or 42 USC 1321.

(ii) By the unemployment trust fund to the obligation trust

fund and used to pay obligations of the Michigan finance authority.

(d) To fund unemployment compensation benefits and this

state's account within the federal government unemployment trust

fund, including balances in that account.

(e) To fund capitalized interest; debt service reserve funds;

and payment of costs of, and administrative expenses in connection

with, issuing obligations.

(2) In 2011 and in each year thereafter in which any

obligation is outstanding, an employer is subject to, shall be

assessed, and shall pay an unemployment obligation assessment,

which shall be collected quarterly and shall be deposited to the

credit of the obligation trust fund. The obligation assessment is

in addition to the employer's required contributions, is not

subject to the limiting provisions for contributions required under

this act, and is in addition to and separate from the solvency tax

imposed under section 19a.

(3) The unemployment obligation assessment rate shall be

determined by the state treasurer after consultation with the

director of the department of licensing and regulatory affairs and

shall be an amount sufficient to ensure timely payment of all of

the following:

(a) Principal, interest, and any redemption premium on the

obligations.

(b) Administrative expenses, credit enhancement and

termination fees, and other fees, if any, in connection with

issuing the obligations.

the terms of a resolution, indenture, or authorizing statute under

which the obligation is issued.

(d) Amounts necessary to maintain the ratings on the

obligations that are assigned by a nationally recognized rating

service at a level determined by the state treasurer, in his or her

sole discretion.

(4) The obligation assessment rate may take into account the

employer's experience rating from the previous year. The obligation

assessment rate shall be applied against the taxable wage limit

described in section 44, and shall be assessed against all

contributing employers.

(5) The obligation assessment is due at the same time,

collected in the same manner, and subject to the same penalties and

interest as contributions assessed under this act.

(6) The proceeds of obligation assessments received each year

are irrevocably pledged and dedicated to the payment of obligations

and administrative expenses on those expenses and are subject to

the pledge and lien made to the extent and as described in the

resolution, indenture, or the authorizing statute under which the

obligation is issued.

(7) The director of the department of licensing and regulatory

affairs shall administer and cause the obligation assessments to be

collected.

(8) The director of the department of licensing and regulatory

affairs may request the state treasurer to establish additional

special subaccounts within the obligation trust fund for the

Senate Bill No. 484 as amended December 1, 2011

purpose of identifying more precisely the sources of payments into

and disbursements from the obligation trust fund, or as may be

required under the resolution or indenture authorizing the

obligations.

(9) The director of the department of licensing and regulatory

affairs or his or her designee may enter into agreements with the

issuer of the obligations or a third party as is necessary to issue

the obligations. Nothing in this act or any provision of any

document authorized under this section creates or constitutes state

indebtedness.

(10) As used in this section and section 10a:

(a) "Michigan finance authority" means the authority created

under Executive Order No. 2010-2, MCL 12.194<<

>>.

(b) "Obligation" means a note, bond, financial instrument or

other evidence of indebtedness issued as provided in this section.

on an employer under this section.

(d) "Obligation trust fund" means the fund created in section

10a.

Enacting section 1. This amendatory act does not take effect

unless all of the following bills of the 96th Legislature are

enacted into law:

(a) Senate Bill No. 483.

(b) Senate Bill No. 806.