HB-5575, As Passed Senate, June 3, 2014

SUBSTITUTE FOR

HOUSE BILL NO. 5575

A bill to create the Michigan settlement administration

authority; to provide for the operation of the authority; to create

certain funds; to authorize the resolution of certain potential

claims against the state; to prescribe the powers and duties of the

authority and certain other state officials and state employees;

and to make certain appropriations.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 1. This act shall be known and may be cited as the

"Michigan settlement administration authority act".

Sec. 2. The legislature finds and declares the following:

(a) If certain requirements are fulfilled, this state shall

make a contribution to reduce deficiencies in pension benefits of

members of retirement systems, in order to avoid additional ongoing

and future litigation and to partially settle the city of Detroit's

bankruptcy case, in return for, among other things, full releases

from any claims against this state for alleged deficiencies in

pension benefits.

(b) Partial settlement of the city of Detroit's bankruptcy

case and this state's contribution in support serves important

public purposes and will be beneficial to the entire state due to 1

or more of the following:

(i) It will improve household income of pensioners, many of

whom may reside in other parts of this state, and reduce the

likelihood of their seeking public assistance.

(ii) It will facilitate prompt resolution of the city of

Detroit's bankruptcy case and save state taxpayers ongoing

litigation costs.

(iii) It will protect this state and its taxpayers from

potential claims from parties associated with the retirement

systems.

of its powers granted under this act fulfill in all respects a

public and governmental purpose for the benefit of the people of

this state.

Sec. 3. As used in this act:

(a) "Authority" means the Michigan settlement administration

authority created under section 4.

(b) "Board" means the board of directors of the authority.

in substantially the form included with the city of Detroit's plan

for adjustment.

(d) "Countercyclical budget and economic stabilization fund"

means the countercyclical budget and economic stabilization fund

created in section 351 of the management and budget act, 1984 PA

431, MCL 18.1351.

(e) "Plan for adjustment" means the plan for the adjustment of

debts of the city of Detroit approved and entered by the United

States bankruptcy court for the eastern district of Michigan,

southern division, In Re City of Detroit, Michigan, case no. 13-

53846.

(f) "Retirement systems" means the police and fire retirement

system of the city of Detroit and the general retirement system of

the city of Detroit.

(g) "Settlement administration fund" or "fund" means the

settlement administration fund created in section 7.

(h) "State treasurer" means the state treasurer of this state

or his or her designee who is designated by a written instrument

signed by the state treasurer and maintained in a permanent file

and whose signature has the same force and effect as the signature

of the state treasurer for all purposes under this act.

Sec. 4. (1) The Michigan settlement administration authority

is created as a public body corporate and politic within the

department of treasury. The authority is a state institution within

the meaning of section 9 of article II of the state constitution of

1963 and an instrumentality of this state exercising public and

essential governmental functions. The exercise by the authority of

the powers conferred by this act is an essential governmental

House Bill No. 5575 (H-3) as amended May 22, 2014

function of this state.

(2) For the fiscal year ending September 30, 2014, there is

[ ] appropriated $194,800,000.00 from the

[ ]

settlement administration fund [to be used only as provided in this act].

Sec. 5. The authority shall exercise its duties independently

of the state treasurer. Any administrative functions of the

authority shall be performed under the direction and supervision of

the state treasurer.

Sec. 6. (1) The authority shall exercise its duties through

its board of directors.

(2) The board shall consist of 3 members as follows:

(a) The state treasurer.

(b) The state budget director.

consent of the senate, who has knowledge, skill, or experience in

the legal field of bankruptcy.

(3) The state treasurer and the state budget director may

appoint a representative to serve in his or her absence.

(4) Members of the board shall serve without compensation but

may receive reasonable reimbursement for necessary travel and

expenses incurred in the discharge of their duties.

(5) The state treasurer shall serve as chairperson of the

board.

(6) A majority of the appointed and serving members of the

board shall constitute a quorum of the board for the transaction of

business. Actions of the board shall be approved by a majority vote

of the members present at a meeting.

(7) The members of the board and any agent of the authority

are subject to 1968 PA 317, MCL 15.321 to 15.330, and 1968 PA 318,

MCL 15.301 to 15.310.

(8) A member of the board or agent of the authority shall

discharge the duties of his or her position in a nonpartisan

manner, with good faith, and with that degree of diligence, care,

and skill that an ordinarily prudent person would exercise under

similar circumstances in a like position. In discharging the

duties, a member of the board or agent of the authority, when

acting in good faith, may rely upon the opinion of legal counsel or

other expert advice.

Sec. 7. (1) The settlement administration fund is created

within the state treasury.

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

any source for deposit into the 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 fund at the close of the fiscal year shall

remain in the fund and shall not lapse to the general fund.

(4) The authority shall expend money from the fund only as

provided in this act.

Sec. 8. (1) The authority shall either disburse the money in

the fund to the retirement systems or return the money to the

countercyclical budget and economic stabilization fund as set forth

in this section.

(2) The authority shall cause $194,800,000.00 to be paid to

the retirement systems if and only if the authority determines in

writing that both of the following conditions have been satisfied:

(a) The bankruptcy court has entered an order approving the

plan for adjustment.

(b) The terms and conditions of the contribution agreement

have been satisfied.

(3) If the authority determines in writing that at least 1 of

the conditions in subsection (2) has not been satisfied, then the

money in the fund shall be returned to the countercyclical budget

and economic stabilization fund.

(4) If the authority has failed to make a finding in writing

under subsection (2) or (3) by May 1, 2015, then the money in the

fund shall be returned to the countercyclical budget and economic

stabilization fund.

(5) The authority is dissolved on May 2, 2015.

Sec. 9. It is determined that the creation of the authority,

the appropriation made to the authority, and the carrying out of

the authority's authorized purposes are in all respects a public

and governmental purpose for the benefit of the people of this

state and for the improvement of their health, safety, welfare,

comfort, and security, and that these purposes are public purposes,

and that the authority will be performing an essential governmental

function in the exercise of the powers conferred upon it by this

act.

Sec. 10. The obligation to make this state's contribution

described in the contribution agreement is not a general obligation

or indebtedness of this state or the authority and is subject to

the fulfillment of the requirements of the contribution agreement,

the plan for adjustment, and the order of a bankruptcy court.

Sec. 11. This state, a state official or state-related entity,

as defined in the plan for adjustment, the state treasurer, the

authority, a board member, an agent of the authority, and any other

legal, financial, or other expert providing advice to the authority

does not have any liability for the representations, warranties,

covenants, determinations, agreements, or other obligations of this

state or the authority, or under any of the certificates, notices,

or agreements delivered pursuant to the contribution agreement, the

plan for adjustment, or the order of a bankruptcy court confirming

the plan for adjustment.